House Hunter

By Jun Sanchez* THIS entry is based on the study this author made on the survey released this April by the National Statistics Office on all types of private building construction in the Philippines. The study focused on residential construction since it is meant for prospective Pinoy homeowners and residential developers. The survey is based on the number of building permits approved by the local building officials in all cities and municipalities in the Philippines; the projects are described as “started.” No figure was given as to how many were finished, still in progress or discontinued. The study shows that:

• Residential projects account for 70% of all private construction in the Philippines. Of which, 85% are single houses, 3% are duplex/quadruplex/townhouses, 9% are apartments and 3% are condos.

• Residential projects have a short boom-bust cycle, i.e., growth cannot be sustained. It’s moderate for single houses and apartments but for townhouses and condos, the cycle is volatile. They enjoy massive growth for a year or two only to plummet later. Condo construction has been declining massively since 2005, indicating a glut in this segment. This, however, is a national trend and does not classify projects into Class A, B or C.

• Apartment construction grows steadily indicating that there’s a growing demand for it from Pinoys who have yet to own their homes.

These facts are relevant only if the regions (and provinces therein) where these projects were erected are considered. Knowing where these projects are may give a hint as to which regions offer the best living conditions and possibly ample job opportunities. It will also give insight on the said volatility of output of certain residential types. Of the seventeen regions in the country, eight account for 86% of total residential construction from 2004 to 2008.

• National Capital Region ranks only 4th. Manila is last in three residential types among the six districts but 4th in condos.

So, why does construction of certain residential types behave erratically while others do not? Inherent geographic characteristics of the region, scarcity and cost of land, population density and availability of commercial establishments, job opportunities and conveniences determine the suitable residential type in the areas therein. Refusal or failure to acknowledge this fact resulted in erratic construction of certain residential types. Take Manila for example. Scarcity and high cost of lots no longer make it ideal for single houses. Its density and abundance of commercial establishments, offices and conveniences currently make condos the ideal housing project in Manila. The same is true in Makati City. See how the other regions performed, especially CALABARZON and Central Luzon.

• CALABARZON ranks first. In Cavite alone, over 1,700 condos were started. Compare that with 23 condos in NCR’s District 5 that includes Makati. Cavite also accounts for 25% of all quadruplex and townhouses in the eight regions.
• Central Visayas is 2nd. Cebu is way ahead of the other provinces in this region. Its output is equivalent to 71% of NCR’s total output.
• Central Luzon is 3rd. Bulacan overtook Cavite with over 1,900 condos, 29% of all condos.
• 5th, 6th and 7th are Davao Region, Ilocos Region and Western Visayas, respectively. The number of their condominium projects is also peculiar. 174 condos were started in Davao del Sur, 208 in Pangasinan, 135 in La Union and 130 in Iloilo. Ranked 8th is Northern Mindanao.
• Not in the top eight, 125 condos were started in the Cordilleras, 57 in Mimaropa, 39 in Bicol, 36 in Soccsksargen and 23 in Caraga in 2004.

CALABARZON and Central Luzon are largely responsible for the apparent glut of quadruplex, townhouses and especially condos. These housing projects, condos particularly, enable a developer to optimize the cost of land. They are most suitable in highly urbanized areas where lots are scarce and price is high. Building them where lots are not much of a premium and remote with little to offer in terms of conveniences and diverse job opportunities is imprudent. How many of these townhouses and condos have been completed or discontinued? Since condos are sold on a pre-selling basis, how many Pinoys who bought into these projects lost their money? Each residential type possesses advantages that are uniquely its own. It is only by applying the principle “form follows function” not only in the way a residential project is built but as important, where it is built can a developer be certain of his project’s viability and assure that the Pinoy homebuyer gets the home that fits his lifestyle and provides what he values most – time, convenience, space, privacy or peace and quiet. For a free copy of the study, you can email the author at junsanchez2003@yahoo.com

By Anna Valmero INQUIRER.net MAKATI CITY, Philippines -- Issues concerning the housing project of the Department of Science and Technology (DOST) agency Industrial Technology Development Institute (ITDI) remained unsettled and continued to divide ITDI employees after two meetings held Thursday. The housing project involves six parcels of land in barangay Molino in Bacoor, Cavite. The land, which has a total area of 244,456 square meters, was used as an agricultural research site by the ITDI, formerly known as the National Institute of Science and Technology (NIST). When ITDI was reorganized in 1987, its agricultural research functions were transferred to University of the Philippines Los Baños. In 1992, a resolution was passed to use the land as housing project for ITDI employees, which was made legal by the issuance of Executive Order 137 signed by President Gloria-Macapagal Arroyo in October 2002. “The main issues are summed up in two words: affordability and transparency,” said Natividad Villostas, senior science research specialist of material science division at ITDI. After years of discussion with the Molino Task Force, Villostas said the body handling the project failed to ensure that ITDI employees could avail of the housing project. She said the project lot allocation is questionable and the pricing for house and lots were beyond the capacity of over 80 percent of the ITDI employees. Meanwhile, senior science research specialist and co-chair of Molino Task Force Elvira Viros insisted that the task force has done its job to set and keep the project in motion. During a general meeting Thursday, Viros presented the history of the project and stressed they have been transparent. She said the task force has been reporting the progress of the project by holding general assemblies and posting documents in bulletin boards across the DOST campus in Taguig. Villostas, however, denied that the Molino Task Force has been transparent, citing several observations. She said the Implementing Rules and Regulations (IRR) of the project were written without consultation with the ITDI employees and was only presented to them generally and was even amended allegedly without the employees’ knowledge. Viros, for her part, stressed that in 2004, the task force released and circulated to division heads the amendments, which were discussed in an executive committee meeting and published on the monthly paper “ITDI Miscellaneous.” During Thursday’s meeting, Mylene Rivera, director of Housing and Urban Development Coordinating Council (HUDCC), pointed out that the HUDCC could not intervene “since the problem is internal and must be fixed by the ITDI management.” In a core group meeting held after Thursday’s general meeting, Rivera suggested to let phase 1 of development continue since there are target dates of completion for the project. She also urged the body to start working on site 2 of the housing project so it can be developed simultaneously with site 1 next year. Rivera assigned the Molino Task Force to conduct another survey of ITDI employees and find out how much they are willing to pay for the housing program if they are interested to purchase a property. She added the task force can revisit the land size allocation and the offer a “cost-competitive” choice of the ITDI employees. Based on the IRR of the housing project, phase one includes development of 131,193 square meters of the total area. Moldex was tapped as developer of the project phase one, which Villostas pointed out has pending cases. ITDI director Nuna Almanzor was not present during both meetings.

By Alexander Villafania INQUIRER.NET MANILA, Philippines -- In an effort to promote excellence among the country's budding architects and design engineers, Environments Global Foundation (EGF) launched two programs aimed at the country's architecture and engineering educational institutions. EGF is a corporate social responsibility group of the architectural and construction group Environments Global. The two programs are the Lines to Lives Academic Excellence Award in Architecture and the Red Point Award. The Lines to Lives is a planned annual search for the most outstanding student of architecture. Participating students must have a grade point average of 1.25, with no failure or incomplete grades. EGF has partnered with the University of the Philippines, University of Sto. Tomas, and the Mapua Institute of Technology as part of the pilot program of the Lines to Lives, which would run from 2008 to 2009. There would be three final winners for Lines to Lives and each will receive P150,000. Meanwhile, the Red Point Award is an undertaking between AGF and the Council of Deans and Heads of Architecture Schools in the Philippines. Its purpose is to find the best thesis from architecture students in the country. Similar to Lines for Lives, there will also be three final winners for Red Point Award and each will win P100,000 each. Winners will be announced and awarded in June 2009. In an interview, EGF President Antony Zubiri said the two programs aim to encourage budding architecture students to excel in their chosen course. He said the Philippines' architectural schools produce among the best architects who work in major design companies abroad. "By providing students with a venue to develop their skills, we will create an environment for excellence among future Filipino architects," Zubiri said.

By Izah Morales INQUIRER.net PEOPLE these days are increasingly seeing the significance of owning or investing in a property. In a recent housing fair hosted by the Housing and Urban Development Coordinating Council, about 8,000 people came to learn more about the housing programs offered by organizations like the Pag-Ibig Fund and also check some possible investments they can make, according to Oscar Empensando, department manager III, Acquired Assets Department of the Pag-Ibig Fund. The housing fair opened on October 29, 2008 at the SM Megatrade Hall In an interview, government employee Agustin Enabe said he visited the fair to check on possible investments. Meanwhile, private employees Vilma Tabagan and Fernando Torres were both seeking a house, which they can avail at cheaper prices. “I’ve been renting for 30 years. Maybe, this is the time to avail a house from subsidized housing projects,” said Torres. Empensando, for his part, shared some steps people can take to avail of a housing loan from Pag-Ibig Fund. To qualify for a Pag-Ibig Fund loan, one should be a paying member with a net income not lower than P 3,000, especially for government employees. He advised that people should check the Pag-Ibig website for the list of acquired assets, which they can also buy. Once they’ve selected the property they wish to acquire, they can fill up a reservation form. Next, they should conduct an ocular or on-site inspection of the house they’ve selected. If they eventually decide to buy the house, they should then go to the Pag-Ibig Fund office and pay the reservation fee for the house. They will be then asked to submit the necessary documents (community tax certificate or cedula, proof of income, marriage certificate, among others).

TESSA Salazar talks to an industry legal expert who shares at least 15 ways to prevent your home from getting repossessed. Mike Denava, a legal officer of the Housing and Land Use Regulatory Board, noted that about 50 percent of buyers of house and lots and condominium units had admitted they could no longer pay their monthly amortizations or were dissatisfied with particular aspects of the project, and were asking for refunds of their payments. He added that some of these callers were overseas contract workers who could no longer find jobs abroad. Denava has enumerated the following 15 reminders to potential property buyers: 1. Check the source of your income. Aside from checking the development projects thoroughly, look at your own resources on a long-term basis to be certain if you can really pay your monthly amortizations in the long run. 2. Check if the project has a license to sell and if it is registered with the HLURB. 3. Check if the broker or agent is registered. 4. Check if the property is not yet sold to others. 5. Conduct personal visits to the project site. It is also advisable to visit the property itself to check for leaks or potential for flooding. 6. If you’re buying on pre-selling terms, look at the date of completion of the project, which should be found in the developer’s license to sell. 7. Check if the property is mortgaged. If it is, make sure there is clearance from the HLURB. 8. Check if the materials used in your prospective home conforms with the standards approved by the HLURB. It is indicated in the approved plan. The local government approves the plan for subdivision projects, while the HLURB approves plans for condominiums. HLURB grants certificates of registration and licenses to sell to developers applying for project approvals. Denava also said approval of subdivision projects also includes the assurance of safety measures. Mandatory requirements, particularly in condominium units, include certificates of fire protection, occupancy permits and mechanical certificates. 9. Make it clear who should be responsible for paying the cost of water and electric meters. 10. Check whether subdivision perimeter fences will be provided. If it is not in the approved plan, a buyer cannot demand the developer to put perimeter fences. 11. Do not sign a blank contract to sell. 12. Read the contract to sell thoroughly, especially the fine print. 13. Secure a copy of the contract to sell and of the other documents that you have signed. 14. Make sure the contract to sell will be registered with the Register of Deeds (the developer is mandated to do this). 15. Pay directly to the owner-developer and/or authorized marketing agents, and make sure to ask for official receipts as soon as they get your payment.

RALLY S. Martinez, president and chief executive officer of XCell Property Ventures, Inc., explains the present state of the real estate market, particularly the mid-luxury to luxury niche. In this video interview with INQUIRER.net online videographer Janie Christine Octia, Martinez says that the company values the overseas professionals and expatriates market, which he feels have become more intelligent nowadays.

INVESTMENT manager Ryan Osea gives INQUIRER.net a tour of two of F1 City Center's model units. Video taken by INQUIRER.net online videographer Janie Christine Octia during the F1 City Center grand launch at MC Home Depot in Bonifacio Global City.

By Daxim Lucas Philippine Daily Inquirer THE CONGLOMERATE Ayala Corp. and its real estate arm said they hade entered into a joint venture with India’s Mahindra Group to develop an exclusive residential community in one of the subcontinent’s major cities. In a statement to the stock exchange, Ayala Corp. and Ayala Land Inc. said the deal involved development of a high-end housing enclave in the 1,500-acre Mahindra World City (MWC) in Chennai, India. The joint venture, Mahindra Residential Developers Ltd., will be 51-percent owned by the Mahindra Group and 49 percent by ARCH Capital Asian Partners L.P., a private real estate fund managed by Ayala affiliate ARCH Capital Management Co. Ltd. The project will be on about 55 acres of land in the MWC special economic zone, which is designated for low-density residential community development, Ayala Land said in a statement. The exclusive community of about 750 residential units will be planned and designed by international planners and architects with amenities, development standards and an urban environment not commonly found in India, Ayala Land said. The joint venture through ARCH Capital represents Ayala’s first major foray into the Indian real estate market, Ayala Land chairman Fernando Zobel de Ayala said in the statement. “We continue to see good growth prospects in India and we are delighted to have the opportunity to participate in this momentum through our partnership with the Mahindra Group.” Ayala Corp. and Ayala Land did not disclose the financial terms of the deal. Zobel said the Ayala group’s newly established regional property investment firm, Fidelis Holdings, had been “actively exploring opportunities to expand [its] international activities in this arena.” MWC, a pioneering effort of Mahindra Lifespace Developers Ltd., the publicly listed real estate and infrastructure arm of the Mahindra Group, reflects Mahindra’s vision for a world-class special economic zone catering to investors and manufacturers in automotive accessories, information technology and apparel industries. Ayala Land president Jaime Ayala (no relation to the Zobel de Ayala family) meanwhile said Ayala Land expected to report strong sales in the first quarter despite a market slowdown caused by the US subprime mortgage crisis. He said Ayala Land was refocusing its selling efforts for the US market—a major source of sales last year—from high-end property units to more affordable housing in view of an expected drop in spending power of US-based Filipinos. With editing by INQUIRER.net

By Daxim Lucas Philippine Daily Inquirer FINANCIAL losses of the tobacco tycoon Lucio Tan’s Eton Properties Philippines Inc. widened significantly at the end of last year as the company embarked on an aggressive spending program to get its first projects off the ground. But its total assets were close to hitting the P1-billion mark a year after it was founded, Eton said. In a statement, Eton said its net loss at the end of 2007 reached P146.7 million, 664-percent bigger than the P19.1-million loss it reported in April last year. It said it expected to start earning sales revenues this year. Eton said its assets had reached P980 million at the end of 2007, up 165 percent from the asset base it disclosed in its last reporting period. It said there was brisk take-up of its projects, two of which -- The Eton Residences Greenbelt and Eton Baypark Manila -- had been fully reserved from launch date. Cash and near-cash assets rose to P395.1 million as of the latest reckoning, up 324 percent from a year earlier, Eton said. It said its growth trend was expected to continue especially since deposits made by early buyers had reached P701.5 million, up 2,308 percent from April 30, 2007. It said the increase in deposits was due to “record reservations of its four other projects launched within the year.” The company’s projects include Eton Emerald Lofts in the Ortigas business district, Belton Place and Eton Parkview Greenbelt in the Makati business district, and One Archers Place in Manila. Edited by INQUIRER.net

By Rosemarie Francisco Reuters MERLY PAZ, a Filipina domestic worker in Hong Kong, has stopped sending money for the construction of her home in southern Iriga City because the peso value of her US dollar-pegged salary has fallen sharply. "My salary is limited so I placed the house on hold," said 31-year-old Paz who has been working in Hong Kong for nearly eight years. "But the longer I'm putting it on hold, the more that prices of construction materials are rising." A real estate boom in the Philippines has been powered by demand from overseas Filipino workers (OFWs) such as Paz who send home salaries to fund purchases and construction of family homes. But many OFWs have had to cut back on property purchases recently as the peso value of their salaries dropped by 19 percent in the past year due to the weak US dollar. A majority of the Philippines' eight million OFWs work in the United States. This drop in demand should have had a chilling effect on the Philippine property sector, where real estate prices surged 18 percent in 2007 and 38 percent in 2006 largely because of demand from OFWs. Indeed, share prices of property firms have plunged over a slowdown in overseas sales and worries of mortgage defaults. But domestic sales are being kept buoyant by a huge housing backlog, low interest rates and friendly payment terms, higher incomes of workers in the growing outsourcing industry, and a rising expatriate population. The slowdown in construction of new housing after the Asian financial crisis of 1997-98 has led to a housing backlog of 3.8 million units in the Philippines, said Alex Pomento, strategist and head of research at Macquarie Securities. About 70 percent of the country's estimated 90 million population do not have their own homes, he said. "It's end-user demand driven. It is not investor driven, that's the difference with the property boom before the Asian crisis," said Victor Asuncion, director at property services firm CB Richard Ellis Philippines. "It is not speculative. There is a specific demand being addressed." Construction is booming across much of the country, especially in Manila, a mostly low-rise city where dozens of residential towers are beginning to dot the skyline. At least 38,000 new apartments will be available by 2013 in the Makati financial district alone and in nearby Bonifacio Global City, property firms say. There is no let-up in demand. In just four days last month, market leader Ayala Land Inc sold about a third of the P3.3-billion value of a new residential tower at Bonifacio Global City. "They say the property market is slowing. But despite the slower US sales for our premier product, we really can't feel it yet because the local market is still strong," said Rex Mendoza, head of residential and corporate sales at ALI. Take-up rates or reservations for all its residential projects are up 39 percent in the first two months of the year, the same pace as the whole of 2007. But the surge in real estate prices seems to be a thing of the past. Pomento said he saw prices rising about 6 percent in 2008 and next year. "The days of aggressive growth appear to be behind us," he said. "We expect price hikes to be capped by the more competitive environment." At least partly because of that, local property firms have sustained heavy falls on the stock market, with ALI down nearly 25 percent and mass housing leader Vista Land and Lifescapes falling 50 percent in the first quarter against a 17.6-percent drop in the main index in the same period. "On a 12-month view, the negatives cannot be disregarded and the market is already trying to price in the concerns ahead of any negative news from property companies," CLSA said in a recent study on the Philippine property market. Real estate firms say the fall is more because of depressed sentiment overall and that while local demand for housing is strong, they haven't given up on the overseas market. In the first two months of this year, ALI says its sales to Filipinos abroad were down to 22 percent of total housing revenues against 35 percent for all of 2007. To offset falling demand from the United States and Hong Kong where the local currency is pegged against the US dollar and where many OFWs work, property firms are now aggressively selling their residential projects to OFWs in the Middle East and Europe. "I think our growth potential will continue so I'm hoping the market will recognize that," said ALI President Jaime Ayala, adding the share price was "very much driven by global sentiment."