Sector ‘on strong foundation’-A A +A
Thursday, December 26, 2013
THE twin calamities that hit Central Visayas late this year affected the real estate industry but also reinforced demand for well-built projects, an official said.
The real estate sector was doing well in the first half of 2013, said Cebu Holdings Inc. president Francis Monera. The second half brought in challenges with the Bohol earthquake and super typhoon Yolanda.
Monera credited the strong performance of the sector to the growth of the construction industry, flourishing business process outsourcing and increased remittances from overseas Filipino workers. He said these have been the main drivers of the real estate industry in Cebu for the last five years.
PrimaryHomes vice president for sales and marketing Ramero Espina also attributed the growth in the real estate sector in Cebu to the growth of tourism sector in Central Visayas. He said there will be double digit growth rate with the terminal expansion of the Mactan-Cebu International Airport.
Monera said OFW remittances for October reached $2.3 billion, an all-time high, while the BPO sector is poised to contribute $16 billion in revenues for 2013.
“Employment generated by the BPO industry and the influx of remittances have increased the purchasing power of the middle class, which has, in turn, sustained the demand for residential units, whether they be for subdivisions, townhouses and condominiums,” Monera said.
Jose Soberano III, chief executive officer of Cebu Landmasters Inc., said the real estate industry in Cebu was “robust” in the first three quarters of 2013.
“Even with the slowdown in the fourth quarter due to the two calamities that partly affected Cebu, the overall performance of the industry in 2013 was still very positive, in the same vein that was felt in 2012.”
Soberano said, however, the 7.2-magnitude earthquake in October and typhoon Yolanda in November created an atmosphere of fear and doubt among major markets of Cebu’s real estate industry. But, he said, this is surmountable with developers delivering the correct and reassuring message of safety and construction integrity.
“Developers had to cope on how to impart the information to the market that well-designed and constructed buildings and homes coupled with strategic locations are in fact, deterrents to future calamities, and are therefore, good buys and investments.
More efforts, though, have to be sustained in the coming months to bring in more sales and attain the normal levels of growth previously experienced,” Soberano said.
Monera also said that calamities made the market more conscious of investing in properties that are safe from disasters. He said this will compel companies to develop more properties that better address safety concerns.
Monera said Finance Secretary Cesar Purisima attributed the third quarter growth of the country’s economy to the “robust performance of real estate, renting and business activities, trade and financial intermediation, and increased investments in fixed capital, reinforced by consumer and government spending, and robust growth in external trade.”
Monera said that in Cebu, the continued growth of the real estate sector was evident in Cebu Business Park and Cebu I.T. Park, which host majority of commercial and residential high-rise developments in the city.
As of yearend, there are 14 ongoing construction projects in Cebu Business Park and five constructions in Cebu I.T. Park for residential, office and commercial purposes.
Once completed, Monera said these projects will bring in a total gross floor area of 434,800 square meters and 94,400 square meters respectively.
Monera also said office and commercial leasing have remained robust with high occupancy rates throughout the year. Cebu Holdings Inc and other AyalandLand Inc. properties have registered the strongest takeup for residential projects in the second quarter of 2013.
Meanwhile, Espina reported that the growth of the housing industry in Cebu was strong from the supply side, yet the demand is still soft.
“The 2013 housing industry most likely registered a growth, but the rate is relatively lower compared to the last three years, 2010-2012,” he said.
Espina said Central Visayas registered among the highest in inflation rate nationwide, even before the calamities hit. He said this has placed pressure on the capacity to save for housing and added to the increasing cost of construction.
“Since inflation is an economic reality, we adjusted in terms of how flexible our payment schemes are to make it more affordable for our buyers,” he said.
Housing and Land Use Regulatory Board 7 Director Alixes Roy Lopez said the number of residential projects this year has decreased. For subdivisions, the total number of projects in 2013 was 25, down from the 35 projects in 2012. For condominiums, there were 14 last year and 15 this year.
The decreasing number of projects this year, Lopez said, can be attributed to the increasing price of construction materials and the high cost of raw land.
He said, however, that although the number of projects has gone down, the project cost has also increased, which means developers have poured in more investment this year in coming up with better quality projects.
Soberano, on the other hand, responded that the data could have decreased because most projects were launched last year and a number of them are being geared up for next year. But for Cebu LandMasters, he said they have introduced a steady number of projects yearly.
The Home Development Fund (Pag-ibig Fund) Visayas, meanwhile, reported that it had fallen short in meeting its housing loan target of P4.109 billion this year.
Victoria dela Peña, vice president of Pag-ibig Fund Visayas, said the agency only released P2.72 billion as of October 2013. This, she said, is due to glitches in the processing of some documentary requirements. The slow release of land titles from the Registry of Deeds also affected the loan approval rate of the agency, she said.
Demand to increase
However, dela Peña said the demand for housing loans is expected to increase next year because Pag-ibig will lower its interest rate from 7.3 percent per annum to 6.4 percent.
For the year ahead, those in the industry said the demand for mid-market and affordable projects will take the lead.
“In the real estate sector, we expect a lot of new projects, new players and more flexible payment schemes as the market for residential properties becomes more competitive,” Monera said.
Espina projected that there will be an increase in the prices of properties if the cost of the construction materials and labor will keep on increasing. Real estate players from other regions will also enter Cebu next year, he said.
Soberano expects that Cebu’s real estate industry will continue to grow with OFWs and BPO as key growth drivers.
Lopez said developers are considering to expand in southern Cebu next year, since the northern towns were ravaged by the typhoon.
“As long as the Cebu economy remains favorable, which we expect it to be, then we are confident that the local real estate industry will be bullish in 2014,” said Monera.
Published in the Sun.Star Cebu newspaper on December 27, 2013.