The hidden risks for real-estate companies

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Category: Properties

11 Mar 2014

 

Written by Amor Maclang

RISK and crisis preparation is a crucial element that should never be missed in any marketing initiative, particularly for businesses belonging to the real-estate sector.

In the mere course of fulfilling your business mandates as developers, real-estate firms practically expose themselves to various risks that pose huge threats to your business in terms of your efforts to build a positive reputation and ensure business continuity. Issues and situations such as tree balling; the concept of adaptive reuse; preparing to go public (IPO); an “innocent” advertisement that was misinterpreted; working with foreign architects and designers; dealing with indigenous communities; property zoning; or even eyeing to build brands and lure investors to conflict-stricken areas like the Mindanao region all involve risks that, if left unaddressed, can likely escalate into full-blown crises that put businesses in peril.

There are three things you can do to address all these dilemmas. (1) You can choose to eliminate these problems right from the beginning; (2) Mitigate the impact; or (3) Prepare for risks by crafting your strategic plan. That is the most important thing that should be spelled out.

Risks, issues and crisis are a part of doing business. As I have mentioned countless times in the past, the public doesn’t judge you by what happens; it’s how you respond to a situation that forms the lasting impression. Tree balling, for example, is a necessary initiative developers often resort to, especially if you are preparing to develop a network of roads to and from a soon-to-rise property. Over the years, we have heard about a few instances about public protests carried out by environmental groups and concerned citizens against developers who have decided to continue with their tree-balling work.

In the case of local developers tying up with foreign architects and designers or those adopting a foreign concept to sell a local property, the situation can rouse the ire of local stakeholders—architect groups, homegrown artists and many others more—who may be wondering why they are not good enough to deserve your patronage. They are likely to wonder about this loudly—and publicly, too—thus possibly fueling a reputation that you are not pro-Filipino.

Ayala Land has done an exceptional job in managing this kind of situation. How exactly do they do it? For one, they work with multiple architects for various projects—an equal mix of local and international
talent—that strengthen their support for the expertise of Filipino professionals while also getting inspiration from foreign practices. Additionally, they refrain from overly communicating this fact to the point that it (the international appeal) becomes their actual selling advantage.

What can other developers learn from these two scenarios? These are perfect examples that highlight the value of providing proper context behind business decisions. As developers, you have a choice whether to completely eliminate the risk of being the center of a public outcry by completely stopping to ball trees or mitigate it by proceeding to do the same but reinforcing your business decision with a reforestation advocacy. Identify possible scenarios and pertinent stakeholders and prepare communications for each to help you deal with the situation when the need arises.

Crisis is a question of “when,” not “if.” There are a lot of people in the Philippines who believe that thinking about possible crisis scenarios might actually cause them to occur. Logically speaking, one must conclude that not thinking about crisis scenarios will prevent them from ever happening. And, sadly, that kind of thinking does not hold any dependable truth with it.

In a crisis situation, remember that facts will always be your best ally. Do not try to complicate the situation by making up stories just to cover up your ass. State the facts as they are and do not justify any wrongdoing, if there are any. Stick to the plan and craft your message based on the communications that you have set in place. Do not throw yourself into the lion’s den without a solid branding and reputational strategy because you risk losing your business and hurting your reputation by not arming yourself against the vulnerabilities of your industry.

Conduct a rapid assessment and war-room exercise of various business scenarios relevant to your operations, how things can escalate, or plans to de-escalate before you make your final decision. Establish an image as a thought leader that looks out for the welfare of the immediate community proactively. Map your stakeholders—it can be the local government, the local business community, or the local insurgents, even—because it is not just your customers who define what a good business means to you as a developer. Engage them and communicate how you intend to respond to their needs.

At the end of the day, in a reputation economy, you may be a well-oiled machine but how people perceive you and how they perceive how you conduct your business counts as much as the actual product or experience you sell. Remember that sale will benefit you only once. A mismanaged crisis can hurt your chances forever.

Five-star living for Marco Polo

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Category: Properties

11 Mar 2014

CONSTRUCTION and completion works continue in full swing at Cebu’s latest upscale residential address, Marco Polo Residences. Situated within easy walking distance from Marco Polo Plaza Cebu, the branded and serviced condominium is for families who want to live the luxury-hotel lifestyle every day.

Construction work on the third tower, Marco Polo Parkview, is set to begin. Nestled 800 feet above ground in a prestigious locale in Cebu, Tower 3 is designed to reflect the meticulous taste of its residents and their guests. The high-rise neighborhood looks out over Mactan channel and the stunning cityscape, and is a short drive from downtown Cebu, Ayala Center, AsiaTown IT Park, Mactan Shrine, Magellan’s Cross and Cebu International Airport, among other top destinations in the Queen City of the South.

This month The Residences, or Tower 1, is scheduled for turnover, while Two Residences, or Tower 2, has reported major construction headway and is set for topping-off. 

Federal Land is setting a track record in the development of internationally branded residences that elevate the standards of high-end condominium communities in the country. Marco Polo Residences is the latest addition to its impressive portfolio as the first project of its kind in the Visayas, comparable to branded residences in the most expensive cities in Asia. So much better than an extended hotel stay, the experience of every occupant will be highlighted by the following features: an opulent grand lobby and drop-off ramp; architectural concept by Arch. Bong Recio; selected amenities designed by The Gettys Group (Chicago); outdoor landscaping by EA Aurelio Landscape Architects; hotel services that include concierge services, apartment cleaning, valet services and room-service-style dining; and a security system that ensures utmost comfort and privacy. Unit owners can expect unprecedented and exclusive access to first-class facilities and privileges associated with a five-star hotel. For Project Inquiry call +639173236123.

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In Photo: Construction of Marco Polo Residences’s Tower 2 is progressing well, with topping-off scheduled in the first quarter of the year. (Right photo) The door of luxury condominium development with international quality services of a five-star hotel opens this year. Marco Polo Residences’s Tower 1 is set for turnover this 2014.

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How can local developers reach the foreign market better

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Category: Properties

18 Mar 2014

 

Written by Amor Maclang

PROPERTY sales for a good number of local real-estate developers have continued to sustain an upward trend as of late. This development has helped translate the encouraging outlook that the country has enjoyed over the years into actual business opportunities that continue to fuel the surge of various local industries.

Real-estate experts and analysts have noted that the Philippine property sector will continue to defy odds as it aims to achieve record-breaking growth figures this year.

For one, the foreign market—investors, property buyers and even foreign developers—has had a strong impact on how the local sector has thrived, continually pouring in key investments focused on high-potential areas, such as commercial and office real estate, construction and tourism. In the last three months, foreign institutions eyeing to establish their brands in the region have tapped Filipino developers as partners to projects collectively valued at $10 million to $300 million. This alone stresses the huge interest that the foreign market has in doing business here in the country.

But how exactly can the Philippines take advantage of the economic potential that has caught the eye of the foreign market? How can we sustain this development and lure more investments to support our growing economy. Here are a few insights I want to share with you:

Make your brand do the talking

Branding is one of the easiest inputs to the value-chain that can unlock more value for the community and our people. It is through nurturing what your brand stands for and communicating the promise of what you can achieve—and subsequently delivering on that promise—that developers can sustain a long-term relationship with the foreign market.

Establish an investor-friendly identity by making your brand speak of your business values. You can bolster your brand’s reputation by championing green initiatives, for example. Understand the needs of the foreign market and create opportunities by sustaining their trust. It won’t be enough that you know everything about sustainable or green development; you should be able to back up all your assertions with actual products that live up to your brand’s unique character.

Create a demand for the ‘unique’

Another way to attract the market is to create products that fulfill the promise of extraordinary living experiences. Brittany Corp., for example, has invested in this concept when it introduced Crosswinds, its Swiss-inspired residential development in Tagaytay. The secluded atmosphere and the calming allure of the place are perfect elements that have the biggest potential to attract discerning buyers.

Understand the market’s potential

There is a huge disparity between the capacity that both the foreign and local property market have, and being able to craft strategies on how to target the two separately already moves you one step ahead of the competition.

The best example to illustrate this point is the massive opportunities that come with the silver market. We’ve mentioned before that this is one of the emerging property markets that is poised to bring long-term growth for real-estate developers here in the Philippines, simply because of the investment and spending capacity that members of this highly specialized segment possess.

As I have mentioned in my previous column, members of the global silver market are continuously on the lookout for homes and investment opportunities overseas, and developers in the Philippines should be able to provide products and services that fit their lifestyle. This can come in the form of developments that promote medical tourism, leisure tourism or luxury properties, among many others.

With the Philippines successfully rising as a global investment hotspot, it is about time that our local developers stepped up their game to be able to sustain and ride the growth long-term. What developers can do is to carefully strategize by evaluating their efforts and redirecting their plans to suit the needs of a highly complex segment like the foreign property market.

The BOOMING Philippine Economy - A morning with Dr. Bernie Villegas

It's not just in boxing (Manny Pacquiao), Entertainment (Jessica Sanchez) and Basketball (Jones Cup) that things seem to be looking up for the Philippines!

I very recently had the pleasure of spending a morning with Dr Bernie Villegas. What was suppose to be a brief update turned out to be more that two hours hearing about his view of the "very promising" prospects for the Philippine Economy. Known in the business community as the "Prophet of Boom", Dr Bernie was a bit more introspective and somewhat "conservative" than his usual hyper-optimism.

Fast Growing Economy

Nevertheless, my confidence in the future of our country was boosted a gazillion times after that chat with Dr Bernie. In my hopes to spread the optimism, I am sharing some of the key points I remember from the talk.

Let's all try to live long, quality lives. We'll be rich soon!

The Philippines will be the 16th Largest Economy by 2050!

The Prophet of Boom started out by citing the very exciting prediction of the top economists of HSBC that the Philippines is poised to be the 16th largest economy in the world by year 2050! That means that when my kids hit my present age, they'd actually be enjoying the perks of being a rich 1st world country! That's assuming the present economic and political fundamentals hold up and are sustained. That's a 5% to 7% growth rate consistently for the next 20 to 30 years. Very doable.

It's like what happened to Korea, Taiwan and Singapore. Korea grew to be the economic super power by the mid 80's even after having been torn to bits by the Korean War only 30 years prior. The tiny island state of Taiwan which still isn't even officially recognized by many nations rose to its place in the World Economy despite only being a "breakaway" state from Mainland China a few decades before.

Singapore, Hong Kong, Taiwan and Korea all eradicated poverty in just one generation. This is despite being very poor in natural resources, not having a domestic market as large as the Philippines and some having gone through war.

Meanwhile, a lot of good things are looking up for the Philippines:

Stable Democracy:
After many years of finding our balance, our Democracy is now on firm footing. The 2010 elections was a turning point in our history where clean and generally peaceful elections took place thanks in part to the PICOS machines and a maturing electorate.

The 2010 elections gave us a glimpse of how clean elections can be achieved. We all need to do our part in protecting this new-found source of true democracy.

We just need to "make tiis" watching and seeing more of Kris Aquino and Boy Abunda on TV. Ika nga nila, "what are we in powder for?" Joke lang.

Labor Peace:
It's been a long time coming but we finally have a more cooperative and peaceful labor sector. The era of massive strikes, plant shut downs and even urban terrorism against the management sector are now, for the most part, lessons in our history. We are seeing a more progressive, responsible and cooperative labor sector willing to partner with management to add jobs to the economy.

Militant Labor has quieted down.

New Face of Philippine Labor: 
Peaceful and Cooperative!

Educated Young, English Speaking White Collar Labor Force:
Despite the unrelenting efforts of programs like Willing Willie, Vice Ganda and similar shows that seems to be a consipiracy to "idiotize" the Philippine population, the foundations of the Philippine Education system, poor funding notwithstanding, has continued to churn out a well educated mass population. More than 50% of the population is below 25 years old, knows math, a little bit of science and enough structured English. Moreover, parents in the Philippines still labor hard both here and especially abroad to send their kids to some form of schooling with most being able to complete at least high school where they learn critical thinking, life skills and English.

The Business Process Outsourcing Industry:
The educated labor force is fueling the astronomical growth of the Philippine BPO industry. We have already outpaced India, Ireland and all other challengers to the BPO market. This is giving rise to more affluent and young middle class which is also feeding the growth of real estate (condos and mid priced housing), retail and liesure. It really is starting to be MORE FUN IN THE PHILIPPINES.

OFW Power:
This phenomenon has continued unabatted and even accelerated over the past 20 years and counting. At any given time, around 8 to 10 million pinoys are abroad mostly either as contract workers or immigrants who all send back money to the mother land. This is fueling the housing boom, the retail boom and the micro enterprise boom. Many pinoys left here in the Philippines go into business to augment their income. The Go Negosyo movement may also be inspiring the legions of OFW family members here at home.

It's also somewhat fueling the education boom as more and more kids of the OFW's are able to progress into college. And, as they graduate, many ambition to work abroad and take over as their parents come home to retire.

The OFW families has also created a spike in the savings rate of the average Pinoy family. Thus the banking system is awash with CASH!

Strong Financial and Banking System:
Credit this to Cory Aquino's Banking Team. Joey Cuisia and Jess Estanislao used their expertise to set up a very stable and efficient banking system when they took on the reigns after the Marcos era. The reforms they put in place adds to our strength as an emerging "market". Portfolio of loans and assets are very healthy and our systems well managed. This is what sets us apart from many economies in Asia and the rest of the world.

Low Dependence on Petrol and Exports:
Our economy is less dependent on petrol and exports as other countries are. This has insulted us from the crisis that hit the USA and Europe of the last few years. As such, our economy continues to grow and our dollar reserves expanding despite the turbulance in other parts of the world. And, despite the economic slow down in these markets, the Europeans and those from the Middle East are too highly dependent on the Filipino labor force to do tasks they have become accustomed having Pinoys do.

One of the Best Performing Stock Markets in the WORLD:
Have you guys seen the index lately? It's up more than 25% since the start of the year! We have consistently been in the top performance list in the past few years. This will bring in even more investments into the country. And a lot of instant millionaires.

Dr Bernie recounted the contributions of each of the recent past Presidents in setting up the Philippines for greatness:

Ferdinand Marcos: Well balanced source of energy. We can thank Marcos for pushing geothermal and other alternatives to petrol for our energy requirements. Though we are presently still among the most expensive electricity cost in the world, this will eventually come down as efficiencies kick in.

Corazon Aqunio: The strong and stable banking system and the restoration of Democracy. She fought off all those coup d' etat attempts that practically squandered the goodwill generated by the People Power revolution. She prevented our country from falling into the control of a military junta like what was seen in Latin America during that era.

Fidel Ramos: De-regulation, Liberalization and De-nationalization of key industries to drive efficiency and development of key industries and infrastructures. The telco industry is one of the biggest beneficiaries of this move. Singapore Premier Lee Kwan Yu commented during his visit here in the mid 90's that "98% of the Filipinos had no phone and the balance 2% were waiting for a dial tone". This embarassingly true observation inspired a more aggressive de-regulation of key industries. The BPO industry is benefiting from the de-regulation of telco and BPO is one of our main engines for growth in the next few decades.

Joseph Estrada: Modernization of the Agriculture Sector care off the appointment of Ed Angara as Secretary of Agriculture. In their short tenure, Erap and Ed layed down the roadmap for building farm to market roads, post harvest facilities, irrigation and rural development. All this helped spread the wealth as well as grew the contribution of our agri sector in moving the economy forward.

Erap gave priority to Agricultural Development

Gloria Macapagal Arroyo: Gloria helped continue build a massive infrastructure that is yielding many benefits to the country. The nautical highway, SLEX, SCTEX, NLEX and many other projects in the country-side has aided in generating commerce and trade even to far flung areas in the country.

What could derail our good fortune?

Corruption remains to be our biggest challenge. This is probably why President Noynoy is focused on establishing a clean government.

Red Tape is also a damper on our progress. It takes too much effort to invest and get business done in the Philippines. It also provides many opportunities for the corrupt. If we can streamline our processes and not have to go through too many steps to get permits, licenses and approvals, our business activities will grow exponentially.

Vulnerable to Natural Calamities. We sit right smack in the usual path of storms and depressions. This is a challenge we need to get used to or should always be prepared for.

High Rate of Poverty. We need to drive growth in the economy consistently at 6% to 7% to eventually eradicate the poverty that eats up our country. Other countries have done it in the past. We are poised to make it happen.

Dr Bernie is expecting the country's credit rating to be improved to investment grade by or before Christmas. If this happens, then maybe his other forecasts will finally prove right!

The Prophet of Boom,
Dr. Bernardo Villegas

I am keeping my fingers and toes crossed!

Mabuhay ang Pilipinas!

Triathlon will certainly help in jumpstarting the boom. Mahal ng bike, eh.

Posted by Gregory Banzon at 5:37 AM

Gaisano retail arm plans 100 stores by 2017

CEBU CITY -- Metro Retail Group, retail arm of Gaisano-owned Vicsal Development Corp., recently opened the first of 10 stores it plans to build this year to reach its goal of expanding the Metro chain to 100 stores by 2017.

Eduardo C. Ponce, president and chief operating officer of Metro Retail Group, said on the sidelines of the launch last Feb. 27 that the company’s main thrust is to build or acquire and redevelop retail units in department store, supermarket or hypermarket formats instead of a shopping mall.

“To date, we have about 42 retail outlets nationwide and we plan to more than double that to 100 by 2017,” he told journalists here after the opening of Super Metro Colon hypermarket, the third Metro store, along historic Colon Street in downtown Cebu City.

“We are optimistic and aggressive about expanding into modern retail.”

Two more stores -- located in Carmen town in northern Cebu and in Carcar City in the southern part of the province -- will open next.

A Metro store is also being built in Calamba City, Laguna.

ACQUISITIONS EYED
On top of the 10 stores planned to be built this year, Mr. Ponce said acquisitions are also in the pipeline.

He did not elaborate beyond saying his company was in talks with operators of some regional malls and smaller stores.

“We cannot reach our target of 100 stores by 2017 if we are just going to build. There are acquisitions in the pipeline and we will just rebrand them,” he said in a separate interview.

The existing 42 retail outlets under Metro include at least six outlets under the Tita Gwapa Supertinda brand of community grocery stores that were acquired.

Mr. Ponce also said the company will continue to forge partnerships with property giants like Ayala Land, Megaworld Corp. and Filinvest Land, Inc.

The group also plans to set foot on Mindanao, even as the immediate focus is to expand the chain in the Visayas and Luzon.

Frank Gaisano, chairman of Metro Retail and managing director of Vicsal, said the group has been invited to set up stores in Mindanao.

“We’re on the lookout for opportunities there -- especially in Davao -- because Mindanao is a huge retail market,” Mr. Ponce explained.

On the sidelines of the same event, Mr. Gaisano told journalists that the opening of Super Metro Colon is part of the revitalization program of the Colon Merchants Association. Colon, touted as the oldest street in the country, used to be the central business district of Cebu.

“We are working with the Colon Merchants Association and the Office of the Mayor to revitalize Colon. Our vision is to turn Colon into the Ginza of the Philippines,” he said.

Asked for his outlook on the province, Mr. Gaisano noted that Cebu is the toughest retail market in the country.

“All the other retail outlets are represented in Cebu. In fact, so many of the retail outlets have either originated from Cebu or are migrating here. Bankers are telling us that if you can survive Cebu, you can survive anywhere,” he added.

Mr. Ponce said the competitive edge of the downtown market consists of offering great value deals.

“You don’t want to compete in prices,” he stressed.

“What you want to compete in is value. The more affordable you can make a valuable product, the better experience your customers will have,” he explained. -- John Paolo G. Bago

Source: Businesswolrd