View of the historic Cebu Cathedral.
A strong economy, booming tourism industry and fast-growing property market are drawing foreign investors to the “second city” of the Philippines.
By Romesh Navaratnarajah
A growing number of foreign investors are looking to invest outside Manila, the Philippines’ capital, with Mandaue City in Cebu emerging as a hotspot, due to the region’s flourishing economy, rising population and hot tourism market, according to CBRE.
“Economy-wise, Cebu is one of the top performing provinces in the Philippines with an average annual GDP growth of nine percent in the last five years, 1.4 times higher than the whole country and the highest among 17 regions,” said the consultancy.
Its population, which is increasing by 2.2 percent per annum, is also projected to surpass 4.5 million this year and 5.2 million by 2020.
Tourist paradise
Located in the heart of the Visayas group of islands, Cebu is home to a number of stunning beaches and mountain resorts. Tourists are drawn to the white and sandy shores at Bantayan, Malapascua, Moalboal and Badian, while the mountains in Busay and Balamban are popular getaways.
Unlike the heavily congested capital, Metro Manila, the ambience of this province is more relaxing. It offers a mix of city life and island adventure, with resorts just a few minutes away, attracting tourists and foreign retirees alike.
Compared to Boracay, which is mostly dotted with resorts, Cebu is more cosmopolitan, due to the presence of shopping malls, established schools and Business Process Outsourcing (BPO) companies there. That’s why it is considered the capital of the Visayas region.
Vibrant market
Another reason it is on the radar of overseas investors is that condominiums there are still relatively affordable, with prices ranging from US$1,500 psm (S$2,036 psm) to US$3,000 psm (S$4,072 psm). In comparison, condo units in Metro Manila cost between US$2,400 psm (S$3,258 psm) to US$4,400 psm (S$5,973 psm).
Cebu’s condominium rental market is also vibrant, with studio and one-bedroom units sought after by professionals and students from other provinces, while expatriates and their families prefer larger apartments. Given the strong demand, yields for investors range from eight to 12 percent per annum, noted CBRE.
Moreover, developer sales of condo units have been growing by 11 percent per year. This is attributed to the strong local economy, influx of tourists and foreign retirees, the thriving BPO sector (which is creating more high-paying jobs), and the rising remittances from overseas Filipino workers.
In fact, developer sales rose to 5,000 units in 2014 from just 4,719 units in 2012, despite the fact that the number of launches fell from 6,925 units to 6,400 units over the same period.
Safest province
Security is also not an issue for foreign property buyers, as proven by the influx of tourists and foreign retirees, noted CBRE.
“Last year, the National Bureau of Investigation (NBI) declared Cebu as the safest province in all of the Philippines,” as there is very little political or civil unrest there.
Aside from that, it’s easy for foreign buyers to get financing, as most developers offer flexible payment terms. For instance, Singaporeans who want to buy units at the new Mandani Bay mixed-use development in Mandaue City can take advantage of the deferred cash scheme.
Under this scheme, they only need to pay a 20 percent down payment and monthly instalments for the next 47 months with zero interest. In addition, they can get a 10 percent discount on the property’s selling price. Thus, their monthly payments can be as low as US$950 (S$1,290) for a 30 sq m studio unit.
According to CBRE, overseas investors prefer condominiums that are easy to rent and resell, like studios and one- to two-bedroom units. In recent years, the consultancy has also noticed a shift in demand from low- to mid-range condos, due to rising incomes.
Property hotspots
When asked which is the best neighbourhood to buy a home, the consultancy identified Mandaue City as an upcoming residential hotspot, as the authorities plan to build a new IT park there due to the existing one being already 99 percent leased out thanks to robust demand from BPOs.
Meanwhile, the highly-anticipated Mandani Bay project occupies a waterfront site of approximately 20ha, with a prominent location between Mactan Island and Cebu Business Park, the home of Cebu International Airport and the major commercial areas in Cebu City.
“While Mandani Bay will be primarily residential, it will also comprise retail and office components that will come together to form a mixed-use urban community,” said Robert Wong, Executive Director of Hongkong Land, which is jointly developing the project with Cebu’s Taft Properties.
He added: “Hongkong Land has strong confidence in the future of Cebu and the Philippines and we believe this project will contribute positively to the city.”
Bright outlook, but restrictions remain
Many foreigners feel that now is the time to invest in the Philippines, in light of the high marks given by two major global credit rating agencies.
Last year, Standard & Poor’s gave Philippines its highest ever long-term rating for sovereign credit, while Moody’s concluded that the government’s Baa2 bond rating reflects the resilience of its economy against the current headwinds faced by its neighbours and other emerging markets.
However, experts caution that foreign buyers are subject to restrictions. Although they cannot own land in the country, they can purchase freehold condo units under the Condominium Act or Republic Act 4726. But only up to 40 percent of the total units in a development can be purchased by non-citizens. Similarly, they can only own up to a 40 percent stake in a condominium developer.
Meanwhile, CBRE will be hosting a Cebu property showcase at Marriott Tang Plaza Hotel (Lengkuas Room) on the weekend of 28 and 29 May 2016, from 10am to 6pm. Seminars will be held on both days at 2pm, where Audrey G Villa of HTLand will be speaking about residential investment in Cebu.
Guests who pre-register for the event will receive a door gift when they purchase a unit.
For enquiries and registration, please contact Phyllis Tan at 8666 3111, or email phyllis.tan@cbre.com.sg
CITY FAST FACTS
(METRO CEBU)
Population: Approx. 4.5 million
Total area: 1,163 sq km
Currency: Philippine Peso
GDP per capita (Philippines): Approx. US$3,000
GDP growth (Philippines): 6.1 percent
Future transport: Extension of the Cebu Bus Rapid Transit (BRT) project
Condo prices: US$1,500 psm to US$3,000 psm
Distance from Singapore: Approx. 2,430 km
INTERNATIONAL HIGHLIGHT
A 20ha mixed-use waterfront project is set to transform Cebu into a world-class lifestyle destination.
NEW PROJECT
Mandani Bay
Mandaue City, Cebu, Philippines
Type: Mixed-use development
Developer: Hongkong Land and Taft Properties
Tenure: Freehold
Facilities: 25m lap pool, kids pool, barbecue pits, outdoor fitness area, playground, yoga deck
Nearby Key Amenities: Singapore International School, University of Cebu Medical Center, Parkmall, Cebu International Convention Center, Cebu Business Park
Nearest Transport: Mactan Cebu International Airport
Starting Price: PHP 2,800,000 (S$84,848)
Hongkong Land and Taft Properties are jointly developing this premium mixed-use project in Mandaue City, comprising 18 residential blocks, 120,000 sq m of retail space, and 120,000 sq m of office space.
Phase one, Mandani Bay Suites, features two blocks of 1,200 condominium units, offering magnificent views of Mactan Channel and of the mountains that rise up behind the city. Unit types include standard studio to three-bedroom units, as well as garden duplexes, townhouses and penthouses. The freehold project also provides a range of leisure and recreational facilities.
Located on a 20ha waterfront site, Mandani Bay Suites is close to Cebu Business Park, Cebu International Airport, and major commercial areas in Cebu City. The master-planned development will be launched over eight phases and is expected to be completed within approximately 15 years.
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