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It’s not a secret that the Queen City of the South is a property hotspot. But this time, interestingly, seekers are flexing a pretty strong appetite for higher-priced properties.
According to the 2020 Property Outlook Report from Colliers International, mid-income condominium units, which are priced between P3.2 million to 5.99 million, are popular among Cebu home buyers and investors. In H1 2019, it represented 61% total take-up, higher than the affordable and economic condo market segments. The property experts predicted that mid-income projects will emerge more popular, dominating the market over the next three years.
Given this, we can’t help but ask, what’s driving Cebu’s rising purchasing capacity? What could be the reason behind the strong property demand? Here, we break down some possible factors:
Rise of Businesses
With businesses popping up, more employment opportunities are generated. And with people employed in stable jobs, they get to experience better buying power. In 2019, Cebu recorded more than 32,000 establishments, higher than 2018’s figures, which were at 30,000, as mentioned in this Business World report. The government was able to collect a total of P1.2 billion from the renewal period in January last year.
This year, doing business in the city is a lot easier. The city has a one-stop-shop for renewals, for one. At the same time, permits are now valid for two years, easing the burden of applications on entrepreneurs. Emerging businesses will contribute to more jobs in the market, giving people more stable income sources, which allow them to take up real estate investments.
Some of the thriving enterprises in Cebu include furniture production, information technology, and tourism-related ventures, from accommodations to tour packages down to souvenir shops and pasalubong centers. Needless to say, the real estate industry is booming. The huge venture of two property giants, SM and Ayala, alone is expected to generate two million direct and indirect jobs.
Influx of BPOs
The business process outsourcing (BPO) industry is worth singling out because it’s the biggest generator of jobs in the city. The sector recorded a 19 percent hiring growth from January to May last year. The average monthly salary of BPO workers ranges from P17,000 to P50,000. This can significantly add to the purchasing capacity of Cebu home seekers and investors alike.
The city continues to be an attractive BPO hub as it offers a massive pool of competent talents, a technology-empowered infrastructure, a competitive cost for doing business, and strong government support. Last year, the industry took half of the office supply in Cebu, and property experts project that it will continue to drive commercial property demand in the next few years.
Once again, with expanded business operations, this means more employment opportunities for people. Cebu IT Park and Cebu Business Park currently house the most number of BPO workers in the city.
Steady Flow of OFW Remittances
According to the report from Colliers International, overseas Filipino workers (OFWs) are among the most aggressive in buying mid-income properties. It’s reflective that hard-earned remittances are going to real estate. With funds from abroad continuing to pour in, the demand for property would grow stronger.
Last year, remittances were recorded at $30.3 billion for the first 11 months, a little more than four percent higher than the figures in 2018, which was at $29.1 billion.
While some OFWs are taking up property as primary residence, others are using it as a passive income source. Buying higher-priced units in Cebu’s business districts, they lease it out to professionals, entrepreneurs, and expats. In turn, this gives them stronger buying power for more real estate investments.
Availability of Loans
The willingness of financial institutions to lend money to people increases people’s buying power. With a line of credit, they can spend more and get the home of their dreams or venture into lucrative property investment.
Last year, Pag-IBIG Fund, the government-operated lending agency, released housing loans worth more than P5.3 billion in the Visayas region, including the province of Cebu. This resulted in buying over 4,000 properties. New lending firms are also popping up in the city, offering a range of products that suit different seekers’ and investors’ needs.
The real estate industry in Cebu is booming, particularly the mid-income condo segment, thanks to the public’s stronger buying power. With a positive outlook in the next few years, the sector is poised to become an even more attractive real estate powerhouse.