Real Estate
BPO BOOSTS MEGA ESTATES FOR LIFE, WORK AND PLAY
The general consensus among industry experts is that the Philippine real estate market has taken off and is set to continue on an upswing. Second quarter figures or 2006 show that the industry posted sustained growth of 12.4 percent, according to jata released by the National Statistical Coordination Board (NSCB).
The two highest growth areas in the sector are middle-income residential development and business process outsourcing (BPO) eases. BPO is an emerging industry in the Philippines and is regarded as one of the fastest-growing industries in the world. Philippine BPO is expected to earn $13 billion by the year 2010. Local proficiency in English and the fact that most BPO workers in the country are college graduates have increasingly made the country the first choice for call center placement among U.S. companies.
Middle-income property sales are on the rise in part due to this surge in BPO. Higher wages in this particular sector have helped to create a property-purchasing market among the growing workforce. However, the main reason for increased demand in this housing segment is overseas Filipino worker (OFW) remittances. In 1996, 4.2 million OFW’s sent $4.3 billion back home. There are now eight million Filipinos working overseas and in 2006 they tripled those remittance figures to $12 billion. Experts in the property consultancy sector believe that 25 percent of this $12 billion goes to real estate investment.
It is precisely in these two high-growth areas that Megaworld Corporation is market leader, placing it in an optimum position to benefit from any further rise in the property sector. Megaworld was founded in 1989 and went public in 1994. One of the keys to its success, according to Executive Director Kingson U. Sian, is its pioneering approach to real estate. "We conceptualized the live-work-play community in 1996, just before the Asian financial crisis. In 1998, during the crisis, we brought out plans for an information technology (IT) park," he says. The end result of this approach was Megaworld's Eastwood City, comprising Eastwood City Cyberpark. This development marked the emergence of the Philippines' BPO sector in 1999 and is now home to the country's largest BPO community.
Another influential factor has been far-sightedness. "In our business, prime land is a scarce raw material," says Mr. Sian. "We started accumulating land in 2002, when the market was at its lowest." Megaworld's land bank gives it an edge over other real estate companies in the development of previous untapped high-growth areas.
The company is also willing to engage in joint ventures where further advantages can be obtained. The 50-hectare McKinley development in Fort Bonifacio, Taguig City is such a project." Buying this amount of land and expanding it over ten years would mean a high carrying cost for Megaworld. We minimize the costs by joining hands with the landowner, who will see a return on investment when we succeed in setting up the development," says Mr. Sian.