Forecast at a glance Condominium Demand Demand for condominiums continues to market grows be stronger than for house and lots as vertical developments are within proximity of the CBD. We expect this to Dinbo Macaranas Senior Research Manager continue for the next two to three years, improved by leisure type developments. Given the increasing land prices in Cebu, it is not surprising to see more condominium (vertical) Supply developments than house and lots (horizontal). The Colliers projects over 15,400 condo condominium stock in Cebu totals 33,400 units, all in units to be completed by 2021. This will expand the options in Cebu, which Metro Cebu. While launches were down for both already has approximately 53,000 horizontal and vertical projects in 2017, take-up for house and lots across the entire condominiums was notably faster, reaching 5,600 province. units versus 1,100 for house and lots. This has also translated into increasing prices of condominiums Price where prices are breaching the mid-income Prices of condominiums range between segment, nearing PHP6.0 million (USD 120,000). PHP2.8 million (USD56,000) to PHP6.8 Colliers expects vertical demand to continue, million (USD136,000). In Metro Cebu, augmented by leisure-related residential house and lot prices are largely developments, especially after the planned comparable ranging between PHP2.8 million (USD56,000) to PHP7.1 million completion of the Mactan Airport expansion by mid- (USD142,000). We expect a 2% to 6% 2018. Thus, we suggest that developers launch more growth in prices annually in the next two leisure-related condominiums. Meanwhile, for house to three years, driven by faster and lots, developers may consider areas outside increases from condominiums. Metro Cebu such as Talisay, Consolacion, and Minglanilla, which are fast becoming viable alternatives to the city centre.
Source: Colliers International Philippines Research
Cebu Vertical Residential Supply Forecast (units) LOCATION AS OF 2017 2018F 2019F 2020F 2021F TOTAL Cebu City 24,500 6,600 2,600 2,000 - 35,700 Lapu-Lapu City 6,100 1,400 200 500 - 8,200 Mandaue City 2,800 - - 1,200 900 4,900 Overall 33,400 8,000 2,800 3,700 900 48,800 Source: Colliers International Philippines Research
High rise Metro Cebu Preference for vertical
Given the increasing land prices in Cebu, it is not developments surprising to see more condominium (vertical) Demand for both horizontal and vertical developments developments than house and lots (horizontal) especially continues in Cebu, although we observe a faster take-up in Metro Cebu. The condominium stock in Cebu totals in condominium projects than for house and lots. Total 33,400 units, all in Metro Cebu. This complements the take-up of condominiums in 2017 reached 5,600 units, total of over 27,000 house and lots across Metro Cebu, consistent with the average in the prior three years of and as well as the 26,000 horizontal units more across 5,500 units. House and lots on the other hand, recorded the rest of Cebu province. total take-up of 2,100 units, slower than the average in the last three years of 3,800 units. Condominium units in Metro Cebu are largely concentrated in Cebu City with over 24,500 or 73% of Colliers attributes this increase in preference for vertical condominium stock located in the provincial capital. projects to (1) the increasing land values which have Lapu-Lapu City follows with 18% or 6,100 units, while forced developers to focus more on vertical the balance is in Mandaue City. developments, and (2) the proximity of condominiums to the CBD, enhanced by the worsening traffic situation in The condominium pipeline in the next few years will Cebu, making them the choice of Cebuanos and continue to grow. In 2018 alone, we are expecting over investors alike. 8,000 units to be delivered in Metro Cebu, 83% of which should come from Cebu City, and 17% from Lapu-Lapu. Understandably, therefore, there have been fewer house From 2019 to 2021, we expect about 7,400 units to be and lot developments launched in recent years. While delivered, still concentrated in Cebu City, but quite a horizontal developments saw a slight increase in significant number of units will also come from Mandaue launches from 1,200 units in 2016 to 1,600 in 2017, this City. is still slower than the three-year average since 2013 of 3,500 units annually. Launches of condominium Some of the notable upcoming projects in Cebu City developments, while also declining, still reached over include Avida Towers Riala by Avida Land (660 units), 3,000 units in 2017, about 150% more than the number Parthenon Residences by Land Traders (800 units), 38 of house and lots launched. Park Avenue by Cebu Landmasters (745 units), Vista Suarez by Vista Land (600 Units), and 32 Sanson by Furthermore, house and lot developments in Cebu have Rockwell Land (300 units), among others. also expanded outside of Metro Cebu. Some of the key horizontal projects launched in more recent years (2015 In Lapu-Lapu City, some of the notable projects are to 2017) are located in Talisay, Consolacion and Saekyung Condo by Saekyung Realty (800 units), One Minglanilla, given the limited developable land within and Manchester Place by Megaworld (200 units), and near the city centre. Sheraton Cebu – The Residences by Apple One Properties (150 units). Lastly, in Mandaue City, Taft Properties’ Mandani Bay Suites (1,200 units) and Quay (800 units) are the key upcoming developments.
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Examples of projects launched in Talisay in the last three Notably, most expensive condominium units in Cebu years are Villa Donna by Kenrich Development, Malibu priced from PHP130,000 per sqm (USD242 per sq ft) to by Aldea Premier, and Sta. Monica Estates by Sterling over PHP200,000 per sqm (USD 371 per sq ft) are at Land Development. In Consolacion, some of the projects least 75% sold already. The project which first breached launched were Yanessa Country Homes by Hedland, the PHP200,000 per sqm-mark is Sheranton Cebu Vista de Bahia by MCJR Realty, and Modena Mactan Resort Residences by Apple One Properties. Consolacion by J. King and Sons. Meanwhile in Minglanilla, Francesca Highlands by Grand Land, and In terms of total contract price (TCP), actively selling Ricksville Heights Minglanilla by Arieza Land were the house and lots in Cebu are averaging PHP4.6 million key projects launched. (USD92,000). By comparison, the average TCP of condominiums is 17% higher at PHP5.5 million Horizontal Launches and Take-up (units), 2017 (USD110,000). Colliers expects that prices of 6000 condominiums will increase faster than house and lots given the higher demand for these types of 5000 developments which are typically closer to the CBD. 4000 3000 Colliers projects a 3% to 6% annual increase in average 2000 condominium prices over the next two to three years. On 1000 the other hand, we expect prices of house and lots to increase at a slower pace of 2% to 3% annually due to 0 expansion to other areas outside the city and the bigger 2013 2014 2015 2016 2017 impact of the affordable price segment on overall Launches Take-up averages.
Source: Colliers International Philippines Research
Up for a leisurely comeback Mid-income condominiums, Generally, the residential market in Cebu is still strong. Sales of both horizontal and vertical developments are affordable house and lots still at healthy levels. Colliers notes however, a shift in When broken down by price segment, the take-up the market as condominiums have become slightly more between horizontal and vertical developments varies. viable given increasing land values in the city. In For house and lots, the affordable and economic addition, the worsening traffic situation has forced segments or those priced between PHP1.7 million individuals to look for residential options near the CBD. (USD34,000) and PHP3.2 million (USD64,000) are the Upcoming supply is also sizeable which makes the most sellable. These two segments comprise 85% of market more competitive. total 2017 take-up. Meanwhile for condominiums, the One upcoming bright spot is the completion of the affordable and mid-income segments, priced between Mactan airport expansion scheduled by mid-2018. The PHP3.2 million (USD64,000) and PHP6.0 million country has been awaiting upgrades in local and (USD120,000) are the most sellable, comprising 67% of international airports to boost tourism. Once completed, total take-up. the airport is expected to accommodate between 4.5 Overall average prices of condominiums rose by 5% million to 13 million passengers annually. Colliers from 2016 to 2017. Interestingly, several projects believes this will also have an impact on residential showed a mid-teens percentage increase over the same developments as it will make the location more attractive period. Thus, from being largely driven by affordable to investors and end-users. housing, more mid-income condominium developments In addition, there is a 1500-hectare reclamation project are also selling well. Among others, projects that sold proposed by SM Prime Holdings Inc. In December 2016, well in 2017 include Mandani Bay Quay and Suites, the Philippine Reclamation Authority (PRA) and the Grand Residences, Vista Suarez, and 38 Parc Avenue. municipality of Cordova in Mactan Island announced the signing of a memorandum of understanding (MOU) to jumpstart the project.
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Developer recommendations Colliers believes that both infrastructure projects will have a strong impact on Cebu real estate. We recommend that more residential developments be built in areas traversed or nearby these infrastructure plans. We also suggest that developers build more residential projects that are leisure and lifestyle-oriented in anticipation of increased interest brought about by the infrastructure improvements. Already, we have seen some developers incorporate the resort-type feel in their projects to differentiate their products.
Ultimately, location and price will still be key. Metro Cebu
will still be the viable location for condominiums, with prices averaging the higher range of the mid-income segment. House and lots meanwhile, have become viable in locations outside the city such as Talisay, Consolacion and Minglanilla, at a price-point of PHP3.2 million (USD64,000).
Cebu Residential Average Price (PHP), 4Q2017
LOCATION VERTICAL HORIZONTAL (PHP / sq m) (PHP / unit) Cebu City 104,900 7,100,000 Lapu-Lapu 109,900 2,800,000 Mandaue 92,000 4,900,000 Conversion: USD1 = PHP50 Source: Colliers International Philippines Research
For more information: Contributors:
Dinbo Macaranas Joey Roi Bondoc David A. Young Richard Raymundo Senior Research Manager Research Manager Chief Operating Officer Managing Director +632 858 9047 +632 858 9057 randwil.macaranas@colliers.com joey.bondoc@colliers.com Kasi Yute Research Analyst
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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