Socialized home developers air crucial issues

By Charles E. Buban
Philippine Daily Inquirer

WE MAY NOT realize it, but improving the standard of living here in the Philippines may depend on one sector that as of now receives meager support from both the government and the private sector.

“Indeed, socialized housing is one sector that seldom gets attention despite the fact that its revitalization may alleviate the condition of around 30 million Filipinos who are currently living near or below the poverty line,” notes Linda Tan, president of the Organization of Socialized Housing Developers of the Philippines.

Tan admits that even for the country’s top property developers, little is devoted to socialized housing considering the many challenges involved, seeing little return on their investment is just one of them.

“This is why, in 1995, small property developers and those with substantial investment in socialized and low-cost housing projects formed the OSHDP. Aside from strengthening our collective voice, our organization believes someone must take up the cudgels for the sector otherwise a third of Filipinos would forever remain renting their homes or living as squatters and in subhuman conditions,” says Jefferson Bongat, OSHDP vice president.

According to Bongat for this year, OSHDP has several issues it would like to tackle with the housing authorities and lending institutions:

1 More sources of funds for those availing socialized housing units. “Currently, the only reliable source of loan is the state-administered Home Development Mutual Fund, also known as Pag-Ibig Fund. In fact, it offers the lowest interest rates in the market: 6 percent for loans up to P400,000 and 7 percent for loans above P400,000 to P750,000,” says Sonny Ducay, OSHDP director and PRO.

This means borrowers in the P400,000 housing loan package will only have to shoulder a monthly amortization, for 30 years, of P2,398.

According to Ducay, this monthly payment may already be manageable for a family earning about P7,400 a month.

“It was also great that Pag-Ibig Fund has increased its total budget for its housing loan programs in 2009 to P84.5 billion in order to cater to the strong demand for low-cost housing. While we expect a similar increase in allocation this year, we also would like banks to formulate a similar package that would allow our borrowers to avail a more accommodating housing loan package. These families also deserve to be trusted,” Ducay says.

2 Exemption from “cash advance” that utility providers ask developers of socialized housing projects. One of the major challenges a developer has to deal with these days is the need to shell out additional money to initially shoulder the cost of installing the needed facilities before service could be provided. For example, Meralco would require “cash advance” for the posts, cables and transformers before electricity will be provided.

The same goes with water providers who require a similar arrangement before water could start to flow into the houses.

3 Price stability of building materials. Ducay says the continuously rising price of raw materials—cement, steel, etc.—affect property developers, big or small.

“But the impact is much more pronounced in small developers whose budget is just enough for the project,” Tan says.

To remedy this, OSHDP is now talking to its members for the possibility of collating their requirements for the year so OSHDP could purchase materials in bulk to receive discounts.

4 Providing incentive for materials suppliers including hardware. OSHDP believes socialized housing projects should be regarded differently.

According to Bongat, the group will formulate a proposal to the Board of Investments and the Department of Finance that would provide a reward system like tax incentives to suppliers who would give much lower or discounted price of their products.

5 Using solar-powered street lights. Bongat reports that OSHDP has approached a China-based firm specializing in inexpensive solar-powered products including solar street lights.

“It’s not only just love of the environment. If we could put up solar-powered street lights on our socialized housing projects, then the poor families that will live there will have less bill to worry about. In fact, we could eventually build a self sustaining community that will rely less on the power grid,” Bongat says.

6 Centralizing land allocation for housing development. While there are advantages of assigning the job of identification and allocation of land for housing development in the hands of local government units, OSHDP believes that not all local zoning officers are knowledgeable enough to perform their mandate.

“It’s a highly technical task that if you are not qualified, there is a huge chance of ruining your community’s zoning. It’s no wonder that we have members who complain about being given a property that is beside a cemetery, which is of course, not very attractive if you are selling your project to a prospective homebuyer,” Ducay explains.

He reports that together with other organizations involved in the housing sector, OSHDP has been pushing for a more streamlined, consolidated and unified activity.

“This will result in less number but more qualified people to deal with not to mention effective and efficient delivery of service,” Ducay says.

 

How to finance and build a dream home

By Dr. Johnny Noet Ravalo
INQUIRER.net

Question:

After few years of hubby's hard work abroad, we finally have sufficient money to start our dream house. We cannot decide if we are going to hire the labor, hire an architect/engineer, and buy the materials on our own or is it better to hire a hassle-free contractor? -- Joann

I'm a 23 year old currently working in Dubai. I'm earning well enough to send my siblings to college and save up for myself. I'm planning to start building my own house when I come home this year but I honestly don't have any idea about loans. I have however availed of the Pag-Ibig Overseas program and am eligible for a P1.6-million loan. Any advice? -- Kamille


When it comes to your first home, there are always at least two sides to consider.

Finance is the first because it is our reality check. Anyone who has ever tried asking an architect to put into paper a design for a home knows that the dream house is almost always way beyond the budget.

An upside for new homeowners is the current low interest rates. Compared to the market situation in the 90s, the cost of mortgage today is very affordable. Commercial rates go for under 12% for up to 25 years. Not only is this lower than pre-1997 crisis rates, banks now allow for fixed mortgage rates, even for 25 year housing loans.

Those who argue that a fixed rate loan prevents the borrower from taking advantage of falling rates lose sight of the fact that the borrower is protected from the repricing uncertainty. The borrower cannot be protected from repricing risk (both up and down) and still have the benefit of downward flexibility if rates fall.

Kamille, check the website of different banks, especially the housing loan calculators. This gives you a clear idea of the monthly amortization, depending on the amount to be borrowed and the term of the loan.

Going for a very long-term housing loan will not always be good. Remember that interest is paid on the outstanding balance and so the longer you maintain a loan the more you pay in interest. Choosing too short a term will also not work well because a higher monthly amount may be too much to bear. If something unexpected happens with Kamille's income, the mortgage is in trouble.

Joann is concerned about the second side of building a dream home and that is the practicalities of converting an empty lot into a home.

Her concern can actually be generalized into a two-step question: Do you buy a ready-made home or build one? If you decide to build, do you do handle the logistics directly (engage the architect/interior designer, hire the laborer and buy the materials) or do you outsource all these to a contractor?

There is no golden answer. I know of one couple who took a mortgage to buy a home before getting married. They ended up with outlets that short circuited anything plugged into them, aircon outlets that didn't work because there was no electrical wires attached, a fuse box that was underpowered for the house and a living room that were eight to ten inches deep when rains were heavy. Oh, did I also tell you that the kitchen sink refuse went straight out of a hole into the street so their neighbors literally knew what was cooking for the day?

Building a home isn't any easier. If you don't have any reliable contacts, hiring the labor is going to be a big problem. Would you or your spouse have the time to physically supervise the day-to-day build up of your dream home? More importantly, could you tell if something being dug, cemented or wired was not in order?

My own experience with contractors hasn't been encouraging either. Again, even if you are physically present on site, you depend on the contractor to get several different things moving at the same time, working towards the same goal. Since contractors end up committing to several simultaneous projects, they often outsource jobs with contractual workers. This is a hit-or-miss situation since it is difficult to impose a quality standard. Besides, even if the contractor's own employees do the work, individuals do the digging, cementing, cutting, welding, the wiring. It is impossible, and unproductive, to have someone second-guess each and every worker. In the end, there is a fair amount of trust --- and luck --- involved here.

Personally, I prefer the US system where inspections are done by “city hall” in stages: civil works, electricals and safety standards. This ensures that oversight doesn't get built into other oversights. This, though, is a separate story.

Joann, your decision may ultimately rest with your own limitations. If you have the time to canvass for the construction materials, have a ready network of laborers, and has enough know-how to spot errors in works-in-progress, centralizing the construction will likely cost less. Consider that saving as payment for your time and expertise in being a multitasking expert, combining the role of a purchasing manager, a finance manger, a human resource specialist and a hands-on site manager.

If you decide to outsource the work to others, the onus on control rests with the contractor. When you buy a home on an as-build basis, there are no headaches with supervision and operations but there may be surprises once you and you family moves in.

Come to think of it, both of you, Kamille and Joann, will surely have your own housing story to tell. Whether it’s the financing or the sockets or the drainage, something surely will pop out. That's not an “if” but a “when”. That's part of owning a home.

Property sales remain brisk, says Landco

By Doris Dumlao
Philippine Daily Inquirer


UPSCALE PROPERTY ASSETS, especially in Visayas and Mindanao, are selling briskly despite the slower domestic economic growth triggered by the US-led global downturn, leisure estate developer Landco Pacific Corp. reported.

Landco said on Friday that sales of its prime property developments in the first half of the year reached P1.95 billion, beating the company’s target by 11 percent. This was attributed to the strong sales of its real estate projects outside Luzon.

Sales in Visayas and Mindanao hit P497 million, 35 percent higher than the company’s target, due to the strong performance of Landco’s leisure, urban and hometown developments.

Its leisure developments contributed P427 million in sales, while memorial parks added P287 million, exceeding their combined target of P561 million by 27 percent.

“At this point in time, when those who have money to invest may be afraid to put it in riskier vehicles, real estate becomes the safer investment—it’s a tangible asset that won’t go anywhere and will surely appreciate. It is also an investment that can be used, experienced and enjoyed, ” Landco president Alfred Xerez-Burgos III said in a statement.

Landco’s prime projects in the Vis-Min area include Monterazzas de Cebu, a premier mountainside residential community in Guadalupe, Cebu City; Playa Azalea, a seaside commercial and residential enclave in Samal Island, Davao del Norte; and Woodridge Garden Village in Zamboanga City, a resort-like residential subdivision. Its memorial parks are Forest Lake parks in Iloilo, Zamboanga, Davao, General Santos, Cagayan de Oro, San Fernando, La Union and Biñan, Laguna.

Xerez-Burgos III said: “Coupled with the improving global economy, the completion of these projects will provide Landco better opportunity to further boost sales.”

Overly cautious market spurs condo sale

    

By Charles E. Buban
Philippine Daily Inquirer

DURING A BOOM period, the condo market embodied everything that was exciting about being rich and living within a short commute to a bustling metropolis.

Not only are developers willing to show exuberance in their latest projects but even the buyers are willing to spend money as long as they enjoy opulent architecture and be able to live the high life.

But with the crash of the world’s housing markets in 2008, condo buyers became overly cautious.

Putting aside immodest fantasies of modern living, a lot of today’s condo buyers would rather go for affordability, comfortable and homely environment.

“In a way, it became our time to get noticed. We’re the ones already offering low-priced units with high-quality facilities that are not too ostentatious,” explained Epifanio Santillan Jr., president of PA Metro Residence Builders Inc., the developer behind East Residences Ortigas in Pasig City and One Metropolitan Place, a five story condo in Pasay City.

East Residences Ortigas offers 30-square-meter units with prices ranging from P1.097 million to P1.560 million while One Metropolitan Place offers 8-, 24- and 30-sq-m garden units with prices ranging from P959,000 to P1.633 million.

Santillan reported that unit sales have slowed down a bit last year (when crisis broke out in the United States) but picked up once again early this year when it became clear that the country would not feel the brunt of the US housing crash.

Sell out

In fact, PAMRBI was able to sell out two of the four residential buildings (Amethyst and Topaz) at East Residences Ortigas in record time and is expecting the same with the units available at Jade and Ivory.

“It’s important to tell that the property market is perking up and buying a condo unit is still one of the best investments one could make,” said Romarico Alvarez, PAMRBI chairman.

He said as developers of residential condo projects, they were banking on first-time buyers, probably single professionals or newlyweds.

“Aside from enjoying the price advantage [as compared to buying a house and lot in a subdivision], you don’t have to take care of a big yard since the association would handle most of the things outside your unit including the playing courts, swimming pool and the gardens,” Alvarez explained.

Location is also a big factor considering that most of their buyers are working in offices located in major business districts.

“If you are working in Makati or even in Fort Bonifacio Global City, it will be a short ride coming from One Metropolitan Place, which is located on Edang Street [near Philtranco bus station], Pasay City. The same goes with East Residences Ortigas, which is a ride away from the Ortigas business district,” Santillan explained.

Since condo residents often enjoy less privacy than residents of detached homes, developers have made a concession: lessen the number of units per floor.

Both East Residences Ortigas and One Metropolitan Place only has six units per floor. This floor area density allows condo residents not only enjoy privacy but also less foot traffic along hallways and less waiting time on elevator.

Housing, agri projects get BOI perks

By Amy R. Remo
Philippine Daily Inquirer

THE BOARD OF INVESTMENTS (BOI) has approved five housing, agriculture and training projects worth a combined P3.1 billion.

Data from the BOI showed that the five projects could generate 585 new jobs once these become operational.

The biggest of these investments is the condominium project of New Pacific Resources Management in San Lorenzo, Makati City.

Dubbed Beacon Tower 2, the P2.35-billion project involves the construction of a 44-story condominium, which can accommodate 1,316 studio-type residential units, with floor areas ranging from 21 to 25 sq.m.

This is the company’s second application with the BOI. Commercial operations for the Beacon Tower 2 would start this month and would directly employ 238 employees.

Another housing project is by Maplecrest Property Management Inc., which put up the Silvercrest Villas in Bacoor, Cavite.

The P471-million project involves the development of 4.6 hectares of land, on which 295 low cost housing units will be put up.

BOI also approved the application of 557 Feather Meal Corp. to process agricultural waste and byproducts and produce aquatic and marine feeds.

With an estimated cost of P70.4 million, the project would involve setting up a facility that would process poultry waste like feathers, carcass trimmings, condemned carcasses and other internal organs into digestible feeds.

The raw materials used in the production process are supplied by San Miguel Foods Inc., which will also be the sole buyer of the company’s animal feeds products.

Another agriculture project is by Dan Way Processing Corp., which applied for a registration with the BOI to set up a plant in San Miguel, Bulacan, that will produce poultry feeds. The declared full production capacity of the plant is at 20 metric tons (MT) an hour or 29,592 MT a year.

Dan Way said it would hire 71 employees once commercial operations start this month.

Aeronavigation Academy International Philippines Inc. also registered with the BOI for the expansion of an existing aviation training institution in Silay City, Negros Occidental. This expansion project is expected to cost some P123 million and will generate an additional 30 new jobs.

Meanwhile, Pampanga-based Far East Furniture Marketing Corp., registered with the BOI to avail itself of tax incentives for its export activities, particularly tax credits on raw materials and VAT zero rating for exported products.

Being a largely foreign-owned firm, Far East has committed to trade 85 percent of its total production abroad to be eligible for these incentives. The company exports home and office furnishings as well as decors.

Cavite starts housing revolution

By Rita Festin
Philippine Daily Inquirer

GENERAL TRIAS, CAVITE - Being close to Metro Manila, Cavite has become a first-class province and a highly urbanized center whose high growth rate is unsurpassed in the country.

But to meet that high growth, the province has had to contend with the need to provide decent living conditions for its working population. And an ambitious mass housing project is doing just that.

Pamayanang Maliksi is the first mass housing project of the province in a 53-hectare property in General Trias that offers 6,000 low-cost housing units for Cavite’s blue collar workers.

The project is spearheaded by the provincial government in partnership with developer R-II Builders Inc. with P400 million funding from the Asian Development Bank’s (ADB) Development of Poor Urban Communities Sector Project (DPUCSP).

The Housing and Urban Development Coordinating Council, as oversight agency of the housing sector, and the Development Bank of the Philippines (DBP), as development bank, are coexecuting the project.

The groundbreaking was held on March 14, 2008 and as of August, 1,000 housing duplex units have been constructed in the first cluster, of which 509 beneficiaries’ applications have been approved through the Pag-IBIG Fund.

Over 204 homeowners have already moved in, while 188 applications are under process. Buyers are enticed by the spacious roads that match the more affluent housing subdivisions, amenities like a clubhouse and playground for each of the five clusters, and ready drainage, water line and power connections. A public school is also being built within the site.

At least 10 percent of the provincial government’s employees make up the current crop of home buyers since the site is just 10 kilometers away from the capitol. Factory workers in ecozones make up half, a third are employees outside the ecozones, while the rest are teachers, military, self-employed and overseas workers. Most of them are in the P6,000 to P15,000 monthly income bracket, are regularly employed and Pag-IBIG members.

Riza Ferrer, 30 years old, works in a garments factory in Imus that exports children’s clothes to the United States. She moved into her unit on Aug. 29 with her husband, their 5-year-old daughter and her brother-in-law. She was paying P2,300 in the boarding house that they used to occupy and had to contend with a very strict landlady who had no compassion for delayed rental payment.

At Pamayanang Maliksi, she pays a slightly higher amount at P2,365 monthly amortization rate for 20 years. She is the first worker from her factory that has bought a unit here but her coworkers have already expressed their desire to visit and see the community for themselves, especially those who also dream to have their own home.

For Analyn Rillera, 28, she is the 10th in her Japanese-owned car spare parts factory in Dasmariñas town to have bought a housing unit here. She was paying P2,000 monthly rental in a small house with the same size as her new home. Her monthly amortization rate is P2,150 for 25 years. She lives with her husband and mother. She has been trying to conceive for three years now, so her mother hopes that in their new home, Analyn can finally produce an offspring.

Both Riza and Analyn rave about the simple application requirements and quick processing of their papers by the Provincial Housing Development and Management Office. Riza’s application only took two months, while Analyn’s took three months.

The typical duplex unit that they bought has a cash price of P300,000, payable at P2,150 monthly amortization for 25 years, with no down payment and no collateral. Each unit has a floor area of 22.55 square meters, while the lot area measures 48 sq. m.

There will also be single attached units available at P400,000 per unit, or at P2,800 monthly amortization for 25 years measuring 30-sq.-m. floor area at a 60-sq.-m lot.

ADB’s $30 million concessional loan to the DPUCSP project is coursed through the DBP as the conduit. The project provides affordable housing, serviced building sites and microcredit facilities to improve the income and quality of life of the urban poor outside Metro Manila. Other project sites are in Angeles City, Butuan, Lingayen, Pangasinan, Isabela and Tarlac.

“The Cavite site is much more impressive than any other DPUCSP project site,” said Florian Steinberg, ADB senior urban development specialist.

The project has a relending component for site development and secure tenure to qualified local government units (LGU), nongovernment organizations, private sector developers and similar project proponents. It finances the acquisition of serviced plots, construction of new housing units, improvements to existing housing and microenterprise credit facilities. It provides capacity building and project implementation support to beneficiary local communities, LGUs and other project proponents.

Provincial employees wear T-shirts with the slogan “Be part of the revolution” since Cavite has produced many heroes and the entire province is known for its many historical landmarks. Part of their modern revolution is to provide decent mass housing for an even more progressive Cavite for the future.

(The author is a national officer of the ADB.)

Housing, agri projects get BOI perks

By Amy R. Remo
Philippine Daily Inquirer

THE BOARD OF INVESTMENTS (BOI) has approved five housing, agriculture and training projects worth a combined P3.1 billion.

Data from the BOI showed that the five projects could generate 585 new jobs once these become operational.

The biggest of these investments is the condominium project of New Pacific Resources Management in San Lorenzo, Makati City.

Dubbed Beacon Tower 2, the P2.35-billion project involves the construction of a 44-story condominium, which can accommodate 1,316 studio-type residential units, with floor areas ranging from 21 to 25 sq.m.

This is the company’s second application with the BOI. Commercial operations for the Beacon Tower 2 would start this month and would directly employ 238 employees.

Another housing project is by Maplecrest Property Management Inc., which put up the Silvercrest Villas in Bacoor, Cavite.

The P471-million project involves the development of 4.6 hectares of land, on which 295 low cost housing units will be put up.

BOI also approved the application of 557 Feather Meal Corp. to process agricultural waste and byproducts and produce aquatic and marine feeds.

With an estimated cost of P70.4 million, the project would involve setting up a facility that would process poultry waste like feathers, carcass trimmings, condemned carcasses and other internal organs into digestible feeds.

The raw materials used in the production process are supplied by San Miguel Foods Inc., which will also be the sole buyer of the company’s animal feeds products.

Another agriculture project is by Dan Way Processing Corp., which applied for a registration with the BOI to set up a plant in San Miguel, Bulacan, that will produce poultry feeds. The declared full production capacity of the plant is at 20 metric tons (MT) an hour or 29,592 MT a year.

Dan Way said it would hire 71 employees once commercial operations start this month.

Aeronavigation Academy International Philippines Inc. also registered with the BOI for the expansion of an existing aviation training institution in Silay City, Negros Occidental. This expansion project is expected to cost some P123 million and will generate an additional 30 new jobs.

Meanwhile, Pampanga-based Far East Furniture Marketing Corp., registered with the BOI to avail itself of tax incentives for its export activities, particularly tax credits on raw materials and VAT zero rating for exported products.

Being a largely foreign-owned firm, Far East has committed to trade 85 percent of its total production abroad to be eligible for these incentives. The company exports home and office furnishings as well as decors.