No more boom and bust

Is the local real estate market in for another boom and bust cycle?

Seems like it would not, and this optimism is shared by not a few property development companies. This means that any progress that we are seeing right now, both in terms of the number of constructions as well as in the number of buyers, is more likely to stay.

So what accounts for this change in behavior of developers and buyers alike?

Kit Vergara, senior vice president for sales and marketing of Concepcion family controlled Philtown, says that developers and buyers are much, much wiser, and have learned their lesson well.

While in the past, property developers were constructing left and right, offering more than what the buyers really need in terms of the basic, these developers have become more prudent spenders.

The dark days of the local property market in the late ’90s resulted in many developers offering very high prices for prime real estate in a mad scramble for lands to develop. Buyers, looking for investment options, resorted to buying properties. But many were not able to sustain payments, resulting in banks foreclosing properties and accumulating real estate assets.

But of course, the lucrative OFW and Fil-Am market for local properties was just in its infancy days then. Now, most real estate companies are after this market. Some put up a sales force abroad while others merely have one representative stationed abroad who does all the work. The latter of course is due to two reasons: low overhead and to avoid being taxed abroad for doing business.

Other markets in Europe, such as in UK and Italy where there are many Filipino professionals, are fast emerging.

Philtown is one company that has emerged largely unscathed. Its One McKinley high-rise condominium project at Bonifacio Global City (a 50-50 partnership with the Export and Industry Bank) is sold out while its second project, the Fairways Tower is 92 percent pre-sold. The latter project is six months away for its first phase of turnover, says Vergara.

Its project at Rockwell called Metropolitan is also said to be doing well, with 70 percent of the units sold.

In the last month, Vergara reveals that around 30 percent of their buyers are Filipinos residing in the US who are buying not for investment purposes but because they are their children want to return to the Philippines and have a place they can call home when they go back. In Fairways Towers for instance, around 15 percent of the buyers are Filipinos residing abroad while at the Metropolitan, the figure is higher at 20 to 25 percent.

Another project, called WH Taft Residences in Manila just opened for pre-selling. Later this year, there will be another Philtown project near Esteban Abada in Xavierville, Quezon City geared towards students and younger professionals and will thus consists mostly of studio units. We just learned that Philtown just signed up with the landowner for a joint venture project for the still-to-named condo project in Quezon City, which will have a maximum of 30 floors and with unit sizes ranging 25 to 60 sq.m. Another project, called Asiana Residences in Pasig, consisting of three building clusters, will be introduced this year.

Philtown, more known for its One Mckinley high-end project, is still catering to the A and upper B market, except that as we all know, this market is limited. So it is now entering into joint ventures with landowners in specific areas, eyeing one in Roxas Blvd and three more at Fort Bonifacio.

The real estate company of the Concepcions (who own RFM Corp.) is no longer a landowners and developer, but is leveraging its experience by entering into joint ventures with landowners and then developing the project.

All in all, Philtown is earmarking around P3.2 billion for four projects, namely WH Taft, the Quezon City project, Asiana Residences, and Plantacion del Sol in Batangas (consisting of house and lot units). More are lined up next year, including one property in Fort Bonifacio.

Saving grace

Landco Pacific Corp. has become the saving grace for the Metro Pacific group.

In fact, Metro Pacific Corp.’s ownership in Landco has been transferred to a newly created company called Metro Pacific Investment Corp. (MPIC), obviously to prevent Landco being pulled down by MPC subsidiary Negros Navigation’s dismal performance.

Just like Philtown, Landco is optimistic about the sustainability of the growth that the local real estate market is currently experiencing. So optimistic that it is earmarking at least P5 billion in joint venture projects in the next five years.

Landco officials attribute the current growth in the market to bthe fact that developers are more conservative and that properties being offered are of the right size and very affordable, given the more attractive payment terms.

Landco has five strategic business units with their own areas of expertise, namely: residential resorts, leisure farms, shopping centers and central business districts, first home and memorial parks.

Its projects include Peninsula de Punta Fuego, Terrazas de Punta Fuego, Leisure Farms, Ponderosa Leisure Farms, Pacific Mall, to name a few.

But its more exciting endeavor these days is in Calatagan, Batangas called Playa Calatagan, a 92-hectare integrated residential and tourism beach community. According to Landco SVP for leisure and tourism Patrick Villano, this project will be Luzon’s version of Boracay and he expects Playa Calatagan’s white sand beaches to become a popular party place in the next couple of years.

Villano says that so in demand is the Calatagan project that they are already looking at expanding it by next year.

Landco’s entry into the leisure and tourism sector is expected to usher more projects similar to Playa Calatagan. In fact, next in the pipeline is a landmark tourism project in joint venture with the Escudero family of the Villa Escudero fame.

Aside from the Calatagan expansion and the Villa Escudero project, other projects lined up for Landco include a new phase for Terrazas consisting of nine hectares, house and lot units at Ponderosa, to name a few. A residential project is also being mulled in Northeast, Quezon City.

Landco’s Alby Xeres-Burgos expects the future to be very bright for the company, characterized by high growth, entering the mainstream (to earn a place among in the major league) as against the current focus on boutique and leisure development, more variants of the resort products starting with Calatagan, more condo units, and more nature-based projects.

I’m sure that Landco and Philtown’s optimism is shared by other developers. It appears that the real estate sector is in for a long, smooth ride.

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