CEBU’s condominium stock is expected to reach 87,600 units by 2025, which translates to a delivery of about 6,800 condominium units per year between 2023 and 2025, according to the latest industry report from Colliers Philippines.
The forecast represents a growth of 30.5 percent from the 67,170 inventory recorded in 2022. Cebu City and Mandaue City are likely to account for 80 percent of the new supply.
By the end of 2025, Cebu City’s total supply will reach 52,900 units, while Mandaue City will have 16,080 units. Lapu-Lapu City will have 17,790 units; Talisay City, 570 units; Liloan, 220 units; and Minglanilla, 100 units.
Colliers Philippines has already recorded the completion of 340 condominium units in Cebu in the first quarter of this year. Some of the projects completed during that period include Pacific Land’s Mactan Plain Residences and Philippine Estate Corp.’s Wellford Residence Madison Building.
Around 9,500 new condominium units are expected to be completed in Metro Cebu in 2023.
Joey Roi Bondoc, associate director for research at Colliers, said these figures reflect the improving sentiment from businesses, individual investors and end-users who are likely to support the growth of the Cebu residential sector.
Karla Domingo, Colliers’ director of Advisory Services, added that Cebu as a residential location has shown resilience during the Covid-19 pandemic and is expected to recover by the end of 2023.
1Q take-up
In the first quarter of 2023, Colliers recorded the take-up of 1,100 condominium units in Cebu, with demand primarily driven by the affordable to lower mid-income segments.
These segments, with units priced from P2.5 million to P7 million, accounted for nearly 80 percent of total condominium units sold during the period.
Colliers Philippines said the high take-up of condominiums is partly sustained by the demand from overseas Filipino workers (OFWs). Cebu is among the major sources of overseas Filipinos deployed annually.
In the house and lot segment, 420 house-and-lot units were sold in the first quarter of 2023, a 37 percent year-on-year increase. Horizontal developments remain popular among end-users, particularly in Carcar City, Lapu-Lapu City, Balamban and Consolacion. These areas accounted for nearly 90 percent of total house and lot take-up in Cebu during the first quarter of this year.
Prices to go up
In terms of capital values, condominium prices are expected to grow by 3.5 percent annually from 2023 to 2027. The price appreciation is likely to be supported by improving sentiment from local and foreign investors, according to the property advisory firm.
As of the first quarter of the year, the average price of a condo unit stands at P143,800 per square meter. The Villas at Aruga of Rockwell Land is the most expensive project in Cebu, with an average total contract price (TCP) of P101.3 million (US$1.8 million) and an average price per square meter of P589,600.
As for the house and lot segment, the average TCP as of the first quarter was P4.2 million. The most expensive house and lot in Cebu is Monterrazas Prime of Genvi Development, with a TCP of P51 million. The average lot-only price, on the other hand, stood at P12,000 per square meter in the first quarter of the year. Lot-only units of Fonte Vida of Double Seven Grand Property Ventures are the most expensive, priced at P50,500 per square meter.
Going green
To sustain the momentum, Domingo said developers must introduce products that are right for their ideal markets.
“Launching projects is one thing; introducing successful products is another. Developers should continuously evaluate whether their products are indeed preferred by and are a right fit for their target market,” she said.
Developers are also encouraged to consider securing green building certifications to meet investors’ demand for sustainable features. There is also a need for them to continue assessing demand gaps for both vertical and horizontal markets, especially in terms of product types, prices and amenities.
“In our view, developers also need to evaluate whether to retain or further tweak discounts and promos extended to buyers at the height of the (Covid-19) pandemic,” Colliers said.
Developers should also closely monitor the impact of interest and mortgage rates on residential demand and how the central bank’s policy rate adjustments in the future will impact residential appetite, the firm added. (KOC)