In an interview with the Journal Nestor J. Padilla president and chief executive officer of the Rockwell Land Corp. said while the Philippine property market started recovering from the 1997 Asian financial crisis about two years ago “the rebound is softer than neighboring countries. … If the overseas Filipino demand is not what it is now I think the recovery would be very slow.”
Rockwell Land is the primary developer of the high-end residential commercial and educational facility Rockwell Centre which sits on 15.5 hectares of land near the heart of Makati City. The area was once home to a power plant of the Manila Electric Co. (Meralco) the largest electricity distributor in Luzon which includes Metro Manila and owned by the Lopez Group of Companies. Meralco Benpres Holdings Corp. and First Philippine Holdings Corp. all Lopez companies are the major stockholders of Rockwell Land.
On July 15 participants in the 2nd Ambassadors/Consuls General Tour of the Philippines were treated to a tour of Rockwell Centre and where Padilla personally entertained them and answered their questions about the company’s newest condos the Joya at Rockwell which will be finished in two years and One Rockwell.
To be constructed beginning January 2007 One Rockwell is being marketed by Rockwell Land as a “villa in the sky” where its two towers either curve or are in an angular geometric shape rising 46 storeys high. Designed by Miami-based architecture firm Arquitectonica One Rockwell boasts unique bi-level loft-style Z-shaped units offering spectacular views of the surrounding cities. Rockwell Land has allotted about 8 billion pesos for the said residential project which will be completed in 2010 for the West Tower and 2011 for the East Tower.
Padilla said take-up for the Joya and One Rockwell have been “better than expected” with the former already 97% sold after pre-selling began in 2004 while the latter is “45% (sold) for the West Tower. And (marketing) of that started only six months ago.” A 70-square meter one-bedroom Z-loft in One Rockwell costs at least 7.4 million pesos (roughly $142 000) which is comparatively lower than a condo unit in say Miami Florida — an area catering to American retirees — which cost an average of $223 000. About 35% of units in the five condominium developments in the Rockwell Centre excluding One Rockwell have been purchased by overseas Filipinos mostly from the U.S. wishing to retire in the Philippines.
Padilla said the local demand for Philippine property projects is not as strong as before thus the need for most developers to market their projects abroad specifically to overseas Filipinos. “The local demand is not as strong as it used to be ” he said which he attributed to political and economic uncertainties — factors that are ignored by the overseas buyers. “It’s more the local investors who are more cautious (in buying property). The overseas Filipinos … they want to come home. They want to invest here at home regardless of what happens.”
Other property developers actively marketing residential projects to Filipino-Americans include Crown Asia Ledesco Megaworld Properties Inc. State Properties Corp. Pacific Heights Shangri-La Properties Inc. LandCo Pacific Corp. and Filinvest Properties Inc. Rockwell Land has been conducting road shows for its projects in San Francisco Los Angeles Glendale New York San Diego Washington D.C. Las Vegas Hawaii New Jersey Chicago and Toronto in Canada.”
Local banks have been trying to spur more housing loans by offering significantly reduced interest rates. But potential borrowers have been shying away “because people got burned when they borrowed money before. I think the local market is hit by the higher cost of living. You can reduce the interest rate but if your income has not kept up … the income of most people rose but the cost (of living) is growing much faster so disposable income is getting squeezed and now it looks like interest rates are now creeping up ” Padilla said.
The Asian financial crisis affected the Philippines which saw massive outflows of foreign capital. For a number of years a number of Philippine property developers halted construction on many projects as interest rates were hiked to control the volatility in the foreign exchange rate and local demand for real estate faltered. Philippine borrowers saw their housing loan rates jump to a 25% per annum from the 15% to 18% they had been accustomed to pay before 1997.
While present housing loan rates have considerably eased to pre-Asian crisis rates growth in housing loan rates has not picked up. Data from the Philippine central bank showed loans extended to purchase residential property dipped to 33.12 billion pesos ($637 million) in December 2005 from 35 billion pesos ($673 million) recorded in December 2001.
Still Rockwell Land is looking for other projects to invest in but most likely Padilla said this will be outside the Rockwell Centre because available lots are already filled. “We want to go beyond just condominiums. (It) could be house and lots resorts or medium-rise cluster apartments.” He declined to identify the possible sites for these other development projects until negotiations with the landowners are finalized. “We’ve been looking for (other sites) for almost a year now. And it’s a question of the right product for us. I think given the way the Rockwell brand has been positioned we cannot just take any project. It has to complement what we’ve created. Otherwise we run the risk of diluting the brand positioning.”
He said that there would be no new malls in the company’s pipeline. “There are too many malls. And I can understand why because it’s good business. But I think after a certain point it would be very difficult (to maintain). Our market is again pitched at a high level. I don’t think there can be several of this ” Padilla said in reference to the up market Power Plant Mall.
According to the Benpres Holdings’ consolidated annual report for 2005 “(Rockwell Land) is also looking into developing residential leisure projects outside of Metro Manila in tourism destinations such as Tagaytay Baguio and Batangas. The planned developments will be situated in high-end exclusive locations and will continue to carry Rockwell’s top quality seal. These projects aim to meet client demand for a wider range of Rockwell products and services and will be the company’s focus in the next five years.”
Rockwell Land profits rose slightly to 288 million pesos ($5.54 million) from 238 million pesos ($4.58 million) in 2004. Aside from Joya and One Rockwell other residential condos in the Rockwell Centre are Rizal Tower Hidalgo Place Luna Gardens Amorsolo Square and the Manansala. The Lopez family is one of the oldest business and political families in the Philippines. MBJ