Cebu's real estate sector remains upbeat in 2011

By Ehda M. Dagooc (The Freeman) Updated December 27, 2011 12:00 AM

CEBU, Philippines - Cebu’s real estate industry proved to be the most dynamic sector in 2011, and this is expected to sustain in the next few years, as the province gains interest from both local and foreign developers as well as property buyers.

“Growth in Cebu’s real estate industry continued in an upward trajectory as is evident in the number of construction projects in the City, particularly within the Cebu Business Park and Cebu I.T. Park-collectively called the Cebu Park District,” said Cebu Holdings Inc. (CHI) president Francis O. Monera.

Together with its mother company Ayala Land Inc., (ALI), CHI launched several real estate projects in Cebu 2011, bringing in the different brands of ALI, such as Alveo, Ayala Premier, Avida, among others.

For ALI and CHI alone, the company has calculated at least P10 billion projects in the next few years for Cebu, including already CHI’s expansion of the Ayala Center Cebu which will start early 2012, that will incur the company at least P2 billion investments.

“Construction activities around the city have become more dynamic at present with more developments in the pipeline that continue to diversify from horizontal to vertical projects,” said Monera saying that this development reflects the increasing number of condominium units which is expected to grow by 74 percent to over 5,000 units to complete in 2011.

“Together with an expanding office space that may reach to some 460,000 square-meter of usable area or 15 percent than the 2010 inventory in Cebu,” said Monera.

Well known developers had strengthened its presence in Cebu and built series of projects, including new real estate sector investors, some are exporters who diversified their businesses to the booming sector.

Despite the fear of supply glut in the next few years, specifically in the condominium inventories, brokers’ believe that Cebu will not experience what Metro Manila is experiencing, wherein value of condo units dropped to their lowest levels, due to oversupply.

In Cebu however, real estate brokers are confident that thousands of condominium inventories in Cebu will be sold out in the short-term, while interest from both local and foreign buyers is getting stronger.

Anthony Leuterio, president of the Philippine Allied Chamber of Real Estate Brokers and Licensed Salesmen (PhilAcre) said that Cebu will benefit on the movement of international investors particularly from the United States and Europe, looking at Asia as their preferred property investment site now.

Cebu, with its good image in tourism, and as an investment destination is seen to lure more foreign property buyers,--condominium units in particular.

According to Leuterio, based on the profile of property buyers in Cebu in the last few months, his company—Leuterio Realty Company, with a network of over 200 brokers selling properties within the Philippines noted a tremendous increase of foreign buyers in condominium in Cebu. These buyers do not only buy one or two units, most of them are buying bulk number of units—largely for investment purposes.

Leuterio said Cebu’s decision to position itself as a preferred “vacation destination” has paid now, regardless the lack of full support from the government in terms of promotion. He believes that Cebu is blessed with its “Hawaii-like ambiance”, and international investors are preparing to take advantage of this opportunity.

While the international buyers pushed the active and strong confidence of developers to provide more condominium units, Leuterio said some developers also in Cebu are also maximizing the interest of local buyers with their equally strong interest in buying house and lot properties within the Metro Cebu area, as well as in the beachfront countryside locations.

Real estate marking consultant and educator Jun Garing held the first real estate sales forum, designed for condominium selling in the middle of this year.

Garing said, the event was held to equip licensed brokers and learn from the pitfalls of condominium marketing, so that Cebu will be able to be saved from supply gut in the next three years, and inventories of condos will be sustained by strong interest especially from the foreign market.

While interest from the developers continue, Garing whose company is commissioned to market the Filinvest property at the South Road Property (SRP), and also owned a real estate training facility—Salesman’s Centre, said that there is no time for Cebu to prepare for a professionalized condo marketing—but now.

This is because, Garing noted that Cebu’s real estate selling culture, still lacks uniqueness and still has to embrace its maturity level.

In fact, he said Cebu has to adopt different strategies in marketing condominium properties, such as introducing package-selling, condo-tel concept and even fractional-ownership.

Amid the interest from industry players, and buyers, Garing said Cebu has to address the concern of providing good property management services.

Garing, a seasoned real estate seller, said while there are a lot of projects being built here, property management service here has not take off yet.

The boom of real estate in Cebu is here, he said adding that this development should be complemented with the proper and right support services. Otherwise, glut in supply that will result to slide of property value in the next few years will be experienced.

As of latest count, there are a total of 36 developers whose projects have been approved for condominium buildings. This is worth over P100 billion worth of investments. (FREEMAN)

Camella Homes plans more projects for 2012

Ni AJ De la torre (The Freeman) Updated December 27, 2011 12:00 AM

CEBU, Philippines - Due to the high demand of houses in the city, Camella homes has expanded a current project plus eyes more new projects in the coming year.

Just last week, Camella homes opened four new model townhouse units at The Courtyards in Pasadena, Guadalupe, Cebu City. This expansion was thought off due to the high demand of houses, especially in the area, said Camella Cebu North General Manager Myra Lynn Gilig.

Gilig said that with the convenience of the location plus more banks offering low interest housing loans especially with the holiday season, they are bullish that the project would be greatly welcomed by the public.

24 three-bedroom townhouse units would be located at the subdivision which is tagged at P4.6 million to P7 million.

Architect Michael Pizarro, the interior design consultant for some of Camella Homes’ projects here in Cebu, said that for the new units in Pasadena, they have designed it for a specific theme, a laid-back and comfortable living lifestyle.

Pizarro said that they have shifted to a design with neutral colors to “catch the attention of a more discriminating market,” which seeks for comfort, feeling like the home is “away from a busy metropolis.”

Further, Gilig said that they are very happy with the Performance of Vista land, which comprises of business units Brittany, Crown Asia, Camella Homes, Communities Philippines and Vista Residences.

According to Gilig, 60 percent of their growth drivers for this year and the recent years can be attributed to Overseas Filipino Workers.

She said that the strategic and convenient locations of their projects also add up to their good performance every year.

Although Gilig admits that there really is a market for condominium residents and developers in Cebu city, she said that they are not worried because there is a different profile for those who prefer condominiums over houses.

Gilig explained that most of those who invest in condominiums are the younger generation and yuppies but there is still a large market for those who seek houses especially for families and OFW’s who find it best to invest in house and lots.

She revealed that they have increased their market share and also will be opening 14 more projects all over the Philippines in the first quarter alone of 2012.

Three of these new projects would be in Cebu, not counting yet the number of expansions they would also be having next year in their existing projects. (FREEMAN)

Investing in your own home

THURSDAY, 15 DECEMBER 2011 17:53 GEORGE S. CHUA / FREE ENTERPRISE

EVERY Filipino dreams about having their own home, especially this time of the year when the holiday season is in the air and there is no substitute to having a nice Christmas tree in a place you can call your own. How does one turn this dream into a reality? I have some ideas for you to consider.

First is that you have to believe that your dream can become a reality and have a plan towards achieving that goal. Work backwards in determining what is the value of the house or condominium unit you can afford to acquire. There are some rules of thumb that I have seen that give a formula of three times the gross annual household income. So if both you and your spouse are working and each of you get P50,000 each, your gross household income would be P1.3 million. Multiplying this by three times would give you P3.9 million as the value of the house you can afford.

Another way to see how much you can afford to buy a house is by determining how much you can pay in terms of a monthly amortization, assuming you are able to get a bank home loan. From whatever is your take home pay you need to set aside your basic living expenses, such as food, utilities, transportation expenses, tuition and school fees of your children and so on. In the case of rental payments if you are not living with a relative, you can add this back to your available funds to pay the monthly amortization of your loan.

Assuming that you and your spouse could set aside P40,000 a month, at the prevailing interest rate of about 11.5 percent for a 20-year home loan, this means that you can have a home loan for P4,173,913. On a minimum home loan collateral value of 70 percent the home value should be about P6 million which means you need to come up with equity for the difference.

There are a few things you need to keep in mind. First is assuming you are good at what you are doing and know how to take care of your job, chances are over the years you would also be getting more income or pay. While it is possible that things can go really bad like losing your job, it is more likely that not that you will earn more as you become more senior and experienced.

Second, getting a home exclusively on the basis of where you work may be convenient but always keep in mind that the company can change locations, you can be reassigned to a different location or you may even end up working for another company. The best way to mitigate this is get a property that would not only be convenient for you but would also have a good resale value in the event you need to move.

Third, owning a home entails other costs aside from the monthly loan amortization, such as real estate taxes, association dues, and insurance premiums. This means you have to set aside the money for these expenses as well.

The upside to owning a home is the appreciation in real-estate value. This is a nice bonus to having a place to stay. However, as we have recently seen, realty prices could also decline even in very good locations. Not only that, your cost of home ownership could skyrocket for reasons beyond your control such as the jacking up of real estate taxes. You should view your home as a major long term investment that you have to set aside mandatory savings, only after you have provided for this should you even think about other non-essential expenditures. Over longer periods of time, it is a good bet that you will be ahead.

If our government was really serious about helping Filipinos get their own homes and keeping them, there are a variety of ways they can help in. There are a number of ways to do this like allow interest expense to be a deductible expense in our income tax, or keeping real estate taxes at their original levels. The reason local governments jack up real estate taxes is because they claim that the value of the property has gone up! Well yes, that may be so but the property owner does not benefit from that until he sells his property. You can just imagine a retiree whose income stream is already limited and in most cases in a decline, to increase his real estate taxes is like forcing him out on the street. In addition, I have yet to see a local government unit lower real estate taxes even when property prices in there are collapse.

At any rate, investing in your own home is a proposition worth considering. As a major investment proposition, it is unlike other investments that you have little or no control over, you can see where you invested your money in every day, and you are able to enjoy your investment even if there is a momentary decline in the value of your investment. Remember a Christmas tree always looks better in your own home!

Assign your most mundane tasks to your best people

SUNDAY, 20 NOVEMBER 2011 18:30 MICHAEL SCHRAGE

AT a recent dinner with several successful Internet entrepreneurs, the conversation quickly turned to talent. How do you get the best value from your best people? The majority insisted that top talent’s time should focus on the firm’s highest value-added opportunities. Align your best people with the challenges that only they can surmount.

That’s where the contrarian view kicked in—which is one I happen to agree with. Of course your best people should focus on your biggest issues. But one of your biggest issues is—and will always be—the horrendously inefficient scut work that all organizations accrue as they grow. Next Jump’s Charlie Kim, the founder of one of the Internet’s most successful loyalty and rewards programs, argued that as organizations scale, they often slip into less than mediocre processes just to get the job done. These processes are deadly dull to manage and excruciatingly boring to fix.

What talent-loving CEO would assign his best people to such tasks? Kim would. Savvy leaders understand that, as their operations scale, the real barriers to growth don’t have to do with the ingenuity of value-added implementations—they’re found in the necessarily evil support systems and the half-baked infrastructures desperately attempting to support them. Typically, talent-rich organizations assign their mediocre people to solve these seemingly mediocre problems. But that, Kim says, is shortsighted.

Have your most talented people deal with your most stultifying issues. They’ll come up with solutions that annihilate inefficiencies and enable new opportunities for value-added growth. Successfully confronting scut work can stimulate the best of both worlds: rickety, unreliable processes are eliminated and everyone in the organization now has more time and energy to add more value.

That’s a big win. It’s also great for morale. Having your most talented people solve your most mind-numbing problems sends an important cultural signal: Improving organizational efficiency and effectiveness is a priority for both top management and top talent.

It may sound paradoxical, but if your very best people aren’t involved in fixing your organization’s most persistently boring processes, then you’re failing as a leader and a value-added manager. It’s time to get your best people excited about transforming the dull, the boring—and the essential.

Michael Schrage is a research fellow at the Sloan School’s Center for Digital Business at the Massachusetts Institute of Technology. He is the author of Serious Play and the forthcoming Getting Beyond Ideas.

Flames gut Cebu mall

By Davinci S. Maru

Friday, December 23, 2011

CEBU (Updated) -- It was like a scene from a disaster movie when a commercial building erupted in flames and spewed thick, black smoke while pedestrians clogged the streets.

The seven-storey Gaisano Capital South was gutted by flames that broke out in the early hours of Friday and lasted more than 18 hours.

The fire at the corner of Leon Kilat and Colon Sts., Cebu City, highlighted the fire department’s lack of equipment for high-rise operations.

Smoke poured from gaping holes and upper floors, which turned out to be the worst enemy of rescue officials. Debris rained on the ground as the fire continued to raze the building.

CEBU. Onlookers gather as smoke pours out of all sides of the Gaisano Capital building at the corner of Colon and Leon Kilat Sts. Firefighting operations lasted more than 18 hours, and the lack of ladders and other equipment hampered firefighters. (Arni Aclao)

Food chains, cellular phone shops, retail stores and other enterprises were forced to shut down, on what would have been one of their busiest days of the year. The mall was supposed to hold a midnight sale Friday.

Traffic enforcers kept vehicles from entering the streets closest to the fire scene.

No one was reported injured.

While most people went about the holiday rush, about 1,000 mall employees were afraid they might lose their jobs.

Cebu City Fire Marshall Anderson Comar said they received the alarm at 12:42 a.m. from a security guard who was on duty when the fire began.

Initial reports revealed an explosion was heard within the mall’s ground floor area, followed by thick smoke coming from the receiving area.

All of the city’s firefighting units rushed to the mall with the help of neighboring municipalities, the Emergency Rescue Unit Foundation (Eruf), Filipino-Chinese Fire Brigade, barangay fire brigades, and the police.

Comar, in an interview, told reporters some unidentified men didn’t let them immediately inside when they arrived, which he described as a setback in the firefighting operations.

Smoke

By the time the firefighters were allowed inside, the smoke made it hard for them to breathe or see anything.

At 3:55 a.m., the fire alarm was raised to Task Force Bravo, the highest distress signal.

Operatives of the Special Reaction Unit used breathing apparatus inside, but the intense smoke hampered their movements.

Only 30 combined breathing apparatus were available from the Cebu City Fire Department and Bureau of Fire Protection in Central Visayas. Each unit could sustain a firefighter for less than an hour inside a smoke-filled area.

A helicopter from the Philippine Air Force (PAF) hovered above the fire scene, to monitor developments.

Three aerial ladders also weren’t much help after they broke down during the emergency operations.

Firefighters had to use a boom truck from the Visayan Electric Company (Veco) and City Traffic Operations Management (Citom) to manually break the glass windows of the mall for ventilation, or at least to flush the smoke out.

In the spirit of bayanihan, rescue volunteers deployed on orders of retired Major General Victor Garcia, vice president for security of Metro Stores, aided in the firefighting operations.

Cave-in

Sixty armed operatives from the Cebu City Police Office (CPPO) led by Inspector Arnel Banzon helped control the crowd.

Comar said he suspected the fire came from the engine and delivery and stock rooms of the mall, which they could not get into because it was already 140 degrees Celsius inside.

While their operation was ongoing, black smoke billowed after another eruption at 2:42 p.m. inside the McDonald’s outlet across the mall.

Firefighters were put to the test but were able to extinguish that fire that lasted no more than five minutes inside the fast food outlet.

Initial reports revealed a generator reportedly exploded after it overheated.

Diners who were having a late lunch scrambled away from the food outlet to avoid getting trapped.

At 3 p.m., a group of firefighters penetrated the mall and reached the second floor.

However, they had to run out after some floors caved in and they noticed some cracks.

The roof of the seventh level caved in, forcing the firefighters to briefly suspend operations.

Losses

December is usually the best season for retail operations, which was why the timing couldn’t have been worse for Gaisano Capital and its tenants.

Connie Lavado, an optometrist of the Fernandez Eye Clinic, told Sun.Star Cebu they lost almost P12 million worth of items, cash and checks.

Boxes of eyeglasses were recently shipped out from Surigao City in Mindanao and stored inside the establishment. The clinic is one of the tenants of the mall, the first of the chain of 17 stores run by the Gaisano Capital Group.

The store also houses the offices of the Gaisano Capital Group on the upper floors.

It was the first Gaisano Capital put up by Edmund S. Gaisano as a spinoff of Gaisano Bros., the retail venture of the five Gaisano brothers who founded the old White Gold Store.

As of this year, Gaisano Capital has 17 branches in the Visayas and Mindanao.

Eric Labrada, the mall’s liaison officer, said there was no estimate yet as of 9 p.m. as to how much damage the fire had caused.

Openings

Corporate operations will resume on Monday, he said. Labrada also denied speculations the fire was not accidental.

“Why would we set our store on fire? We are even opening three more soon. That’s just baseless. A malicious accusation,” he said.

Cebu City Mayor Michael Rama has tasked the Department of Manpower Development and Placement (DMDP) to make an inventory of the employees that will be displaced by the fire, if any.

He made this pronouncement after spending hours trying to manage firefighting operations.

Rama said the DMDP can help recommend jobs for the displaced employees because the department is in a better position to know about job openings in the different companies.

He will also task the Police Coordinating and Advisory Council as well as staff from the Office of the Mayor to look into possible lapses of the Cebu City Fire Department.

He wondered why Comar and his team did not insist on going inside the store when they were allegedly stopped by the security guard at the entrance.

“Why didn’t they insist? That aspect will have to be looked into,” said Rama. (With JGA of Sun.Star Cebu)

Published in the Sun.Star Cebu newspaper on December 24, 2011.