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RESEARCH
METRO CEBU REAL ESTATE SECTOR REVIEW
METRO CEBUMARKET UPDATE 2H 2018
CEBU REGAINS ATTRACTIVENESS AS A GO-TO SPOT FOR BUSINESS AND LEISURE ACTIVITIES
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investments is noted in the fringesand surrounding cities. A great dealof business and investmentsactivities have been detected inMandaue City in particular. Theproperty sectors in Mandaue wereperceived to be growing at aremarkable rate, following the lowvacancies and almost full saturationof Cebu City.
Aside from boasting of a goodbusiness environment, Cebucontinues to attract local andforeign tourists with the variousleisure activities that could be donein the area, especially in Lapu-LapuCity where the picturesque beachesand resorts are located. In addition,to complement the growing numberof hotels, resorts and other forms ofaccommodations, lifestyle shoppingcenters rise in volume to meetdemand by local and foreign guestsfor added recreation, shopping, anddining options.
Exciting investment prospectsabound Metro Cebu, backed by thecontinuously growing local andregional economy, newly openedMactan-Cebu International Airport(MCIA) and other proposedgovernment infrastructuredevelopments. Bridges designed toconnect Cebu to the other nearbyislands, such as Bohol and Negros,are expected to further enhance theease of doing business betweenMetro Cebu and adjacent areas. Inaddition, road networks in thepipeline will facilitate a smoothertravel experience from Danao City inthe north and Naga City in thesouth, to Metro Cebu, which willresult to faster and more efficientbusiness transactions. Investors aretherefore highly encouraged to takeadvantage of the manyopportunities and become anessential contributor to the ever-developing Metro Cebu propertymarket.
COVER | Investments and Tourism further drive Metro Cebu’s growth in the second half of 2018
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Heavy business and constructionactivities in Metro Cebu areprimarily observed in three of thearea’s major cities, Cebu City,Mandaue City and Lapu-Lapu City.Cebu City has consistently beenone of the preferred outsourcingdestinations in the world. Comingfrom the 12th spot in 2017, CebuCity rose a level up to the 11th spotof the latest Top 100 Super Citieslist released by Tholons, arenowned international strategicadvisory firm. The competitive talentpool and cheap labor cost remainas major considerations in choosingCebu City over other locations.Moreover, the digital transformationof Cebu led by the local IT-BPMsector and the lined-upinfrastructure developments weresignificant factors in the city’simproved positioning.
Cebu City demand has causedsevere congestion in the city coresuch that an increased level of
Source: Tholons
CEBU OFFICE SECTOR ENDED 2018 ON ANOTHER HIGH NOTE
3
Office | Investors displayed sustained optimism in the office market
Numerous construction works,influx of new office space supply,and growing modern trendscharacterized the Metro Cebu officemarket as it closed 2018. Investorsare looking forward to the largeoffice supply for completion in thecoming years.
NEW SUPPLY
Recent building completions andhandovers resulted to a 14.40% or106,253-square meter increase inMetro Cebu’s total office stock(from the first half of 2018). As ofthe end of 2018, Metro Cebu’saggregate supply was recorded at844,377 square meters of officeGross Leasable Area (GLA). 12.58%of this was identified as new supply.
In Cebu Business Park (CBP), threenew buildings went online in thesecond half of 2018, adding 36,993square meters of office space to thetotal GLA in the area. MDCTBuilding and Tech Tower launcheda combined total of 20,228 squaremeters of office space, specificallysuited for Business ProcessOutsourcing (BPO) companies. Onthe other hand, BPI CebuCorporate Center, with a GLA of16,765 square meters caters totraditional office occupiers.
The total office stock in Cebu ITPark (CITP) increased by 40,203square meters, following thecompletion of Filinvest CebuCyberzone 2 and HM Tower. Thetwo office buildings targets BPOcompanies.
Areas in the fringes of CBP andCITP likewise documented anincrease in total office supply. Newbuildings in the fringes added29,056 square meters of GLA to thetotal office stock outside the majorbusiness districts of Metro Cebu.Newly completed buildings in thefringe areas include The Spacealong AS Fortuna and NorthparkBuilding along UN Avenue inMandaue City, and Pacific WorldTower in Megaworld Corporation’sMactan Newtown in Lapu-LapuCity.
VACANCY & ABSORPTION
Office vacancy in Metro Ceburemained below 10% in the secondhalf of 2018, despite the significantincrease in office supply. The 7.87%vacancy rate signifies a healthydemand for office space, which ismainly driven by BPO companies.Moreover, the Metro Cebu vacancyrates have been on a downwardtrend for the past 3 years,notwithstanding the constantincrease in office stock summing upto 258,531 square meters since the1st half of 2016.
CBP’s vacancy rate wasremarkable at 2.35%, as it retainsits position as the leading businessdistrict in Metro Cebu. The vacancyrates of CITP and fringe areas were8.5% and 12.16%, respectively.Although above 10% in the secondhalf of 2018, the vacancy rate ofoffice buildings in the fringe areasessentially dropped from 17.32% inthe first half of 2018.
During the second half of 2018,Metro Cebu’s net absorption wasrecorded at 101,141 squaremeters. The net absorptions ofoffice buildings in CBP and fringeareas were a few square metersshort of 40,000 at 39,885 squaremeters and 39,945 square meters,respectively. CITP’s net absorption,on the other hand, was 21,311square meters, significantly higherthan 8,884 square meters in thefirst half of 2018.
LEASE RATES
Metro Cebu’s overall weightedaverage asking lease rate passedthe PhP600-mark in the second halfof 2018. Rents in Metro Cebu roseto 11.82% half-on-half (h-o-h) and14.20% year-on-year (y-o-y) toPhP613.15 per square meter permonth. Developers and landlordswere able to command higher rentsdue to the robust office demandand dwindling supply in MetroCebu. Moreover, the superiorquality, innovative design and betterhandover conditions of leasablespaces enabled a number oflessors to exact higher rents, pullingup the weighted average rents inthe area. Handover condition ofunits vary from bare-shell to warm-shell, extending to fully-fittedspaces.
CBP continued to record thehighest weighted average lease rateamong the Metro Cebu businessdistricts at PhP689.16 per squaremeter per month. Rents in CBPgrew 9.82% from the first half of2018 and 16.19% from the sameperiod last year.
Cebu IT Park documented aweighted average lease rate ofPhP632.99 per square meter permonth, corresponding toescalations of 11.65% h-o-h and14.47% y-o-y.
FIGURE 1Total Metro Cebu Office Stock (sq.m.)
Source: Santos Knight Frank Research
Page 3
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
CebuBusiness
Park
Cebu ITPark
FringeAreas
H2 2017 H2 2018
within 2019. Central Bloc Tower 1will rise above the Ayala MallsCentral Bloc to maximize the use ofthe roughly 2.5-hectare land insideCITP.
RISE OF MIXED-USE DEVELOPMENTS
Since Metro Cebu’s major businessdistricts are almost at full capacity,property developers shift to thefringe areas and develop mixed-useprojects that are self-sufficient andsustainable.
Base Line Center of CebuLandmasters, Inc sits on a 1.6-hectare land along Juana OsmeñaStreet. Base Line HQ is a 21-storeyoffice development that will offer4,700 square meters of office GLAand 5,900 square meters ofleasable retail.
Soon to rise in Mandaue, AstraCorporate Center will introduce28,000 square meters of office GLAto the market. It is the officecomponent of a 1.2-hectare mixed-use development, Astra Centre,which is situated along AS FortunaStreet.
In the North Reclamation Area,Robinsons Land Corporation hasthe 18,848-square meter CybergateGalleria Cebu in the presentpipeline. It will complete the 4.7-hectare Robinsons Galleria CebuComplex of integrated componentssuch as existing BPO offices,Summit Hotel Cebu and GalleriaResidences Cebu.
Ayala Land and Aboitiz Land’s jointventure development, GatewalkCentral, is a well-anticipated projectin Mandaue City. To be situatedbeside the upcoming Ayala MallsGatewalk Central is the 20,000-square meter Gatewalk CentralBPO building.
Megaworld Corporation’s MactanNewtown is the main business areain Lapu-Lapu City. The 28.8-hectare mixed-use development
will be comprised of a shoppingmall, an educational institution,hotel developments, residentialcondominiums, and a series ofoffice buildings, which are alreadycatering to BPO as well asPAGCOR-enabled occupiers. Allexisting office projects in MactanNewtown are completely leased outto international occupiers.Furthermore, Megaworld plans toconstruct 2 additional officebuildings in the remaining 6,000square meters of vacant land withinthe development.
Rents in the fringe areas remainedmost affordable at a weightedaverage of PhP529.39 per squaremeter per month. Althoughrecording the cheapest weightedaverage lease rate in Metro Cebu,rents in the fringe areas continuedto increase at rates of 13.17%semi-annually and 8% annually.
UPCOMING OFFICES
Approximately 520,000 squaremeters of office space will be addedto the Metro Cebu office supplywithin the next 3 years. Severalmixed-use developments will behighlighting new officedevelopments, boosting MetroCebu’s office stock to more than1,000,000 square meters by theend of 2019. About 170,000 squaremeters of office GLA will becompleted within the vicinity ofCBP. Notable Grade Adevelopments such as LatitudeCorporate Center, One Montage,JEG Tower, Johndorf Tower, 1NitoTower, and PNB Cebu Tower arepresently in the CBP office pipeline.
Developments by Ayala Land,Skyrise and Arthaland will create192,000 square meters of leasableoffice space in CITP. SkyriseRealty’s Skyrise 4 Tower B andAyala Land’s Central Bloc Tower 1are scheduled to be completed
BPI Cebu Corporate CenterSource: Alveo Land
Astra CentreSource: Cebu Landmasters
FIGURE 2 Upcoming Office Supply in Cebu as of H2 2018
Source: Santos Knight Frank Research
Page 4
32%
37%
31%
Cebu Business ParkCebu IT ParkFringe Areas
GROWING CO-WORKING MARKET
The market for shared office andco-working space has developed inMetro Cebu. Various internationalco-working players already set footin Metro Cebu. ASpace, Regus,and iiOffice, which are knownworkspace solutions providers inMetro Manila, continue supplyingshared office spaces in CBP, CITPand fringe areas, respectively.Moreover, well-known internationalco-working player, “WeWork”,announced expansion plans inMegaworld’s Mactan Newtown.
The Company from Fukuoka, Japanis a new co-working player, openinga branch in the newly-operationalHM Tower in CITP. A day pass inThe Company is priced at PhP400per seat.
Local and homegrown players,such as King Properties, startedproviding co-working options tobusiness start-ups, freelancers, andyoung professionals. Avant Officesin Avenir Building, located alongArchbishop Reyes Avenue, haslaunched co-working spaces withdaily rates starting at PhP700 perseat.
FIGURE 3Weighted Average Lease Rate per CBD (PhP/sq.m./mo.)
0
100
200
300
400
500
600
700
800
CebuBusiness
Park
Cebu ITPark
FringeAreas
H2 2017 H2 2018
FIGURE 4Weighted Avg. Lease in Metro Cebu Rate (PHP) vs. Rental Growth Rate (%)
-2%
0%
2%
4%
6%
8%
10%
12%
14%
0
100
200
300
400
500
600
700
H12014
H22014
H12015
H22015
H12016
H22016
H12017
H22017
H12018
H22018
Lease Rate Growth Rate
Source: Santos Knight Frank Research
Source: Santos Knight Frank Research
Co-Working SpaceSource: iiOffice Cebu
Regus OfficeSource: Regus Cebu
Page 5
30.6%
59.2%
10.2%
High-end Mid-end Affordable
INVESTOR-DRIVEN DEMAND FORTIFIED CEBU'S RESIDENTIAL SECTORResidential | Industrial projects seen to propel demand
5
The Metro Cebu residential sectorcontinued to exhibit optimisticmarket sentiments in the secondhalf of 2018, as evidenced by therobust demand coming from bothlocal and foreign investors. Thethriving IT-BPO industry andexpanding PAGCOR-enabledcompanies resulted to an influx ofexpatriates looking for employeehousing in Cebu. Overseas FilipinoWorkers (OFWs), who are lookingfor retirement options andinvestment opportunities in realestate properties, likewisecontributed to a faster residentialtake-up. Overall take-up rate inMetro Cebu reverted to doubledigits at 11.8 units per month,coming from 9.4 units per month inthe previous half. Of the total unitsfloated in the market, 92.5% wereabsorbed as of the end of 2018,higher than the 88.7% in June2018.
TAKE-UP AND ABSORPTION RATES
Mandaue City realized the highesttake-up rate in Metro Cebu at anaverage of 51.1 units per month.The city is getting renewedattention from investors and end-users with the construction ofvarious infrastructure projects. Thefirst phase of the proposed MetroCebu Expressway, which isscheduled to be completed by2022, will traverse Mandaue Cityand Cebu City. The secondunderpass project along UN Avenueis another infrastructuredevelopment in the pipeline,designed to minimize travel timefrom Mandaue City to Mactan-Cebu International Airport (MCIA).
Cebu City followed Mandaue City interms of take-up rate. The averagetake-up of residential projects inCebu City was pegged at 7.7 unitsper month. Of the 31,875 unitsfloated, 91.9% were already sold.
Given the limited available supply ofresidential units in Lapu-Lapu City,the take-up rate in the area hasslowed to an average of 3.5 unitsper month. Nevertheless, thedemand should strengthen as themarket looks forward to the Cebu-Cordova Link Expressway, the thirdbridge connecting Cebu City toMactan Island. The roadinfrastructure is set to beoperational by 2021. New projectlaunches are expected in order tocater to the generated demandfrom improved accessibility uponcompletion of the new expressway.
Property developer PrimeworldLand has stated the company’sintention to invest in the city bymaster planning a new residentialcomplex to be named PrimeworldDistrict. The project will feature 7residential condominiums and 36private villas that will add 2,023units to the total residential stock inLapu-Lapu City.
In addition, affordable residentialprojects are less common in MetroCebu at present. Propertydevelopers chose to compete in thehigh-end playing field, where themarket has been identified.
FIGURE 5Allocation of Condominiums per Classification
Source: Santos Knight Frank Research
FIGURE 6Average Monthly Take-Up Rates per Classification (Units)
Source: Santos Knight Frank Research
FIGURE 7Indicative Average Prices per Area (PhP/sq.m.)
Source: Santos Knight Frank Research
Page 6
58,757 67,741 62,545 72,28986,399 86,957
139,172 143,553178,327 174,569
196,813
253,678
0
50,000
100,000
150,000
200,000
250,000
300,000
2H 2017 2H 2018 2H 2017 2H 2018 2H 2017 2H 2018
Mandaue City Cebu City Lapu-Lapu City
▲15.4%▲8.5%
▲20.3%
19.2
9.17.3
0.0
5.0
10.0
15.0
20.0
25.0
High-end Mid-end Affordable
NEWLY-LAUNCHED PROJECTS
The booming residential market inMetro Cebu led to a number of newproject launches. In the second halfof 2018, homegrown developerPriland Development Corporationlaunched projects in Lapu-LapuCity and Cebu City. Paseo Grove inLapu-Lapu City targets employeesfrom export processing zones andindustrial parks. In Cebu City,Vertex Central added 701residential units to the total supplyin the area. The project will beconstructed along ArchbishopReyes Avenue. The buildingcompletion is slated in 2022.
Moreover, Cebu Landmasters, Inc.started the pre-selling of One AstraPlace within the Astra Centre inMandaue City. Fifteen floors of themixed-use development will beresidential floors, offering a total of478 units.
Furthermore, after completelyselling out its first residential project,Cebu-based developer Sunkai Landrecently launched Sun Park RoyalHotel and Residences. The mixed-use tower is located along JuanLuna Avenue in Mandaue City. Atotal of 448 units, to be comprisedof studio, one-bedroom, and two-bedroom units, will be availableupon its completion in 2022.
NOTABLE TREND
Similar to Metro Manila, townshipdevelopments and mixed-useprojects have gained popularity inMetro Cebu. Due to the furtherworsening traffic situation in Cebu’smajor cities, residents startedseeking the convenience of livingproximate to the workplace andretail establishments. Severalmixed-use components are beingincluded in the master planning ofprojects to create a sustainabletownship.
To be continued on page 12
High-end absorption rate rose to98.3% in the second half of 2018from 80.8% in the previous half.High-end developments continuedto have the highest take-up rate,averaging at 19.2 units per month.
In terms of unit type, studio unitsremained the preferred unit type,especially by investors capitalizingon the sizable rental market inMetro Cebu.
SELLING PRICE
The robust demand for residentialunits enabled property developersto increase the selling prices acrossMetro Cebu. Mandaue Cityexperienced the highest half-on-halfgrowth in prices at 14.9%, followingthe remarkable take-up rate ofresidential projects in the area. Theperformance of the newer projectssignificantly pulled up the sellingprices in Mandaue. The less than1% growth from the 2nd half of 2017to the 1st half of 2018 soared to analmost 15% growth from the 1st halfof 2018 to the 2nd half of 2018.Selling prices in Mandaue currentlyrange from PhP67,741 toPhP143,553 per square meter.
Although Mandaue documented thehighest h-o-h growth, y-o-y growthwas greatest in Lapu-Lapu, wherey-o-y price escalation was at20.3%. Lapu-Lapu demandremained strong while supplycontinued to dwindle, allowingconsiderable price increases.Selling prices in Lapu-Lapu Cityranged from PhP86,957 toPhP253,678 per square meter.
Cebu City maintained a steadyincrease in prices in the second halfof 2018, growing 8.5% y-o-y and2.2% h-o-h. Minimum price in thecity was pegged at PhP72,289 persquare meter while maximum pricewas recorded at PhP174,569 persquare meter.
Source: SunKai Land
Sun Park Royal
Mandani Bay Quay Towers
Source: Mandani Bay
Page 7
Holdings Inc., a subsidiary of AyalaLand Inc (ALI).
In Mandaue City, Gatewalk Centralis a much-awaited mixed-usedevelopment that will include ashopping mall as one of its majorcomponents. Ayala Malls GatewalkCentral will add 115,000 squaremeters of mall GLA to Metro Cebu’spresent retail supply. The LandmarkDepartment Store,
with known branches in AyalaCenter (Makati), Trinoma (QuezonCity) and Festival Mall (Alabang), willserve as the mall’s main anchor.
LEASE RATES
The lease rates of Ayala CenterCebu and SM City Cebu wereamong the highest of the MetroCebu shopping malls, ranging fromPhP1,000 per square meter permonth to PhP1,200 per squaremeter per month. Both mallsdisplayed the highest foot traffic inCebu due to their strategic locationand variety of brands available.
Ayala Center Cebu is within CBP,which is Metro Cebu’s leadingbusiness district, while SM CityCebu is in one of the busiest partsof Cebu City’s North ReclamationArea. Retail demand is primarilygenerated from the local workforceand business travelers. RobinsonsCybergate and Robinsons Fuente,along the Fuente Osmena Circle,likewise commanded rents fromPhP1,000 per square meter permonth to PhP1,200 per squaremeter per month. The large numberof visiting guests staying in varioushotels and local residents in thearea created a strong retaildemand.
The lease rates of RobinsonsGalleria Cebu and SM Seaside,which are located in other parts ofCebu City, started from PhP800 persquare meter per month and wentas high as PhP1,000 per squaremeter per month. Moreover, theaverage lease rates of shoppingmalls in Mandaue City ranged fromPhP800 per square meter permonth to PhP900 per square meterper month.
VACANCY RATES
Robinsons Galleria Cebu had thehighest vacancy rate among all theMetro Cebu shopping malls at11.74% in the second half of 2018.Nevertheless, it has the largestnumber of interesting upcomingbrands, comprised of restaurantsand eyewear shops such as Savory,Max’s, Wingers Unlimited, SunniesStudios and Sarabia Optical,foreseen to draw mall goers andsubsequently attract additional malltenants.
Ayala Center Cebu, which came insecond in terms of vacant spaces,
To be continued on page 12
As Metro Cebu continues to attracttourists, investors and firms, thelocal retail industry experiencedsustained growth in the second halfof 2018. Metro Cebu’s retail sectorremains mainly comprised ofneighborhood malls andcommercial strips. However, itpresently boasts of 3 regionalshopping centers, with a combinedGLA of approximately 850,000square meters.
UPCOMING MALLS
Metro Cebu anticipates the openingof additional shopping malls in 2019and the coming years. A newshopping haven is set to rise in theheart of IT Park this 2019. TheAyala Malls Central Bloc will havefive floors of retail space completewith an indoor activity center, asupermarket, four cinemas, andvarious food choices. The featuresand layout of the mall are similar tothe Ayala Malls in Manila. AyalaMalls Central Bloc will be adding45,000 square meters of leasablespace to the retail portfolio of Cebu
CEBU RETAIL SECTOR REMAINS ROBUST WITH INCREASED ACTIVITIES IN THE AREARETAIL | Consumer demand heightens as Cebu welcomes more local and foreign guests
Central Bloc OneSource: Cebu Holdings
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Industrial | Developers seek new opportunities by operating industrial hubs
7
The Philippine economy posted a6.1% growth as of the fourthquarter of 2018. The industrialsector contributed 34.8% to thecountry’s GDP. Under the sector,manufacturing grew by 3.2% year-on-year, with food manufactures asthe main contributor, growing 4.3%.
Cebu is recognized as one of themajor producers of goods in thecountry. Cebu is known forindustrial parts assembly, foodprocessing, and manufacturing offurniture, stonecraft, garments,fashion accessories, electronics,camera and camera paraphernalia,gifts and housewares (GTH),electrical equipment manufacturing,coal, and dolomite mining.
Metro Cebu contains 12% of thePhilippine Economic ZoneAuthority’s operating economiczones in the country. It has oneagro-industrial economic zone,thirty-five IT Parks and Centers,seven manufacturing economiczone, and two tourism economiczones. Cebu Light Industrial Park,and Mactan Economic Zones 1 and2 are three of the major economiczones located in Lapu-Lapu City.They have a combined total area of253 hectares and currently houses
247 locators. 43,133.46 squaremeters of Standard Factory Buildingspace are available for lease inthese economic zones as of theend of 2018.
Due to the limited number ofavailable spaces in Metro Cebu,asking rents of industrial propertiesoutside economic zones increasedfrom a maximum of Php250 persquare meter per month in the 1sthalf of 2018 to a ceiling of PhP700per square meter per month in the2nd half of 2018.
In addition, the short supply ofleasable industrial space has urgedproperty developers to invest in thedevelopment of industrial hubs.
Priland Development Corporationplans to diversify its real estateportfolio and develop a 42-hectareproperty in Consolacion, Cebu intoan industrial park. The project willhouse factories, warehouses forlease and lots for sale.
CentralHub Industrial Centers, Inc.(CICI), a subsidiary ofDoubleDragon Properties,announced the construction of its3rd industrial hub in Cebu. Futuresites previously identified includeCentralHub Cebu and CentralHubIloilo. The newest location will havean initial area of 5.2 hectares and27,212 square meters of industrialwarehouse capacity.
Page 9
NEW DEVELOPMENTS TO SUSTAIN THE GROWING CEBU INDUSTRIAL SECTOR
General Milling Corporation
CentralHubSource: DoubleDragon Properties
CEBU HOSPITALITY SECTOR ENHANCED BY BOOM IN THE LOCAL TOURISM INDUSTRYHospitality | Rising guest arrivals created significant demand for lodging and accommodation
8
In the full year of 2018, CentralVisayas recorded a 16% year-on-year growth in visitor arrivals. Theregion welcomed roughly over 8Million guests compared to 2017’s6.9 Million local and foreignguests. Introduction of additionaldirect flights and increase inoverall passenger capacity wereresults of the opening of the CebuMactan International Airport in Julyand the Bohol-PanglaoInternational Airport in November.The extensive marketing effortsput forth by the country’sDepartment of Tourism (DOT) andother independent organizationsare likewise considered factors tothe rise in visitor arrivals.
The Province of Cebu contributed77% of the foreign guests thatarrived in Central Visayas in 2018.Cebu is well-known for festivitiessuch as the Sinulog Festival,religious tourist areas such as theSimala Shrine and Basilica MinoreDel Sto. Niño, dive spots such asOslob and historical sites such asthe Magellan’s Cross.
Cebu’s visitor arrivals amountingto 2,805,115 guests is a far outcryfrom Bohol’s 646,082, NegrosOriental’s 116,310 and Siquijor’s66,738. Cebu Province likewiseled in terms of domestic visitorarrivals, accounting for roughly62%, equivalent to 2,770,781visitor arrivals, of the local travelersthat entered the region. The restof the Central Visayas provincescollectively comprised theremaining 38% or 1,685,270visitor arrivals.
Cebu international visitor arrivalsremained dominated by SouthKoreans, with 1,344,154 arrivalsin 2018. Chinese arrivals rose
45% in 2018, increasing from429,306 visitor arrivals in 2017 to621,993 visitor arrivals in 2018.Other notable visitor arrivals werefrom Japan, US and Taiwan.
The cities of Cebu and Lapu-Lapuplaced first and second,respectively, in terms of foreignand local visitor arrivals in
Central Visayas. A combined total of4,276,680 visitor arrivals were notedin the 2 cities. Lapu-Lapu had a largerratio of foreign to local travelers at7:2, which is in contrast to Cebu’s 1foreigner for every 2 local guests.
DOT forecasts an influx of 8.2 millionforeign visitors in the Philippines in2019, with approximately 800,000
Source: Santos Knight Frank Research
Page 10
Cebu69%
Bohol18%
Negros Oriental
11%
Siquijor2%
FIGURE 8CV Distribution of Tourists in 2018
Basilica Minore del Santo Niño Magellan’s Cross
coming from Japan. Various airlinesrecognized the growing volume ofpassenger demand and proposedstrategies to take advantage of theforeseen business opportunities.
Cebu Pacific, a Philippine-basedbudget airline, maps additionalinternational routes from Cebu toJapan and vice versa, consideringthe 1.1 million passenger volumereported in 2018. The airlinepresently offers flights to 21domestic and 5 internationaldestinations from Cebu thatincludes Narita.
Philippine Airlines, the country’s flagcarrier, plans to expand Cebuoperations by increasing thefrequency of its Cebu–Nagoya routefrom 4 flights per week to dailyschedules.
Air Asia Philippines, anotherPhilippine-based budget airline, islaunching Cebu–Macau directflights in February 2019 as part ofthe company’s long-term expansionplan of promoting Cebu as animportant hub for tourism andbusiness.
HOSPITALITY SECTOR’S HEYDAY
Metro Cebu’s hospitality sectortargets vacationing tourists andparticipants of Meetings, Incentives,Conventions and Exhibitions/Events(MICE). In October, a 90s boybandheld its 20th Anniversary “Reunion”Tour Concert in Waterfront CebuCity Hotel & Casino. In November,the Asian Carriers Conference 2018was held at Shangri-La MactanResort and Spa.
A huge supply of hotels and otherforms of accommodation cater tothe demand originating from thetourism boom in Metro Cebu. Cebuhas a wide variety ofaccommodations available, frombudget-friendly inns and taverns,luxurious 5-Star hotels and relaxingresorts with access to the Mactanbeaches. With more than 12,000accommodation rooms spreadacross the cities of Cebu, Mandaueand Lapu-Lapu, Metro Cebu pridesitself of being a major player in thecountry’s hospitality market.
Overall weighted Average DailyRates (ADR) in Cebu and Mandaueranged from PhP3,300 to PhP3,900across all room types. The ADR ofstandard rooms was more thanPhP1,500 while the ADR of suiterooms averaged from PhP4,600 toPhP7,100.
Hotel rooms in Lapu-Lapucommanded a higher tariff, with anADR of more than PhP9,500.Standard rooms in Lapu-Lapu hadan ADR of more than PhP3,300while the ADR of suite rooms waspegged at PhP15,400.
In Cebu City, deluxe and suiterooms of 5-Star hotels had aweighted ADR of PhP3,600 andPhP6,700, respectively. In Lapu-Lapu, however, deluxe and suiterooms reached a weighted ADR ofPhP10,100 and PhP20,000,respectively.
To be continued on page 12
South Korea37%
China17%
Japan13%
US6%
Taiwan2%
Other Nations
25%
FIGURE 9Foreign Tourist Arrivals in CV
Source: Santos Knight Frank Research
FIGURE 10Metro Cebu Room Average Daily Rate (PhP)
Source: Santos Knight Frank Research
FIGURE 11Metro Cebu 5-Star Average Daily Rate (PhP)
Source: Santos Knight Frank Research
Pacific Cebu Resort’s BeachfrontBai Hotel Cebu New Fortune Garden Hotel
Page 11
0.00
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00
Cebu Mandaue Lapu-Lapu
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
Deluxe Suite
Cebu Lapu-Lapu
Continued from Retail…
had a vacancy rate of 4.18%, lessthan half of Robinsons GalleriaCebu’s vacancy rate.
Metro Supermarket, which suffereda devastating fire during the earlymonths of 2018, is scheduled toreopen on the first month of 2019.Metro Retail Stores Group, Inc.(MRSGI) plans to initially open thesupermarket and targets thereopening of the rest of Metro AyalaCebu by mid-2019.
NOTABLE EXISTING BRANDS ANDPLANNED EXPANSIONS
The Cebuanos continued tosupport homegrown brands whileforeign guests wished to try outCebu original brands and products.Supplying the region's caffeine fix isBo’s Coffee, founded in 1996 by aCebu local, Steve Benitez. It nowhas over 100 branches all over thecountry, mostly in Visayas andMindanao. Bo’s Coffee importscoffee beans from Sagada,Benguet, Mt. Kitanglad, Mt.Matutum, and Mt. Apo. The brandis common in Cebu shoppingcenters to the point of having morethan 1 store in a single shoppingmall.
Another brand with a well-established presence in Cebu isBubble Tea Station. It was foundedby a Cebuana, Meyan Lim Young.Bubble Tea Station has stalls inRobinsons Galleria Cebu, SM CityCebu, and SM Seaside City. Theremarkable Milk Tea phenomenonhas extended to Cebu withnumerous store launches in variousshopping malls.
It is likewise common for popularbrands in Manila to expand toMetro Cebu and experience thesame level of popularity,acceptance and patronization fromthe local and foreign market. Afterthe good public reception when itwas launched in Manila last Augustof 2018, Sunnies Face, thecosmetics line of Sunnies Studiosand Specs, is opening twobranches in Cebu. One will be inAyala Center Cebu and the otherstore will be in SM City Cebu.
Continued from Hospitality…
UPCOMING HOTEL SUPPLY
The hospitality sector in Cebu willcontinue to expand as local andinternational hotel brands areconstantly introduced across theMetro. Brgy. Punta Engaño in Lapu-Lapu , where a number of resortsare located, is set to see another1,600 rooms within the next 5years. Some of the upcoming hotelsin the area include Dusit ThaniMactan, owned by Robinsons Landand managed by Dusit Hotels &Resorts, Udenna Development’sEmerald Resort and Casino,Sheraton Cebu Mactan Resort byApple One Properties and RockwellLand’s Aruga Resorts andResidences Cebu.
Megaworld’s Mactan Newtown isscheduled to open more than 500rooms, with the launching of SavoyHotel Mactan Newtown within2019. Another 550 additional roomsare anticipated in the next 2 yearswith the unveiling of MactanBelmont Luxury Hotel.
In addition, Cebu City will beembracing its own ring of hotels invarious parts of the city, includingthe Holiday Inn Cebu(InterContinental and ErawanGroups) and Minore Centre & Hotel(Duros Land Properties) in CBP,Dusit Princess Cebu and Sun ParkRoyal Hotel in the NorthReclamation Area and CitadinesCebu (Cebu Landmasters Inc.) inthe Fuente Osmeña area.
Moreover, Mandaue will bewelcoming a well-known hotelbrand inside the Astra Centre.Radisson Red, operated by theRadisson Hotel Group, is set toopen its doors in 2021 with 146rooms. The brand marketing isdirected towards the millennialmarket.
Continued from Residential…
Mactan Newtown, MegaworldCorporation’s first majordevelopment outside Metro Manila,carries a “LIVE-WORK-PLAY-LEARN and BEACH” concept.Aside from offices, hotel, lifestylemall, and educational institution,residents can also enjoy thedevelopment’s exclusivebeachfront. 8 Newtown Boulevard,One Manchester Place, and OnePacific Residence are high-endcondominiums that form theresidential component of thetownship.
To address the rising demand forresidential units in the area,Megaworld Corporation recentlyintroduced another high-end towerin Mactan Newton. La VictoriaGlobal Residences was inspired bythe Spanish Galleon that FerdinandMagellan used to circumnavigatethe earth. The 20-storey tower willoffer 181 units of varying cuts,starting from studio to three-bedroom units.
City di Mare is a notable existingtownship located along South RoadProperties in Cebu City and is thefirst township developed by Filinvestin the Visayan Region. This 50-hectare coastal township includesexisting residential towers, anupcoming shopping mall and lined-up office buildings. Two multi-towerresidential projects are selling in Citydi Mare at present. Sanremo Oasisis a midrise condominium complexoffering studio and two-bedroomunits. Amalfi Oasis, on the otherhand, sells fewer units per floor andlarger unit cuts in order to targethigh-end buyers.
Mandani Bay is another much-awaited mixed-use project in MetroCebu. It is a joint venture project ofHong Kong Land and TaftProperties, Inc. in the NorthReclamation Area of Mandaue. Thedevelopment is already on itssecond phase. Mandani Bay Quaycluster, which is composed of 3residential buildings and an officetower, commenced construction in2018.
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Metro Manila Market Update Q4 2018
Metro Cebu Market Update 1H 2018
Active Capital 2018
The Wealth Report 2018
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