Interview: Willie J Uy
To what extent has the land acquisition process improved in recent years, and what further challenges remain in this area?
WILLIE UY: The number-one factor is the cost of investing in a land bank, which is a crucial component of a real estate company. As far as financing for land is concerned, it really depends on credit standing, but there are also limits set on real estate among the private banks. Historically, banks could not lend all of their assets to just one industry.
There are many roadblocks that can get in the way of land acquisition, since most of the land being purchased is for affordable housing and was originally agricultural land. I am not saying this is wrong, because the government is doing what is in the best interest of the country; however, sometimes the housing sector tries to make things simpler, but not all branches of government see it that way. Therefore, the additional procedures put in place make land acquisition more complicated.
For example, it takes a lot of effort for us to go to the head of shelter agencies and request that they explain a particular project to another branch of government on the behalf of the developer. I know they have reasons for this procedure, but it makes the process much more difficult. As developers, we know how to fix these problems ourselves and should be given the authority to do so.
How can the government and private sector better collaborate to bridge the housing gap and meet the changing needs of the population?
UY: Starting with financing, the government is on the right track as far as home mortgage finance is concerned. The main lender here is the Pag-IBIG Fund, also known as the Home Development Mutual Fund (HDMF). The HDMF is liquid, and we are happy to report that the CEO came from the private sector and therefore understands its needs and considers them when making financing decisions. As far as the president is concerned, he is also very pro-housing. He encourages government financial institutions to lower interest rates, which makes it easier for consumers to start to borrow funds and afford new homes. For the private side of the industry, the sector in general is very supportive. The key problem is that land prices keep going up; the goal should therefore be to keep prices within a certain range. We are doing the best that we can to help this, but ultimately it comes down to supply and demand.
What is the role of developers in raising financial literacy levels so buyers understand their financial obligations and the value of investments?
UY: Financial literacy has always been important to us. That is why we conduct seminars to ensure that buyers understand the value of land, as well as the importance of debt and its consequences. We also want potential buyers to understand that the best investment is real estate. Furthermore, bigger developers are making efforts to mentor smaller ones to help them grow. Experts can also work with buyers, advising them to ensure they are making the best decisions from start to finish.
The high demand should not cause competition between us. On the contrary, we should take this opportunity to learn from one another and offer mutual support. It is very important to spend time during management meetings to study the demographic statistics of our buyers. Land is increasingly expensive, and, surprisingly, millenials make up the majority of buyers in the market. We believe this is because they are more analytical thinkers when it comes to anticipating the benefits of investments. This shows how financial literacy can have a significant impact on the overall performance of a sector, and developers should continue to nurture these skills. The market trends prove that it is working.
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