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Few bumps on the road for Cebu’s property sector

January 03, 2019
AMID the challenges the country faced in 2018, the property sector remained resilient and is expected to reap even more opportunities this year.

Industry stakeholders reported a healthy performance in 2018.

But despite the rosy outlook, they also pointed out some challenges this year, including the hike in interest rates, which could affect the buying momentum, or the decision to ramp up the expansion activities of developers.

“Rising interest rates could dampen low to mid-income residential demand over the next 12 to 24 months. We believe that a volatile interest rate environment could entice local developers to be more open to partnering with foreign firms,” said property consulting firm Colliers International Philippines, in a statement.

Scarcity of construction workers is another big challenge in the property market.

“(There is) increasing scarcity of skilled labor as real estate competes for the same labor requirements as Build Build Build and those going to work abroad. This puts pressure on the cost structure, as continuing problems on increasing land prices, and access to reasonably priced land still subsist,” said Marcelino Mendoza, president of Organization of Socialized and Economic Housing Developers of the Philippines.

The shortage of skilled labor has compelled Mandani Bay to invest in technology to assist them in some stages of construction.

Jeffrey Lun, project advisor of Mandani Bay, said they will use precast technology to make construction more efficient and less dependent on people.

“By next year, we will be needing 3,000 to 4,000 construction workers but as soon as we adopt to precast technology, the headcount might be around 3,500,” said Lun, adding that this is their strategy to lessen their dependence on human resources.

“With all the construction going on, everybody is fighting over these skilled workers,” he said.

Colliers, on the other hand, sees continued private construction delays due to the acute shortage of skilled workers and ramped up implementation of public infrastructure projects.

The speedy issuance of license to sell (LTS) is another area developers want to see progress this year.

“On the government side, the challenge is on how they could fast track the release of permits,” said Mandani Bay project director Gilbert Ang.

According to property marketer Anthony Gerard, about 90 percent of the projects for 2018 were not unveiled to the market because some developers were not able to meet some of the requirements, particularly on socialized housing.

“We want the government to at least relax their requirements so developers could build more given the big demand in the market,” said Leuterio. “As a marketer, we have run out of projects to sell,” he added.

Colliers said developers should also push for the timely completion of infrastructure projects that should help sustain the dynamism of the Philippine property market in the next 12 months.

The research firm noted right-of-way issues obstructing the infrastructure projects should be settled immediately, as this would help dictate developer strategies over the next three to six years.

Still, these are not enough to dampen the outlook for the property sector.

AppleOne Properties Inc. said it will continue to pour in investments this year by building mixed-use projects in Cebu.

Ray Go Manigsaca said they are bullish about Cebu’s potential to achieve high marks this year, following the unabated growth in tourism and business process management industries.

“We will bring in more foreign branded hotels, as well as explore the opportunities in the office and retail markets,” said Manigsaca.

Ang, likewise, sees a robust property sector in 2019, and healthy buying activities from both local and foreign buyers and investors.

Ang announced they will erect the office component of the 20-hectare mixed-use development this year. The team is also preparing the turnover of 1,200 residential units in March 2020.

“We remain bullish on our outlook for Cebu as we see positive acceptance of Mandani Bay’s residential projects in the market. There will be a lot of activities that will happen this year,” said Ang.

Mendoza said the (building) momentum will continue for middle to high-end developments in real estate, tourism and logistics sectors.

Leuterio said developers should brace for more buying activities this year, both from the local and foreign markets.

“Koreans, Japanese and Chinese are already eyeing the Philippine property market. Developers have to position well their projects because these are serious buyers,” said Leuterio.

However, he said that despite the buying from foreign nationals, developers shouldn’t forget tapping the strong overseas Filipino worker (OFW) market.

According to Leuterio, OFWs who have long worked abroad are now thinking about retirement or putting money into real estate as investments.

Foreign retirees, he added, are also scouting for locations where they can get higher value for their monthly pension funds.

“This is another opportunity for us. However, we need to build retirement facilities to snatch a pie of this market,” said Leuterio.

He believes the high take home pay and the expanding middle class should fuel the demand for residential projects.


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