THE business of real-estate development remains one of the Philippines’ strongest economic pillars. Much of the success the entire sector has enjoyed over the past few years may be attributed to the milestones achieved by developers who have capitalized on the growth opportunities that have come our way.
In other countries, real-estate companies are far less prominent than they are here in the Philippines. Local developers that thrive in today’s market view trends as anchors for introducing innovations to today’s local homebuyers. However, with the impending establishment of the Asean integration next year, leading local developers will soon find themselves facing even stiffer competition with foreign companies and brands eventually flooding Philippine shores.
As more players come into the market, trends in the real-estate sector will be felt more prominently, thus highlighting the immense impact that branding initiatives bring to the table. The reason why branding is more important for developers here in the Philippines to prioritize over other things, like sales for example (don’t get me wrong. Sales play a very important role in the business cycle, but one must be able to first establish a system that will allow profit to flow in more efficiently), is because there is less government oversight for construction. Building brand trust plays a big deal, and to be able to do that, one would need to undertake an extensive branding campaign.
More players,
more opportunities
Once the 10-member Association of Southeast Asian Nations (Asean) formally establishes a single-market community next year, the first major change will be the observance of a more liberalized trading among the participating countries—Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
This development will result in the emergence of a vast economic market composed of 600 million people, which easily accounts for at least 8 percent of the global population—occupying an estimated 4.6 million square meters of prime real estate. There will be an immediate removal of both tariff and non-tariff barriers on both goods and services among the member nations, which, in turn, is expected to establish deeper, better economic ties among the stakeholders in the region. Aside from this, local developers will also get a more favorable access to a bigger resource—the regional work force which will likely play a huge role in fueling a stronger exchange of best industry practices and ideas among the participating countries.
The market integration will also result in stronger capital inflow and investments—something that the Philippines will welcome with open arms. This will only help emphasize the country’s economic edge, and puts the Philippines in a position it wants to be. As I’ve said in my earlier columns, this development will allow the Philippines to showcase its renewed capability to lure investors and sustain good business returns, particularly for foreign businesses wishing to establish presence in the region.
The entry of foreign developers carrying a host of real-estate brands will also impact the rate of construction activity in the country. The construction industry will likely set a record pace once the Asean integration kicks off, which means mixed-use residential districts will rise in various areas of the country alongside retail, commercial and other industrial developments (road networks, transportation hubs and many others). Skilled workers will be more in demand than ever, as more and more developers look to sustain the rapid pace of property development in the country.
Addressing the biggest challenge
However, the free market may counterbalance, or may act in an entirely different fashion, which will likely drive up the quality while driving down the cost. As more international players step into the picture, they might not win because people know them; they will probably win due to innovation and quality, and by utilizing the independent broker network that the current industry has created before them.
This was the challenge that previous industry practices have created ahead of the sector’s growth. Developers who looked at real-estate sales as their primary target have created the seed for the industry’s own demise by creating their independent network, thus opening the doors for foreign developers to come in and tap that existing market without difficulty.
Oftentimes, people don’t look at the larger implications of what they’ve been doing as long as they are reaping the rewards of their efforts. The sad fact about this situation is that they’ve created this environment: foreign developers come in, recruit local sales force, and tap the market that they have at hand. And now, the only legitimate differentiator that they can take advantage can only be achieved by undertaking an extensive branding campaign to help the market understand what they truly stand for.
At the end of the day, what the Asean integration really does is to raise the standards for urban development. A huge, diversified market—similar to the system and structure that the European Union implements—only brings out the best out of each participating country by intensifying the competition and urging players to step up their branding efforts several notches higher. As local players chase newfound economic opportunities, we expect to see developers becoming more globally competitive by anchoring their branding campaigns on their respective strengths and expertise.
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