Prime Philippines Inc., a real estate consultant, sees property development accelerating in the Visayas and Mindanao as efforts to decentralize economic activity gains headway.
Properties in Metro Manila will still remain in demand, but the expansion will happen outside of the capital region, it added.
Ruth Coyoca, Prime Philippines vice president for Visayas-Mindanao, said that over the next decade, the country’s property market will continue moving toward ‘a more sustainable distributed economic landscape’ with second-tier cities attracting capital.
‘We’re no longer looking about purely provincial growth stories. What used to be considered secondary markets are now becoming strategic expansion markets,’ she said.
‘For our BPO [business process outsourcing] clients, our industrial clients, having an office in Visayas and Mindanao is now a strategic need for the sustainability of their operations. So, many of the cities now are evolving into self-sustaining economic ecosystems and this continues to attract occupiers because of its balance between talent availability and operating cost efficiency.’
When compared to Metro Manila, many of these regions continue to offer more competitive labor costs while maintaining access to a young and growing workforce, she said.
‘If you notice, the population growth in the three main regions in our country is having a slowdown. But for Mindanao’s population, growth is at 1.18 percent, even higher than the one in Luzon, which signals that companies who will operate in these cities will not lose talents,’ Coyoca said.
For now, however, investments remain heavily skewed toward Luzon. Over time, however, the Visayas and Mindanao area will boom, mainly in Cebu, Bacolod, Davao and Cagayan de Oro.
For Cebu, Coyoca said it is experiencing a transition, with new premium developments entering the market and an expected increase in lease rates. ‘From an average of P635 per square meter last year, we are now experiencing P645 pesos per square meter average this lease rate. With these new developments, Cebu will continue to enter into a market transition where tenants will look for more quality buildings. But still, with competitive lease rates.’
For Davao, meanwhile, the area is poised to absorb the approximately 85,000-square-meter new office supply expected to be completed within the next four years.
Coyoca said Davao had the highest office occupancy rate nationwide among established office hubs at 95.5 percent in the first quarter. Bacolod, meanwhile, is riding on the consumption-driven economy, with a strong focus on retail development and services-led sectors, making it one of Western Visayas’ most closely watched emerging cities.
‘Based on our experience and the requirements that we’re getting from our clients, they are also now looking towards Bohol, Dumaguete, even as far as GenSan [General Santos], Zamboanga and of course, Iloilo City,’ Coyoca said.