Interview: Ambassador Amable Aguiluz V
What segments of the economy will be generating the greatest activity for the sector?
AMABLE AGUILUZ: The current economic momentum has generated optimism for real estate developers. Even as newcomers enter a market composed of strong consolidated players, room for expansion in residential and commercial sectors remains substantial, driven by the growing economy, resilient overseas foreign workers’ remittances and an expanding business process outsourcing (BPO) industry.
A new expanding source of activity for the sector is entertainment and hospitality, as developers benefit from the influx of tourists and a growing demand for hotels and entertainment infrastructure. We expect to reach 5m tourists for the first time by the end of 2013, making the goal of 10m by 2016 not so farfetched. Therefore tourism, which, coupled with growing remittances accounted for $21bn in 2012 and BPO growth encourage more mixed-use developments to accommodate hospitality and entertainment infrastructure as part of the growth strategy of the residential projects.
The commercial sector also has significant potential and has caught the attention of many of the big players aggressively pursuing office space building. Although everything indicates BPO growth will be consistent, developers must be flexible to make adjustments should any developments impact the BPO industry. That is why the open spaces designated for BPOs can easily be converted to occupy something else.
How are higher value products being prioritised?
AGUILUZ: One of the main reasons why the market is responsive to new projects is due to the integration of technology. For instance, we work closely linked to Cisco on providing internet connectivity and applications targeting security and convenience for residents and buyers. This adds value to any final product and has been adopted as the only way forward for new projects. Green building is another added value trend for developers as a result of higher demand from consumers.
The current strategy is to offer more value for money, such as integrating basic institutions, like schools, as part of the projects. Real estate development is driven by customised needs and the imperative to deliver quality, price notwithstanding. Maintaining higher standards will be the point of competition in the upcoming years, even if more expensive, because in the long run consumer satisfaction pays off. For instance, the adoption of high strength concrete for high-rise buildings enables us to ensure that the building is earthquake-safe, particularly pertinent for the Philippines. For these higher quality services, we work with the Asian Institute of Technology in Thailand for quality control of our buildings. These are measures that not all other players usually engage in, but the initiative will grow as consumers increase their expectations.
How will projects be decentralised from Metro Manila and cater to different economic segments?
AGUILUZ: BPO is already saturated in Manila, so development has moved towards Cavite, Cebu, Davao and General Santos, creating the incentives for real estate companies to move their focus to those areas given a rise in disposable income and the formation of new markets. It is currently getting very competitive in Metro Manila, further incentivising players to seek balance in emerging profitable areas outside the metropolis, heading where the new markets are. Developers should cater to all segments of the economy to maintain balanced portfolios. For example, AMA Group established Picar Development to build high-end condominium projects like the Stratford Residences, as well as luxury hotels such as the Mövenpick Hotel. On the other hand, AMA Land serves the mid-market, with the AMA Tower and the Chelsea Residences, and AMA Communities focuses on horizontal developments like the Ara Vista Village, which is designed for young families and those with more modest incomes. The mid-market segment, mainly composed of the emerging middle class, is growing as home-ownership is becoming a priority.
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