BPO f irms drive demand for office space in Cebu
MORE business process outsourcing (BPO) firms and multinational corporations are locating in Metro Cebu, driving a projected 47% growth in office supply in the next three years, according to real estate consultancy Santos Knight Frank.
In a statement, Santos Knight Frank said Metro Cebu will add as much as 350,000 square meters (sq.m.) in gross leasable area to its office stock from 2018 to 2020. This will bring the total office stock in the area close to one million sq.m. by 2020.
“The growth of Cebu’s property sector this year solidifies the metropolis’ position as the leading investment destination in the Philippines outside Metro Manila. With a strong economy, large pool of talent and new infrastructure in place, Cebu is well on its way to becoming a global city,” Santos Knight Frank Chief Executive Officer Rick Santos was quoted as saying in a statement.
The company attributed the growth mainly to the demand for office spaces from BPOs and multinational firms, which has in turn pushed lease rates higher in the first half of 2018. It noted that weighted average asking lease rates went up by two percent to P548.31 per sq.m. in the first six months of the year, compared to the second half of 2017.
As per the deals tracked by Santos Knight Frank, transacted rents posted a 9% increase ranging from P600 to P650 per sq.m. Office capital values also stood at P150,000 to P200,000 per sq.m.
Santos Knight Frank also noted the opening of the second terminal of the Mactan-Cebu International Airport last July has further enhanced international connectivity in the area.
“The launch of Mactan-Cebu International Airport’s Terminal 2 is a particularly exciting development. While a number of cross-border transactions have recently been closed in Cebu, in particular from China, South Korea and Japan, the improvements to the airport will further increase tourism, facilitate greater inflow of capital and help continue the metropolis’ growth momentum in the coming years,” Mr. Santos said.
Alongside the surge in office supply, the residential property market has also seen double-digit growth across different price points. The affordable sector grew 14.5% in the first half of 2018, midscale rose by 12%, while the high-end sector went up by 12%.
Santos Knight Frank said majority of buyers were investors seeking capital appreciation and leasing opportunities. Gaming companies are also seen to be driving demand, as the company noted that a large volume of availed inventory was purchased for the housing of Chinese gaming companies’ employees.
“Buyers from South Korea, Japan and China – three of the top sources of foreign arrivals in Cebu – are reported to purchase bulk condominium units,” the company said.
Given the development in Cebu, Santos Knight Frank expects other cities in the Visayas region to follow suit, betting on Iloilo and Bacolod, which it noted is now seeing increased commercial and development activities through Iloilo Business Park, Bacolod Capital Corporate Center, and Bacolod Central Mall. -