Manila, Philippines Monday, February 3, 2003
Feature
The name behind landmarks like the Cultural Center of the Philippines in Manila and Ayala Tower One in the Makati central business district is expanding its portfolio to building residential communities for the middle income market.
For this focus, listed construction company DMCI Holdings Inc. (DMCIHI) put up a wholly-owned subsidiary, DMCI Homes, last August 2001.
DMCI is expanding its portfolio to include real estate development. Above, the swimming pool at the East Ortigas condominium unit under construction. Photos by Ben Razon
The thrust of DMCI Homes is developing and constructing small middle-income residential communities, with no more than 400 units per community. DMCI Homes also manages the entire community they built, from maintenance to troubleshooting.
"We want to build small communities of not more than 400 residential units per project for if it’s big, the residents will not know each other plus a bigger community means higher maintenance costs," said Tet Abad Santos, general manager of DMCI Homes in an interview.
The middle-income housing projects of DMCI Homes include the Lakeview Manors, Morning Sun Townhomes, and the Vista de Lago condominium units (under construction) in Taguig; Hampstead Gardens in Sta. Mesa, Manila; and the East Ortigas Mansions (under construction), which is a mixed residential development of townhouses and condominiums in Pasig City. The housing units of DMCI Homes in these locations cost around PhP1-6 million.
DMCIHI chose the middle-income market because in the locations of their projects, like Sta. Mesa and Taguig, the communities are mostly in the middle income bracket and they want their projects to match the market in the community.
Alfredo Austria, DMCIHI vice president for business development, also said that the middle income market has good potentials as shown by studies of economists (see industry report).
The entrance of the East Ortigas Mansions in Pasig.
"Based on the demographics alone, Metro Manila has around 10 million in population and let’s say that 5 percent are in the middle income bracket. That’s around a market of 500,000. "
In its 2001 annual report, DMCIHI also reported positive market reactions in their initial projects.
"Based from (sic) the success of our initial middle income residential projects like the Lakeview Gardens in Taguig and Hampstead Gardens in Sta. Mesa, Manila, we expect significant cash contribution to come from housing development," the Annual Report stated.
Mr. Austria said the company had plans to put up small residential communities to complement their construction business but it was not in the near future. He said these residential projects were pushed ahead of time due to the fact that there were lesser infrastructure contracts for the company and they needed to generate cash flow from their land banks and equipment.
"We have a land bank of around 80 hectares in Metro Manila, with bulk of it situated in Taguig. With our land bank and experience in construction, this is a business that we know and in the process of being able to sell our units we are effectively selling our land and getting revenues out of our construction equipment instead of it just depreciating," added Mr. Austria.
"Residential communities are where the market is as most of the sectors are still recovering and foreign investors are not coming in. Also, our construction works have significantly lessened," said Isidro A. Consunji, DMCIHI president in an interview.
Mr. Austria said that DMCIHI plans to utilize its land bank in the coming years by increasing their middle income housing projects. Currently, he said that DMCI Homes is mulling on developing another small middle-income residential community in Cainta along Imelda Avenue and a medium rise residential building in Taguig.
EAST ORTIGAS MANSIONS
One of DMCI Homes’ ongoing middle-income residential developments is located in a 2-hectare compound in Pasig City along Ortigas Avenue extension and within 30 to 45 minutes of the major central business districts (CBD) like Makati and Ortigas.
The dining area of the 3-bedroom model unit of East Ortigas Mansions.
East Ortigas Mansions, which is slated to have its first batch of occupants this year and to be completely built by 2004, is a PhP750-million mixed residential development. It will have six buildings that will house five-storey condominium units with floor spaces ranging from 50 square meters to 121 square meters with two to four bedroom units.
It also has a separate cluster wherein 12 townhouses are located with the floor area of the townhouse units ranging from 100-212 square meters.
Mr. Austria said that around 50 units have been sold for the East Ortigas Mansions and 12 units have been sold last December. For 2003, he said he expects around 20 units to be sold per month.
Ms. Abad-Santos said that what DMCI Homes wants for their market is to have condominium living within a subdivision set up.
A three-level clubhouse, that is already constructed, has in it a bar, an entertainment room, billiards, an eatery and a penthouse that can be booked for parties. The clubhouse is situated in the middle of the development.
In front of the bar is a swimming pool for the exclusive use of the residents. Basketball and tennis courts will also be put up inside the residential development.
A multi-level parking facility is also being constructed to accommodate the vehicles of the residents. However, the residents will have to buy the rights for the parking space which is priced at a one time fee of around PhP200,000.
The first batch of occupants are expected to move in this year.
Inside the two-hectare compound are two commercial establishments that are within walking distance. One is S & R price mart, a warehouse grocery establishment and the outlet yard, a commercial strip that will house garments and clothing establishments which will sell at factory prices.
There is also a commercial establishment right next to the compound, the Ever Gotesco mall.
"If the residents want to watch a movie or want fresh food they could just walk to the mall and buy groceries at S & R," said Mr. Austria.
When asked about the traffic problem along the Ortigas Avenue extension which has a lot of commercial establishments, Mr. Austria said that there is traffic all over Metro Manila and what the residents have to do is estimate the time when the traffic flow is light and heavy in the area so that they could plan their travels.
For the entire development, Mr. Austria said that they are expecting around PhP1 billion in income once a majority of the units have been sold.
"We want to stay in the housing segment first and be really good in this market segment as there is currently an oversupply of buildings, the industrial sector has no investments and most investors are going to other Asian countries like China and Vietnam," added Mr. Consunji. -- Alab D. Vitug
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