“If there are price increases, we think they would be minimal,” said Karla Domingo, associate director for advisory services at Colliers Philippines, during the Cebu Property Outlook briefing on Friday, May 28, 2021. “Residential prices in Cebu will remain stable this year. I think that the developers will be more considerate of the market. They will still give the same promos, same discounts and extension of down payment terms. This is so that their inventory will continue moving and to keep the interest of the market.”
According to Joey Bondoc, associate director for research at Colliers Philippines, while increase in prices is normally driven by supply and demand, land values within the key cities of Metro Cebu have increased, the reason there have been slower launches of new projects.
“Even previously we’ve already seen a stable increase in prices of house and lot and lot only projects, but of course the pandemic has disrupted that trend of increase in prices. But I think that recovery will be there—the recovery of the outsourcing sector, the rollout of the of Covid-19 vaccination, the stable demand. We believe that moving forward, once the confidence of the market is restored, the prices again will increase perhaps not as fast as compared to the pre-pandemic level but the potential would definitely be there,” said Bondoc.
Four percent increase
In its outlook report, Colliers projects prices of condominium units to increase by four percent in 2021 as demand from investors and end-users begins to recover gradually.
From 2022 to 2025, Colliers estimates a five percent annual growth in prices as Cebu City further recovers from the Covid-19 pandemic.
In the first quarter of 2021, affordable to mid-income developments (price segments between P1.7 million (US$35,400) and P6 million ($125,000) recorded strong take-up for both condominium and house and lot projects in Metro Cebu.
Interestingly, luxury projects accounted for the majority of take-up in lot-only projects. These lot-only projects are priced from P2.4 million ($50,000) and above.
“The demand for this price segment in areas outside Cebu City is likely driven by local investors and overseas Filipino workers looking for bigger open spaces for their families while still within a reasonable distance from the province’s capital city,” the property research firm said.
In the first quarter of 2021, Colliers said some 813 condominium units were sold in the pre-selling market, down 28 percent quarter-on-quarter from 1,122 units sold in the fourth quarter of 2020.
Mid-income condominium projects accounted for 38 percent of both launches and take-up in Metro Cebu. The growing demand for this price segment, according to Colliers, relates to the rising purchasing power of Cebuano end-users and investors.
It expects mid-income projects to continue capturing residential demand in the area as this price segment is expected to deliver about 37 percent of the 6,563 units scheduled for completion in 2021.
“Colliers expects higher take-up over the next three years, and this is likely to be supported by remittances from overseas Filipino workers and the Covid vaccine rollout,” the market report said.
No new completions
Moreover, Colliers recorded no new completions in Metro Cebu in the first quarter of this year.
Total condominium stock remains stagnant at 50,100 units.
For the remainder of the year, the property research firm expects the delivery of 6,560 units, 14 percent higher compared to the 5,760 units delivered in Covid-influenced 2020.
“Mandaue City, Lapu-Lapu City and Cebu City are likely to cover 97 percent of upcoming supply in 2021,” Colliers said.
By price segment, affordable to mid-income projects are likely to cover 77 percent of new supply in 2021.
Projects in these segments include Casa Mira Towers Guadalupe Tower 1, Vistana Pearl Residences, UniPlace, One Oasis Building 8, Mandani Quay Tower 1, Northwoods Place, Urban Deca Homes Banilad Tower 3, Paseo Grove Tower 1, Plumera Mactan, Resort City Towers Tower 1, Saekyung Condo Building 1,2,3, and Plumera Mactan Building N.
From 2021 to 2025, Colliers projects completion of about 4,760 units annually, slightly up from its initial forecast of 4,500 units in the fourth quarter of 2020. By the end of 2025, Colliers saw total condominium stock in Metro Cebu reaching 73,900 units, up 48 percent from the inventory at the end of 2020. (KOC)