THE outlook for the Metro Cebu property market remains buoyant despite the slew of new office space that entered the market last year, real estate advisor CBRE Philippines said in a report.
This is because the property market in Cebu is supported by the province’s sound economic status and “the cheap skilled labor and property rents are also seen to bolster investments in the area, resulting in higher demand for office properties,” CBRE said.
“Further expansion of outsourcing and top local firms are anticipated to occupy the remaining available office stock,” it added.
CBRE Philippines noted that an estimated 86,000 square meters of leasable area was added into Metro Cebu’s new office stock in the second half of last year, with nine buildings delivered during the period.
“The increase in office building projects is an indication of confidence for developers in Cebu’s economy,” CBRE said.
Some of the developers that pursued projects in Metro Cebu in the second half of 2015 include Ayala Land, Megaworld, Filinvest Cebu, Cyberzone Properties, Philam Life Group of Companies, MSY Holdings, FLB Industries, Norkis Cyberpark and Cebu Landmasters.
Due to the entry of new stock, vacancy rates in Metro Cebu in the second half of 2015 rose to 13.54 percent from 8.82 percent registered in the first half of last year.
“Cebu Business Park (CBP) added approximately 20,000 square meters of office space with MSY Tower 1 and FLB Corporate Center going online in H2 2015. Vacancy rate in the area surged up to 11 percent from 6.15 percent in H2 2014,” the report noted.
In a separate report by Colliers International, it noted that the overall vacancy rate in Cebu increased in the last quarter of 2015 to 8.21 percent from 6.73 percent in the third quarter, due mainly to the completion of several office buildings in the Grade B segment.
Colliers said vacancy rates for Grade B buildings rose to 9.74 percent in the fourth quarter from 7.71 percent in the third, while vacancy rates for Grade A offices declined to 2.78 percent in the fourth quarter from 3.0 percent in the previous quarter.
“Still strong leasing in Grade A offices mitigated the sudden influx of supply,” Colliers said.
The real estate services firm also noted that five new office buildings are expected to be completed this year, which is set to add nearly 112,785 square meters of available space to the current office stock.
Meanwhile, CBRE said the overall vacancy rate for 2015 increased to 27.59 percent from 25.41 percent in 2014, mainly due to the completion of 8 Newtown Boulevard towers and Norkis One office building in the second half of 2015, which added roughly 42,000 square meters of office space.
The report also noted that the take-up rate for business process outsourcing (BPO)-ready offices have been slow compared to the speed with which the buildings are completed.
“Nevertheless, it is still expected that new supply will eventually be absorbed as new locators enter the Philippine BPO market and top local companies implement their expansion,” CBRE said.