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IN ROUGH PATCHES
Megaworld sees fertile grounds

By Tessa Salazar
Philippine Daily Inquirer
First Posted 09:53:00 02/10/2009

Filed Under: Real Estate, World Financial Crisis, Housing & Urban Planning

MANILA, Philippines -- In boom times, anybody can sell a condo. It?s during the rough times that the ?men stand out from the boys.?

The country?s largest mid-income residential developer, the largest BPO (business process outsourcing) office builder, and the second largest Philippine developer by market value believes that its ?weather-tested key strategies? not only help the company survive but enable it to thrive in especially difficult times.

Kingson Sian, executive director of Megaworld Corp., revealed to Inquirer Property in a recent interview these key strategies, including focusing on the middle class, building ?24/7 cities? with business process outsourcing industries, and establishing live-work-play communities with as little exposure to the flagging United States and overseas markets as possible.

Megaworld has built more than two million square meters of space for residential properties ranging from luxury houses to townhouses and condominiums. The Megaworld Group has completed more than 50 residential, commercial, and office buildings in the last 19 years, revealed lawyer Anthony Charlemagne Yu, president of Empire East Land Holdings Inc. and Megaworld Central Properties Inc.

?24/7 cities?

Sian explained that these ?24/7 cities? enable the business community to be productive day and night.

?If I put (my business) in a mall, (I will be) governed by the mall?s operating hours. If I put myself in Eastwood, I get 24-hour operation for the same fixed rent.?

Sian then described the business community Eastwood City in Libis, Quezon City as being ?peopled? day and night. ?The BPO industry is supporting all the ancillary industries there. Several retail stores and fast-food establishments are open 24 hours a day, seven days a week. The franchisee is poised to earn more.?

It would then follow that individuals who conduct business in a 24/7 setting would like to be conveniently located near that business community, thus creating an economic synergy combining all of Megaworld?s key strategies.

?It?s like a jigsaw puzzle that when you put together, it creates a very powerful concept, which is unique to us, and which we believe will help us thrive even during difficult times,? Sian stressed.

?Stand-alone? biz com

Eastwood City could then be termed as the ?compleat satellite city,? able to fulfill business and living requirements for its customers any time of the day.

The newer McKinley Hill in Fort Bonifacio is another such ?compleat satellite city.? But unlike Eastwood which offers condos, BPO offices, retail establishments, McKinley Hill also offers house and lot units.

In a congested megalopolis like Metro Manila, where large tracts of land are extremely difficult to acquire, let alone develop, Megaworld has been able to successfully create ?stand-alone? business communities such as Eastwood City, McKinley Hill (which added the ?learn? component to the live-work-play philosophy), Newport City across Naia Terminal 3, Cityplace in Manila?s China Town, and Manhattan Garden City (the only transit-oriented development connected to both MRT3 and LRT2 lines) and Forbes Town Center in Bonifacio Global City. Thanks to these strategies.

?A lot of these properties had been secured in the past crises. And these were large projects that took us 10 to 15 years to finish,? Sian said.

Definite edge

He added that Megaworld would have the definite edge compared to a developer selling a single building with just an accessible main highway as its unique selling point.

?A community is much more secure, safe, and has more value-added services for the same price. That differentiates us.?

Although his company was the first to employ the strategy of selling to the overseas Filipino market, Sian estimated that in relation to Megaworld?s total sales, the overseas market had accounted for only about 5 percent.

?Of these overseas sales, the hardest hit, which is the US sales, accounts for 20 percent. This is quite small. The bulk of our (overseas) sales is coming from the Middle East, Asia, and Europe. I still believe that Asia and Middle East, although they would be hit, will still be in a better position (to buy) than the US market.?

Sian said that in terms of job security, ?our segment of the market has not been hit yet. We?re still quite cautiously optimistic about 2009.?

Resilient middle class

?From the beginning, our focus has really been on the middle class, which we believe is more resilient now than ever. If you look at the industry, let?s say the banking industry, they?re not laying off people, at least for the moment, unless there?s major bank failure. What might happen is just a freeze hiring or a slowdown in hiring, but not massive layoffs. If you look at the papers, layoffs are happening to factories, especially in the electronics (sector).?

Sian was quick to dispel predictions of massive BPO vacancies due to the financial crisis.

?We don?t expect significant vacancies because most of our tenants have long-term leases with us, and currently all of our buildings are at least 95 percent leased. I think we?re OK in terms of leases. We?re quite confident that we should be able to weather this period of difficulty.

?Most of our BPO offices were turned over bare shell, and most of our tenants were the ones who did the fit-outs, so they stay longer with us. They lease for at least five years, with some even leasing up to 10 years.?

And that?s plenty of lead time for Sian and Megaworld to weather the present crisis, and to face the next one with opportunity in mind.



Copyright 2014 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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