The influx of luxe: Cebu property market’s rising affluence
For property developers looking for massive residential potential outside Metro Manila, Cebu is an ideal and popular choice as it is home to affluent, experienced, and astute investors.
Over the past few years, we have seen developers launching and expanding their upscale and luxury residential projects in Metro Cebu. What’s encouraging is that these projects—worth at least P12 million per unit—are also recording very good take-up rates despite being among the most expensive, not just in Cebu, but also across the Philippines.
As I highlighted previously, upscale, luxury, and even ultra luxury horizontal and vertical projects are the preferred investments of affluent investors who want to cash in on residential developments’ capital appreciation potential. This, aside from the savvy Cebuano investors’ preference for elegance and opulence.
Colliers is optimistic that the market for upscale and luxury residential units in Cebu will increase moving forward. In 2023, these residential segments accounted for 30 percent of launches and 11 percent of take-up in Metro Cebu. But we expect these to increase as developers look for fertile grounds for their higher-priced residential developments outside Metro Manila.
Growing Cebu luxury market
The supply of upscale and luxury residential projects in Metro Cebu is relatively small compared to Metro Manila. But the demand is likely to be driven by local and overseas-based Cebuano investors looking for attractive investment prospects that are also viable hedges against inflation. Just like in Metro Manila, we see these investors banking on these projects’ price appreciation potential.
Among the notable developers that have launched upscale to ultra luxury projects in Cebu are Rockwell Land, AppleOne Properties, Ayala Land, Megaworld, Robinsons Land, and The Mont Property Group, the developer of The Rise at Monterrazas.
Viability of resort-themed projects
Colliers believes property firms planning to capture demand from the foreign market should explore the attractiveness of leisure-oriented projects, especially in Mactan.
Targeting tourists is a good strategy given that Cebu is among the most visited local destinations in the Philippines. With the Department of Tourism (DOT) targeting 7.7 million international visitors this year and 12 million in 2028, developers should aggressively market their resort-themed residential developments to international visitors.
Major property players such as Robinsons Land, Sta. Lucia Land, Filinvest Land, AppleOne, and Rockwell Land feature some of the popular resort and leisure-themed projects in Cebu. These projects are priced between P120,000 and nearly P600,000 and are recording very good takeup, ranging from 30 percent to 100 percent.
Latest data from Colliers Philippines further showed that these projects recorded healthy preselling price increases of as much as 50 to 60 percent compared to their launch prices.
Dissecting price appreciation potential
Colliers Philippines believes that prices of condominium units across the Philippines, including Cebu, will only rise moving forward.
Looking at a regional comparison of prices, it appears that Philippine capital values are barely scratching the surface. For instance, the more expensive projects in Asia on a per sqm basis range from $21,000 to $193,000.
In Metro Manila, the most expensive is at $13,600 per sqm (based on latest preselling projects officially launched) and in Cebu, about $10,500 per sqm.
In our view, the Philippine economy’s sustained growth in the near term is just one of the primary factors that will likely propel residential prices.
Metropolitan areas like Cebu already have an established demand base for upscale and luxury projects and this will only expand given the workforce’s rising affluence. This will also be partly supported by the fact that the Philippines also enjoys a demographic sweet spot, or having a high percentage of young and mobile workers actively contributing to the region’s economy.
Aside from the upside brought about by developments’ proximity to infrastructure, prices will likely be influenced positively by the proliferation of residential projects boasting of connectivity, live-work-play-shop lifestyles, high-end amenities, and topnotch concierge services. These are features and services that definitely rank high on high-value investors’ totem pole of preferences for their next residential investment.
The demand for amenity, safety, security, connectivity, and proximity to business districts should ensure the influx of luxe in Cebu beyond 2024.
