Better days ahead seen for Phl property sector (First of two parts)

The local property sector has experienced phenomenal growth these past few years, no doubt, as can be seen from the number of residential and office buildings, townships, among others, being developed all over the place. But is this growth going to be sustained this year? This writer solicited the views and opinions of some of the Philippine real estate sector’s primemovers and decision makers to have a better idea of what could be in store this year for this vibrant economic pillar.

From Andrew Tan, chairman, Alliance Global Group Inc. (AGI) and chairman & CEO, Megaworld Corp.:

The Philippines is well known for its natural beauty, cultural splendor and our warm people. Thus, the real opportunity for the Philippines for the next few years will be the exponential growth of tourism-oriented real estate.

The key lies in creatively designing products that put forth the best of the Philippines. This is one of the ways we, at Alliance Global, remain competitive in coming up with relevant and superior offerings. Our products’ international-caliber design and appeal are testament that what we have is truly world-class.

Boosted by the impressive success of our first fully integrated tourism estate, Resorts World Manila in Newport City, we at AGI are concentrating on our next five tourism estates: Resorts World Bayshore City along Manila Bay, Boracay Newcoast in Boracay Island, Twin Lakes in Tagaytay, The Mactan Newtown in Cebu and Iloilo Business Park in Iloilo City.

We are ramping up efforts to build more than 5,000 hotel rooms in these six tourism growth centers and create about 100,000 tourism- and service-oriented jobs for our fellow Filipinos in the process. This will make AGI the largest owner of hotel rooms in the country and certainly one of the largest employers in the tourism industry.

From Jose E.B. Antonio, chairman, Century Properties Group:

We feel that 2013 will be a better year than 2012 because of the following reasons: first, abundant money supply around the world; second, low interest-rate regime which is expected to continue; and third, there will be a move to purchase undervalued assets.

As for the expansion of real estate developments outside the existing CBDs, the distribution of real estate development will cover areas outside of the popular central business districts with Quezon City getting a notable share of the pie. This is largely due to the growth of BPO companies in the country, which is pegged at 25 percent annually and accounts for $13 million worth of revenues (remittances) into the country’s economy.

These companies have begun looking at other urbanized areas around the metropolis where the requirements for setting up such offices are met such as interconnectivity infrastructure. Areas where there is a high rate of employment are also viable for residential infrastructure. It helps that there are expansive, untapped and affordable lands that offer potential in Quezon City. With this kind of expansion, new CBDs might even rise.

With the sustained power of the remittances of OFWs and their exposure to world class developments, local developers are going to cope with demands for homes that meet higher standards.

From Anthony Charlemagne Yu, president, Empire East:

The property market in the Philippines has become the most dynamic sector in the growth of the Philippine economy. This is particularly true of the middle-income and the upper middle-income market, which has been the consistent ‘driver’ in the Philippine property market and where Empire East has been a dominant player for many years.  With the high trust rating of the Aquino administration and the very even-handed manner in which this government deals with the private sector, we expect the property market to continue to be very dynamic this 2013.  All indicators seem to point to an even better year this year.

As for trends in developments, we believe that the ‘city within the city’ concept pioneered by Megaworld and Empire East (Manhattan Garden City, Eastwood City, McKinley Hills, Newport City, Laguna Bel Air, and many other projects we have lined up these coming years) would continue to dominate the property landscape for the simple reason that it gives more value to the buyers than stand-alone developments. Such concept of ‘Live, Work, Play’ in one complex has become the norm in the industry.  The Transport-Oriented Developments (TODs) pioneered by Empire East will also continue to be replicated by other major developers since TODs have an inherent advantage over developments that are nor easily accessible.

From Alfred Xerez-Burgos III, president & CEO, Landco Pacific Corp.:

2012 was a good year for the Philippine economy, fueled by OFW inflows, a growing service sector, government and private construction spending, steady and low interest rates, low inflation and the availability and access to long-term credit. These contributed to the positive performance of the real estate industry. As of third quarter of 2012, Landco has posted a 20-percent increase in its sales performance compared to the same period last year, reporting total sales of P2.24 billion in September of this year, which is up by P375 million from the P1.866-billion total sales in September 2011.

From Willie Uy, president and CEO, Phinma Properties:

According to sources, the real estate and housing sector will retain its aggressive performance this year, especially in Metro Manila where a cluster effect of new residential and commercial establishments arises near its central business districts (CBD).  The Philippines’ large working population in the Class B, broad Class C, and a portion of the Class D market is helping the economy improve, resulting in a higher demand nationwide for affordable housing of which is under supplied.

There were two trends that we saw in 2012: the construction of green buildings and the lessening of carbon footprint; and the faster construction of mid-rise residential buildings to cope up with the demand. The challenge for developers in the affordable sector is providing attractive payment terms for quality homes to a target niche which is today well-informed of the green trend. The difference with Phinma is that we managed to perfect a balance between affordability without sacrificing quality, safety, and the environment.

From Jeffrey Ng, president, Cathay Land:

The real estate boom is expected to continue in 2013, thus making the industry a buyers’ market. Property developers will flood the market with their current inventory and new offerings, giving buyers the widest spectrum of residential property options.  The high-end and mid-market projects will sustain its market appeal as niche products. It is expected that the affordable and economical projects will be the key volume drivers of the industry.

Metro Manila will see more mid to high-rise residential property options focusing on smaller units of less than 20 sqm., with price points of less than P2 million.  Affordable and economical housing will see brisk growth both North and South of Metro Manila.  With residential property options proliferating in Metro Manila and its surrounding areas, expect major developers to strengthen their presence in the key cities of Visayas and Mindanao.  The overseas Filipino market will continue to be a healthy source of buyers contributing at least 30 percent of local property purchases.

From KATRINA PONCE ENRILE Katrina Ponce Enrile, president, JAKA Group:

The year 2012 was very good for the Philippines economically.  The country was able to post respectable growth rates and now different agencies are adjusting their forecasts to somewhere around 6% (from 5%).  In addition to that, several banks have maintained interest rates tohelp people finance their needs, may it be for business, investments, home, or cars.  These developments are a good sign for real estate in the country.  Not only will people be able to afford house and lot through their supposedly higherincome but also the banks are making it easy for them by giving them lower interest rates.  Some banks offered interest lower than 8%.  In-house financing on the other hand provides low down payments and flexible payment methods.

“OFWs are another reason why the real estate sector will continue to flourish for the years to come.  These overseas Filipino workers continue to work away from their families in order to provide for their loved ones.  These OFW families are buyers of low to mid level residential houses.  In addition, this will create real estate development opportunities in areas where they (families of OFWs) are located in regions such as Calabarzon, Central Luzon.

“Similar with OFWs, BPOs have the same role for the office supply.  Based on the roadmap by BPAP, BPO’s are expected to posts double-digit growth and will employ more than one milloon workers by 2016, from around 600 thousand last year.  This shows that by 2016, the offices/seats required by BPO’s will be almost twice it occupies from last year.

“In terms of new trends and development, due to the recent flooding and in the Metro, buyers will be very cautious in choosing a location or type of residence they will purchase.  Villages in low lying areas will no longer be desired while condominiums that are flood free, brownout free, and closer to work areas and public transports (such as MRTs and LRTs) will be preferred.  Also developers will continue to target the younger segment to invest in condominiums by offering flexible pricing schemes.

“Those who still prefer the traditional house and lot will be drawn away from cities due to higher prices and will be forced to settle to nearby provinces with highway access to the Metro.  Residential villages and commercial establishments will thrive in the said nearby provinces as well as new offices.

“For the real estate sector players, competition will be focused on the amenities and add ons provided specially for condominiums, and the ease of payment.  Location will still play a very important role, however, the location game will be focused more on tapping new areas rather than developing prime locations since most of these prime properties have already been developed.”

From Rick Tan, chief finance officer, Vista Land & Lifescapes, Inc.:

“Taken as a whole, the Philippine real estate industry is widely expected to continue to perform very well in 2013 and probably for the next few years. However, an optimistic outlook for the industry does not necessarily mean that all segments have identical prospects.  A good analogy might be the Philippine stock market which was one of the region’s best performers in 2012 – the prospects for 2013 remain rosy, but of course not all stocks will fly. Just as it will be important to pick the right stocks for market players, the key for real estate developers and investors will be to ensure that they are in the right segments of the industry. 

“Most observers are keenly aware of the strongly positive macro story for the Philippines. Robust GDP growth, benign inflation, low interest rates, improving corporate governance, and supportive demographics provide an attractive backdrop for the real estate and other industries. These are interrelated. The rapid growth of the BPO industry has spurred demand for office space and dwellings for a relatively well-paid workforce which has exceeded 500,000 employees. In fact, many office buildings are fully leased out prior to being constructed.

“Remittance flows have continued to grow and hit record highs. Millions of Filipinos working overseas are sacrificing to fulfil their dreams of owning a home. Developers with a solid track record catering to this market should do well as demand from overseas workers is not as dependent on the fortunes of the local economy.  A further boost to the industry could come if the government fulfils its promise to accelerate the development of infrastructure through the much-touted Private-Public Sector Partnership (PPP) Program.

“Vista Land is particularly well-positioned to excel in this environment. Its Brittany, Crown Asia, and Camella brands cover all price segments in housing, while Vista Residences has made inroads in the condominium market with completed buildings in Makati, Ortigas, Quezon city, Fort Bonifacio Global city, and other key areas.  As the country’s largest homebuilder, it has continued to expand into the provincial areas, catering to overseas Filipino workers who are highly familiar with the Camella brand.  Vista Land has built homes in 31 provinces and 63 cities and municipalities around the country – more than any other property developer – and will continue to expand into other provinces. The company is likely to turn in a record performance in terms of reservation sales, revenues, and net income in 2012. Investors have taken note of this, making Vista Land one of the top performing real estate companies last year with about a 70% jump on its share price. 2013 is expected to be another record year for Vista Land, and much excitement has been generated by its plans to create a major master-planned city in Muntinlupa called Evia (approximately 30-40 kilometres south of Makati)  where it has almost 1000 hectares of land, about 300 of which have already been developed. The governement’s first PPP project awarded in 2011 – a four kilometre road connecting the South Luzon Expressway to Daang-Hari, should greatly benefit Evia and the surrounding villages once constructed.”

From Alfredo Austria, president, DMCI Homes:

As more projects are completed and more residents (especially first-time condo owners) move in this year, people will realize that condos are not built the same, and that condo living brings with it its own set of concerns. More people will probably be extra wary of hype and publicity. 

Property management and associated services will be even more critical to overall condo living experience and purchase decisions.

More new players, both large and small, will continue to enter the industry due to favorable economic conditions. However, strong, trusted brands with proven track records are still expected to dominate amidst a plethora of choices.

“In general, demand for residential condo units will remain strong across all segments. However, we may need to look into the ever burgeoning supply of small units (e.g. studio and 1-BR units) in the core-mid and economic segments.”

 (To be continued)