CONTRARY to what most developers claim about the robustness of the real estate industry, a study of a property consultancy firm showed that this sector has already “softened,” at least for condominium projects. [*]
Data from Colliers International Research and Advisory Services presented during the 2015 Cebu Housing Summit yesterday showed that the number of condominium units launched in Cebu has been declining over a one-year period.
The research, presented by Colliers International research and advisory services director Julius Guevara at the Grand Convention Center of Cebu, showed that there were about 6,400 condominium units launched in 2014 in Cebu. However, this was brought down to a little over 2,000 units in the first half of 2015.
Colliers’ data is also reflective of the recent data coming from the Housing and Land Use Regulatory Board 7 and 8 that showed 63 projects were issued licenses to sell (LTS) in Central and Eastern Visayas from the beginning of this year to September 4, 2015 versus the 60 projects for the whole of 2014.
As the number of launches became minimal this year, sales takeup of these recently launched condominiums was even lower, Guevara said.
“The slowdown in the condominium market is apparent,” Guevara said. The same could be said for Metro Manila, but worse, where the number of condo units sold dropped from 40,000 in 2014 to 25,000 projected for this year.
“I highly suggest to developers to take a very good look at the market,” Guevara told reporters at the sidelines of the summit. He also acknowledged that some developers would contest the figures of their study, as some firms are experiencing a sound performance in condominium sales and remain bullish on the future of the industry.
Others that have projects in Manila “delayed” the launches of their condominium developments seeing this phenomenon, he said.
Guevara explained that the decline could be attributed to the present framework by which sales in the real estate industry is driven– by the investors.
“There is now a buyer’s fatigue,” he said.
Given the low interest rate environment in the previous years, Guevara said investors were looking for alternative assets to invest in. Now, these investor buyers are waiting for these condominium investments to be finished before they make their next purchase.
As the condominium market slows down, Guevara advised industry players to join the hospitality and tourism industries by venturing into condotels.
With tourism in the country and in Cebu being one of the top performing industries, the official said such projects are seen to boost the demand in this sector, especially when these projects are built in provincial tourist hot spots like Bohol and Palawan.
“Condotels can attract more buyers than just pure residential condominiums,” Guevara said.
Cebu’s overall hotel supply is 10,568 rooms at an average occupancy rate of 65 percent, Colliers said.
However, Guevarra noted that growth remains in the horizontal residential segment, particularly in areas with high residential end-user demand.
He noted that while some developers remain optimistic in the condominium market, citing the housing backlog, they have to see that majority of this backlog comes from the low-income market that can hardly afford to buy their own dwellings.
Housing backlog was recorded at 5.5 million, said the Subdivision and Housing Developers Association in previous interviews.
SHDA Central Visayas president Julie Castanos said product affordability continues to be a challenge to developers as the cost of land becomes more expensive.
[*] Originally published in The Sun Star, Cebu