A FAVORABLE economic environment fueled the strong growth of the real estate industry last year. Financial institutions helped accelerate that growth with favorable offers to consumers, industry officials said.
Developers said the sector’s performance reflects the sound economic conditions of Cebu, where the services sector like the Business Process Outsourcing (BPO) and tourism, overseas Filipino workers (OFW) remittances, and strong private consumption have always been the top contributors of the industry.
“Cebu has continued to show strong regional growth throughout the year. The favorable economic environment has had a positive effect on residential demand for mid to high-end segments,” said Megaworld Cebu Properties Inc. president Noli Hernandez.
Unlike in previous years, however, financing packages became more accessible and interest rates among financial institutions turned out to be more competitive and appealing to homebuyers in 2014, according to Subdivision and Housing Developers Association Inc (SHDA) Central Visayas president Alexander Ace Sotto.
The view was shared by Cebu Bankers Club president Gino Gonzales.
The Home Development Mutual Fund (Pag-ibig) lowered its housing loan interest rate to 6.9 percent compared to the previous year’s 7.3 percent.
Pag-ibig business development department manager Rio Teves earlier reported that housing loans in Pag-ibig Visayas exceeded by 114 percent the P3.187-billion target. As of November, housing loans already reached P3.633 billion.
Banks, meanwhile, offered about the same rate as Pagibig, according to Gonzales.
Maximum housing loans for Pagibig are now at P6 million. Teves said this reinforced the sales in residential projects.
A report from the National Economic Development Authority 7 Director Efren Carreon showed that there were 1,760 construction permits issued in the first half of this year, with more than 80 percent or 1,430 of these are for residential buildings. The total value was placed at P8.98 billion.
According to the number of License to Sell (LS) issued by the Housing and Land Use Regulatory Board from June to December this year, total project cost was pegged at P19.43 billion. The project cost of residential projects that were released with “temporary LS” was not included in the valuation.
From June to December, there were 36 LS issued, including those that were awarded temporary LS. Of these, 20 are for subdivision projects while 16 are for condominiums. This is equivalent to 818 houses and 4,408 condominium units in Cebu.
“The industry is still growing as manifested by the continued trust level and confidence of big (national and local) players in Cebu,” said Cebu Real Estate Board Inc. (Cereb) president Samuel Lao. He said there is still a steady demand for residential properties and finding the right location will continue to become a challenge among real estate players.
In separate discussions with developers, they noted that while BPO, tourism, and OFW remittances remain to be the engine of Cebu’s real estate industry, the twin calamities in 2013 reinforced the demand for residential projects, particularly in Cebu.
Developers noted that the last quarter of 2013 exhibited a slowdown in real estate projects, attributing this to the 7.2-magnitude earthquake in October and super typhoon Yolanda in November.
“Partly yes (it affected the industry), as some buyers delayed putting in their money to observe the market,” said Filinvest Land Inc (FLI) vice president for strategic business planning for Visayas and Mindanao Allan Alfon.
However, in 2014, developers said the calamities have brought in more people to Cebu. Grand Land Inc. president Ryan Bernard Go said people from neighboring provinces preferred to relocate to Cebu, with employment opportunities and top educational institutions present in the area.
In addition, the official said the calamities have also made Cebu more known to international markets.
For Grand Land’s projects, Go said a good number of its condominium buyers are foreigners who buy either for investment or for personal use.
“I didn’t receive any complaint from any developer that they have been affected. Actually, it increased our market…and developers helped by relaxing their (loan) requirements,” added Sotto, who is also 8990 Deca Homes vice president for construction and engineering.
Better in 2014
Alfon said that in terms of sales for FLI, sales growth was “better” last year than in 2013.
While the real estate scene in Cebu is bullish, the government has called on developers to increase their portfolio of affordable housing. Lopez said the housing backlog for 2014 is now at 5.3 million. This is higher than last year’s four million.
“Eighty percent of the housing backlog comes from affordable housing,” Lopez said.
Under the law (Republic Act 7279), developers are required to allot 20 percent of a housing project’s total cost for the construction of socialized housing units. Each socialized housing unit should have a price of not more than P450,000.
With the scarcity of land nowadays in Cebu’s urban areas, Lopez urged developers to consider socialized medium-rise buildings (MRBs) instead of the traditional house and lot packages.
He said one developer in Lapu-Lapu City has started out the development of a socialized condominium. The name of the project and the developer was not disclosed as of press time.
“By next year, we hope to see more developers to adopt this (socialized medium-rise buildings) kind of compliance,” Lopez said.
Developers, meanwhile, expressed optimism on the industry in 2015.
“According to economic trends, there is no reason to expect a slowdown. Cebu (is) the second most vibrant hotspot for property investment in the country,” Hernandez said.
Brokers are also excited with the entry of national players. Lao said SM and Robinsons will launch next year their residential projects in Cebu while DMCI, another national player, is already searching for potential locations for condominium developments.
Amid the aggressive expansion of national players, Lao said homegrown property developers still continue to compete head-on with the big names in the industry.
Anthony Leuterio, one of Cebu’s top brokers, also expressed optimism for the year ahead but expressed concerns like scarcity of land and the possibility of “pocket” expansions that can affect the industry’s growth.
“Big developers will have a hard time acquiring big properties and they will be forced to do pocket (small-scale) projects,” Leuterio said.
In addition, problems like traffic and flooding, if not addressed properly, will affect not only real estate but Cebu’s entire economy as well, said Cebu Business Club president Dondi Joseph, who is also the planning committee chairman of the Mega Cebu Development and Coordinating Board (MCDCB). Joseph stressed the need for proper planning before all the problems that come with progress will worsen.
Also at fault
Although the government gets most of the blame, Joseph said the private sector is also at fault for paying their way to get around regulatory requirements and violating building codes by building over waterways and not providing enough setbacks for sidewalks.
With the full integration of the Association of Southeast Asian Nations, developers and brokers see competition going tougher.
Go considered this as a positive indicator of the industry’s growth.
Developers also said that the election in 2016 will not stop them from investing more in Cebu.
Price increases are also seen next year, with Lopez projecting a 15 to 20 percent hike.