East Eats West: Property Development in Manila

Property Development in Manila – an on-site visit

Picture: My friend Darwin studying a building model

My Philippine friend wants to get into property development so I agreed to pose as dummy-buyer for condos for him so that he can get a feel for the market. Property development, especially condos and malls, are mushrooming in Manila and we went first to see the still unopened mega-project SM Mall of Asia, the biggest mall in Asia after the one in China, built on reclaimed land (and not yet open due to foundation problems). The mall is a project of a Chinese family which started of with a small shoe shop and diversified in each political crisis in more businesses, according to my friend. Afterwards we went to see a condominium development near the mall with one and two bedroom apartments and penthouses overlooking still undeveloped bare land. The developer offers financing and even different interior designs from oriental to minimalist to Mediterranean upon request. The property comes with gym, pool, parking, little shop and other amenities. The second development we visited was in an upcoming district of Manila where also a booming call-center industry set up shop. The high-raise development comes with different condominium types, shopping mall, many restaurants and entertainment venues, all artificially built around a central square that reminded me of Disney Land. The condos prices range from 11 to 20 million Pesos (between 200'000 and 400'000$) with monthly payments of 60’000 pesos the condos are mainly geared towards retirees oversee Philippinos and affluent workers as the starting salary for a call-center worker is a modest 15’000 peso (but still double the average wage). Developers offer financing with zero-interest (yeah, right) and especially the no down-payment financing is very popular as people can move in immediately. The downside of the developments is the density of buildings, the lack of public transport and the mediocre building-quality. And like other Asian mega-cities Manila has apparently destroyed all historical buildings and many developments lack authenticity. With the developers selling the condos first cheap and then increasing prices, they create the illusion of an investment and also offer to rent out apartments as a way of generating an income-stream for the owners. Our little day-tour convinced my friend that the market is heating up and it is time to invest.