oing back more than a decade, before the days of “people power”, when uncertainty ruled the economy and interest rates were up near the 60% level, the Filipino property and construction sector was not a business for the faint-hearted.
Companies that were able to looked overseas for their markets and met with success, particularly in the Middle East.
It is an indication of how the revival of the economy has sparked an upswing in the domestic property sector that successful construction companies, which gained only 30% of their earnings from the Philippines back in the 1970s, can now claim more than 90% of their profits from the local economy.

Now skyscrapers are sprouting in Manila at an unprecedented rate and the fast-growing regional economies of islands like Mindanao and Palawan are providing seemingly endless opportunities for further developments.
With industry analysts predicting the property boom should last well into the first decade of the next millennium, prospects for the sector look rosy. Falling interest rates, low inflation and more money in pockets, together with economic liberalization and fairer competition are bringing more firms into the sector.
The economic boom has seen a growth in demand for property across the spectrum, from conglomerates in need of office space, through the retail sector to those at the lower end of the economic scale with enough money now to contemplate moving into new, low-cost housing.

MANUEL VILLAR, JR., congressman and Chairman of C&P Homes, Inc.

Manuel Villar, Jr., Chairman of C&P Homes, Inc. and a congressman, was one of the businessmen who weathered the storm of the early 1980s and entered the post-Marcos era in a sufficiently liquid position to tackle the new opportunities coming up. His firm is now the largest private low- cost housing developer in the country, selling around 26,000 houses in 1996.
“People used to tell me that it is impossible to come up with social housing and still be profitable, but I said: why not? It is possible if you reduce the cost by developing more houses,” Mr. Villar remembers. His judgement turned out to be a good one. His company now ranks among the top ten firms listed on the Philippines Stock Exchange with a market capitalization of some US$ 2 billion.

ANDREW L. TAN, Chairman of Empire East Land Holdings, Inc.

While Mr. Villar’s C&P claims to have a dominant position in the low-cost property sector, the middle-income and commercial sectors are becoming increasingly crowded. Competing firms are putting heavy emphasis on training and marketing in order to ensure that they will be able to sell the projects they develop.
The pressure is also on for the front-runners in the industry to acquire land now in order that they have prime locations for their developments later on. Middle-income housing specialist firm Empire East Land Holdings, Inc. has bought up land to reinforce its business in the coming years, Chairman Andrew L. Tan says.

“Our company is one of the most focused on the mid-range segment of the market and we have positioned ourselves to take the lead there. We have accumulated a landbank that is good for seven years of development,” Mr. Tan declares. He says the company can only benefit from this policy because it will gain from rises in the price of increasingly scarce land as more people come into the market. Even without this speculative element, Mr. Tan’s company, a subsidiary of Megaworld Properties and Holdings, Inc., is unlikely to see pressure on its profit margins - as high as 55% - while demand for property continues to outstrip supply as it will do for the foreseeable future.
The rapid expansion of the sector and the potentially risky need for heavy borrowing to finance projects has seen the industry come up with ways to reduce such overheads.

One way to do this is through joint-venture agreements. Under these, a property firm approaches the owner of a piece of land to form a partnership. Instead of forking over money to buy the land, the company arranges to carry out all the development work, while the owner retains possession. The resulting development is then divided up between the company and the owner of the land.
Doing business this way has been the major factor in the growth of firms such as Fil Estate Land, Inc., which posted a 130% jump in net income in the year to last September.

The company has its origins in 1981 when three young entrepreneurs set up a real estate marketing concern. Now the firm has spread its business far and wide, with projects across the Philippines rather than just being focused in the Metropolitan Manila area. It also operates in a variety of areas, being involved in commercial, residential and leisure developments and has gained a reputation as the company that reinvigorated the country’s golf industry when it built a state-of-the-art golf course in southern Manila.

FERDINAND SANTOS, Chairman of property firm Fil Estate Land, Inc.

The firm’s rapid expansion in a buoyant sector has attracted the attention of foreign investors. Approximately half of the 33% of the firm’s shares not owned by its founders are held by overseas investors and, according to Fil’s Chairman Ferdinand Santos, US markets are central to the company’s money-raising plans. “We are going to aggressively pursue the US capital market, especially in the light of APEC,” Mr. Santos says, adding that there are no plans for the founders to sell any of the 67% of the firm’s shares they own between them. There is also a role to play for foreign firms in the construction industry, as Filipino firms seek to bring in the latest building technology from abroad to make up for shortcomings in its own structure, industry analysts say.

However, with the expansion of the role of the Philippines in the ASEAN trading block and APEC, local firms are also well poised to move into up-and-coming regional markets. Some executives believe the country’s position on trade routes means its contractors are well placed to get a foothold in states such as Cambodia, Laos, Vietnam and Burma if and when their economies open up, a prospect that one industrialist described as a potential economic goldmine.