Saturday, July 28, 2012

Rivalry in Cebu property market heats up


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THE Gokongwei family’s property arm is turning its attention back to Cebu City, where the clan’s business empire traces its roots, amid tougher competition from rival business families like Henry Sy’s SM Group, which is also aggressively expanding in that city.
Robinsons Land Corp. (RLC) said it started work on Robinsons Galleria Cebu, a seven-story mixed-use building in the North Reclamation area, which it claims is its largest commercial development outside Metro Manila.
Analysts said the move underscores Cebu’s growing importance as a tourism and outsourcing destination—a fact not lost on the country’s top builders seeking to take a bigger slice of the province’s booming growth. 
The island has recently diversified its economy to become a business process outsourcing (BPO) hub “second only to Metro Manila”with tax incentives and advanced telecommunications facilities helping to lure investments, said Claro Cordero Jr., head of research and valuation for Jones Lang LaSalle Leechiu, a property consultancy and brokerage firm.  
“This phenomenon has helped improve the general purchasing power of [Cebu’s ] local economy,” Cordero said in an emailed response on Thursday. “The general outlook is that the O&O [off-shoring and outsourcing ] companies are still likely to operate and expand in Cebu in the medium- to long-term.” 
Robinsons Galleria Cebu will include a 56,000 square meter (sqm) shopping mall, a 153-room gohotel.ph budget hotel, and business process outsourcing offices.  Slated for completion by 2014, it will have a gross floor area (GFA) of 156,000 sqm, but the master plan for the 4.6-hectare lot also includes residential condominiums, RLC president Frederick Go said in the statement.
The new project comes as RLC’s  closest competitors are building even larger shopping facilities. Sy-led SM Prime Holdings Inc. opened last month its second shopping mall in Cebu, called SM City Consolacion, with a GFA of  106,857 sqm. 
In 2014, its opens SM Seaside City Cebu, its biggest shopping center there, with a GFA of 241,600 sqm. SM Prime is also reportedly in talks to acquire a fourth site in Cebu.
Apart from the Sys, Gotianun-led Filinvest Land Inc., which is already developing residential condominiums in Cebu, said it will build a business process outsourcing complex in the reclaimed South Road Properties area.  Ayala Land Inc. also operates a shopping center in Cebu apart from residential projects. 
Cordero said the growing trend of property developers expanding in Cebu is unlikely to see a reversal anytime soon.
“Coming from a low base in terms of high-rise residential projects of highly dense projects, the highly improving purchasing power of the consumers is seen to sustain these developments and saturation of the market is still far from the horizon,” Cordero said. 
The integrated approach of these builders, he said, attracts both end-users and investors, but not without opening up its own set of risks. “This type of demand [buying for investment purposes] is highly-susceptible to market externalities such as the weak global economic recovery,” he said.

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