A Tale of Two Cities: Cebu vs Manila

Cebu City Skyline

THE supposed rivalry between Manila and Cebu (although Davao is also a leading contender) and the fight for primacy between these three cities make me happy as a branding and marketing practitioner with a special interest in the property market.

It means that growth—and therefore prosperity, is spreading outside of Manila toward the “provinces” and other growth areas, as President Duterte had intended.

Recently, I had a chat with Richard Raymundo and Althea del Barrio, the deputy managing director and communications head of Colliers Philippines, respectively, about two of our favorite cities.

Condos vs houses

What makes the Cebu and Manila market the same? Different? For retail? Residential? Commercial?

Vertical projects are more popular in Metro Manila, and this is attributed to the lack of developable land in the country’s capital and the number of condominium units being launched by developers.

The Metro Manila secondary condominium market has been characterized by declining rents and plateauing prices. Nonetheless, Colliers believes that the condominium market will be sustained by a rental market that offers competitive yields, The growing number of affordable and mid-income market buyers, and an expanding market outside of Metro Manila’s major central business districts (CBDs).

Condormitels and new workers accommodation 

In Metro Manila, the continued expansion of business-process outsourcings (BPOs), as well as traditional firms, should result in increased employment opportunities. This, in turn, should boost demand for more worker-accommodation units in the country’s capital.

Colliers recommends that developers look into worker-accommodation projects that cater to young urban professionals who can’t afford to own their own apartment yet or rent a condominium unit within the established business districts, such as Makati, Fort Bonifacio and Ortigas Center. These halfway residential units are for professionals who want to live near their place of work. The worker-accommodation units are also more practical for employees working in CBDs as the worsening traffic in Metro Manila only makes their commute to and from work more unbearable.

SM is tapping opportunities in the affordable condo market for BPO employees and other young urban professionals through its acquisition of a 61.2-percent share in Philippines Urban Living Solutions Inc., the operator of a chain of dormitory buildings under the “MyTown” brand, while Ayala Land is building five dormitory buildings in Makati and Bonifacio Global City.

In Cebu the residential market has seen mixed demand for both vertical (condominium) and horizontal housing (house and lot).

Within Cebu City, the influx of new condominium projects at price points largely comparable with horizontal options in Mandaue and Lapu-Lapu City, has brought in stronger demand in the provincial capital. Supported by a steadily growing business center in Cebu City, Colliers expects demand to continue, particularly for affordable and mid-income segments.

Locals lord it over in Cebu but… 

The growth of the condominium market in the Cebu province started since the mid-2000’s with Cebu’s local developers, such as Syntech Properties, La Vienna Realty, Fuente Triangle and Primary Properties launching their projects. Today, however, the list of projects already includes some of the country’s major developers, including Ayala Land, Filinvest, 8990 Holdings, Aboitiz Land and Vista Land, among others.

There is also a demand for worker-accommodation facilities or dormitories in Cebu that primarily cater to BPO employees and other young professionals.


Over the past few years, office space in Metro Manila was mainly absorbed by BPO and KPO companies. The outsourcing firms covered 60 percent to 70 percent of available office supply. However, for the first half of 2017, the share of BPOs to total office space take up declined to 31 percent, while offshore gaming now accounts for 30 percent of total office space absorbed in the country’s capital. Overall, for Metro Manila, office-space demand is currently being driven by outsourcing firms and offshore gaming companies with traditional/MNCs and government agencies accounting for the remaining 39 percent of the actual office-space demand.

The outsourcing firms are the primary occupants of office buildings in Cebu, although offshore gaming is emerging as a driver of office-space demand. This year offshore gaming also emerged in Cebu as a key industry with over 25,000 square meters (sq m) (269,000 [square feet [sq ft] ] ) of office space closed during the period, driven by a 10-floor take-up in Tower One Plaza Magellan.

Since the fourth quarter of 2016, the Philippine Amusement and Games Corp. (Pagcor) has been mandated to regulate Philippine Offshore Gaming Operators (Pogos). Pagcor has since issued 42 Pogo licenses. This led to the proliferation of Pogos across submarkets in Metro Manila, and it is noteworthy that the demand has spilled over to provincial locations, such as Cebu.


Retail sectors in Metro Manila and Cebu are dominated by national players, such as Ayala, SM and Robinsons. DoubleDragon is more aggressive opening new CityMall branches in the provinces including Cebu. Over the next three years, Ayala will be more aggressive in opening new malls within the country’s capital, while most of SM and Robinsons open new outlets in the provinces.

At present, superregional malls, such as SM Seaside City Cebu (SRP), SM City Cebu and Ayala Center Cebu, account for 60 percent of Cebu’s total retail space. The district centers predominantly owned by local developers comprise about a fifth of the Cebu retail market.

Regional malls, such as SM Consolacion and Robinsons Galleria Cebu, account for a tenth of Cebu’s current stock, while district centers and neighborhood outlets primarily located in the downtown area cover the remaining 30 percent.

Both local and national developers have lined up retail outlets that are projected to be completed over the next 12 to 36 months. Among those expected to be delivered this year are Filinvest’s Il Corso mall at City di Mare and NorthDrive Complex of the local developer Elin Land. The projects, once completed, will add about 45,000 sq m (484,400 sq ft) of leasable space to Cebu’s retail stock.

Other retail projects in the pipeline are Ayala Land’s Ayala Mall at Central Bloc in Cebu IT Park, as well as Ayala Land and Aboitiz Land’s Ayala Mall at Gatewalk Central in Mandaue City. The former will offer about 42,000 sq m (452,100 sq ft) of leasable retail space, while the latter, a superregional mall, will have more than 110,000 sq m (1.18-million sq ft) of leasable area. The Gatewalk central mall will be anchored by a Landmark department store. Among the CityMall outlets expected to open next year is the Bacalso brand.

At present, Metro Manila’s retail stock is at 6.5-million sq m of gross leasable area (GLA) versus Metro Cebu’s 1.01-million sq m.

Vacancy in Metro Manila is at around 7.3 percent vs 6.1 percent in Cebu. In both Manila and Cebu we are seeing pockets of vacancies and developers and retailers should use the slight increase in vacancy as an opportunity to curate retail offerings and come up with a more interesting retail mix.

In both Manila and Cebu food and beverage (F&B) segment continues to dominate, with about 30 percent to 50 percent of retail space occupied by F&B retailers.

2) What is your outlook for Cebu office market?

Dom Fredrick Andaya, Colliers Philippines’s director for office services shared that, “Most of the demand is seen in Cebu’s business district given the critical mass it has, its proximity to employees’ residences and the availability of quality office spaces. Overall vacancy in Cebu stands at 10 percent, but Cebu Business Park and IT Park remains tight at 2 percent combined. Meanwhile, Mandaue, Mactan and Uptown/Downtown have double-digit vacancy. The high-vacancy levels in these locations are largely due to accessibility issues limiting demand.”

Gaming on the rise, BPO slowing down

The strong demand from both BPOs and offshore gaming companies in Cebu is a welcome development. Amid concerns of BPO slowdown, the Cebu market has remained resilient. Cebu boasts of a highly reliable and sizeable labor pool, and this has helped keep Cebu among the top outsourcing cities, despite its noted recent dip in overall ranking.

Moving forward, Colliers believes Cebu will still bank on the quality of the labor force to keep the growth momentum in office. Coupled with the upcoming supply of PEZA-proclaimed buildings in the business district, it is likely that demand will continue.

Build: The hope in infrastructure

Furthermore, the number of upcoming infrastructure projects will likely unlock the province’s potential. Some of the notable projects include the Cebu-Cordova Expressway Link, Cebu Bus Rapid Transit, expansion of the Mactan International Airport and the building of the new Cebu International Port.

3) Retail is dead in the US ushering the advent of e-commerce? Is it the same in Cebu? What are the top retail choices in Cebu? Retail, food and experiences?

E-commerce is gaining traction but similar to Metro Manila, it is not seen to significantly affect the brick-and-mortar business in Cebu.

Cebu retail is still dominated by the F&B business. About 30 percent to 40 percent of retail space in Cebu is occupied by F&B retailers. We believe this demand will be sustained by Cebu’s BPO sector and continued flow of remittances from migrant workers.

This is encouraging for mall operators in Cebu to cash in on the retail segments that are very popular among the millennial-driven BPO work force such as F&B and fast fashion. Mall operators should exhibit an interesting mix of F&B and fast-fashion brands to sustain visitor traffic.

The pockets of vacancies in a number of regional and superregional malls in Cebu City and developers should use this as an opportunity to overhaul their tenants.

Amid increasingly generic retail offerings, Colliers believes that curation of retail concepts and tenant mixes is extremely important. Developers should gear toward a more lifestyle tenant mix to survive in a highly competitive retail landscape.

The rise of more coworking spaces 

Due to the worsening traffic in Cebu and the rising disposable incomes of highly mobile millennials and young entrepreneurs, we suggest that developers carve out coworking space in malls within township communities.

Operators should offer incentives for coworking office-space occupants, such as discounts in the mall’s stores, gyms and restaurants.

Brick or click? 

Colliers noticed that major players in Cebu, such as Ayala and SM, are starting to future-proof their businesses by cashing in on the increasing popularity of online shopping. They have been acquiring online-shopping platforms and logistics businesses and we see these measures complementing their Cebu retail operations.

Cebu retail online 

This is a great prospect for Cebu retailers to expand their digital capabilities to access new markets. They should be more aggressive in partnering with app developers. Online retail shops should be easy to navigate and offer wide-ranging payment solutions.

4) Cebu or Manila for better work-life balance over all?

Metro Manila developers are responding to the demand for a more laid-back lifestyle by carving out larger open space for their projects. An example is Rockwell’s Arton project in Quezon City.

Estate- township play 

Both Metro Manila and Cebu firms are ramping up their township projects, which integrate the live-work-play lifestyle. In Metro Manila Ayala Land is developing its Vertis North, Arca South, and Makati Circuit projects. Robinsons Land is developing Bridgetowne, while Megaworld has ArcoVia and other townships in Fort Bonifacio. Rockwell is redefining retail experience through the expansion of Powerplant mall, while DM Wenceslao is positioning itself as the next CBD within the Manila Bay Area. Aseana City is also benefiting from its proximity to the airport and business centers, such as Makati CBD and Fort Bonifacio. Meanwhile, those who choose to live, work and shop in the South are drawn to Filinvest City. We believe that the development of townships is among the developers’ response to the demand for work-life balance in the country’s capital.

Cebu: Leisure is king

Cebu is popular for its leisure-oriented developments, especially in the Lapu-Lapu area. This makes Cebu as an ideal location for expats. Aside from the major CBD, such as Cebu Business Park and Cebu IT Park, developers have also been integrating the live-work-play lifestyle by building townships around the city. Among those in the pipeline include the projects of Ayala Land, AboitizLand and Filinvest.

With the excitement and prospects for both markets coming about, it might not be an function of “or” but, instead, of “and” when deciding between Manila and Cebu. I can now have my larang and eat it, too.


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