Integrated master-planned developments in Cebu SRP, Cebu North Reclamation Area, and other fringes have emerged to satisfy demand for purchasable properties. A recent development launched to the market was Robinsons Land’s Mantawi Residences in Mandaue City. Investments in the residential market continued to grow, combined with the sustained rising demand from OFWs. Aside from return-to-office decisions bringing back the demand for corporate real estate, the retail and tourism sectors largely benefitted from the loosening of travel restrictions, the return of business activities, continued expansion of outsourcing outside Metro Manila, and a generally optimistic outlook on the economy.
Infrastructure has played a pivotal role in driving long-term demand for these developments . Strategically positioned infrastructure projects in Metro Cebu facilitate ease of movement in the metropolis, resulting in cheaper cost of business. As Cebu continues to attract more tourists and business, the metropolis – along with Central Visayas – saw around PhP 1.8 billion worth of investments approved in the region by the Board of Investments in the first half of 2022. The growing confidence in market conditions, and increased mobility within Metro Cebu, is expected to support the demand for real estate within Metro Cebu.
Despite the absence of new office spaces being introduced in the market, notable improvement has been observed in Metro Cebu office market with a recorded 65,000 sqm of net taken-up office space. This lowered Metro Cebu’s office vacancy to 20.01% in the first half of 2023.
As result of increasing office demand, weighted average lease rates in Metro Cebu inched up to Php 640.51 per sqm per month from Php 603.05 per sqm per month . Lease rates in Cebu Business Park, exhibited the highest weighted average lease rates among all areas at Php 702 per sqm per month. Asking rents within Cebu Business Park ranged from Php 510 per sqm per month to Php 910 per sqm per month. Meanwhile, rents in Cebu IT Park ranged from Php 500 per sqm per month to Php 750 per sqm per month, average lease rate in Cebu IT Park was at Php 662 per sqm per month. Average lease rates in the fringe areas recorded the lowest among all areas in Metro Cebu at Php 586 per sqm per month.
The increase in lease rates suggests a sustained positive demand, reflecting the growing confidence and competitiveness of Metro Cebu as a business location. As demand for office space outpaces the available supply, landlords and property owners have commanded higher lease rates.
Already recovering from the pandemic, Metro Cebu’s residential sector sustained its momentum with an overall market absorption of 90% in the first half of 2023. Residential demand was mostly comprised of investors, a segment motivated by capital appreciation and encouraged by return-to-office policies that could drive back the leasing market. Projects in the affordable market revealed the highest absorption, and studio units remained as the most preferred unit type.
Noticeably, middle-income and affordable projects in Metro Cebu are mostly concentrated within the city center, closer to places of work and one that highlights live-work-play components. In contrast, high-end projects are mostly located on Mactan Island, where buyers put greater importance on exclusivity.
At Php 150,000 per sqm, the average selling price of vertical residential units in Cebu City remained to be highest among all markets in Cebu Province. Lapu-Lapu and Mandaue City followed suit. Selling prices in Cebu City ranged from a low of Php 95,000 per sqm to a high of Php 177,000 per sqm. Average selling price in Mandaue City was recorded to be starting at Php 85,000 sqm, extending to Php 220,000 per sqm with the launch of Mantawi Residences.
Retail developments in rising areas such as Cebu SRP are anticipated to drive foot traffic while further commercial and residential properties are built. In SRP alone, around 50,000 sqm of leasable retail space is expected to complement a growing tourism base who travel to the area to visit places like Nu Star. The strategy to use retail as a foot traffic-generators for new mixed-use areas has been seen effective in established business districts across the Philippines.
Overall, in Metro Cebu’s retail market, a total of 75 upcoming retail stores were recorded in the pipeline as of 1H 2023. Food and beverage-related stores had the highest share, accounting for 47% with 35 retail stores in the pipeline. This was followed by clothing and apparel, which at 24% share expected a total of 18 various retail stores across the different local and foreign brands.
Cebu is known for festivals such as Sinulog, a celebration held each year to honor the Child Jesus and one attended by at least 500,000 spectators . During the entire week of January when the festival was held, strong accommodation demand resulted in at least a 10% to 20% rise in ADR, almost 80% to 90% room occupancy. In the first half of 2023, the ADR in Metro Cebu ranged from Php 1,490 to Php 12,130, depending on the chosen room type and location.
Metro Cebu holds over 14,700 hotel rooms as of the first half of 2023. More than half of the supply is in Cebu City (due to its role as the government center in Cebu), while Lapu-Lapu City holds the second highest share and the destination with the highest number of 5-star hotels in the region, capitalizing on its beautiful shorelines and beaches to attract visitors.
Metro Cebu hospitality sector has pipelined to introduce approximately 2,500 new rooms in the coming years. Among these, Lapu-Lapu City alone is expected to offer around 1,500 more rooms. Meanwhile, Cebu City is anticipating the addition of 690 rooms in the near future. Some of these new hotels include Dusit Princess Cebu, Sun Park Royal Hotel (both in the North Reclamation Area), and Sofitel Cebu City.