Rising cost of materials biggest challenge for developers - says CREBA | Business and Politics
Chamber of Real Estate and Builders' Associations (CREBA) Executive Vice President and Chief Executive Officer of CDC Holdings Inc., Melesa “Elsie” Chua says that the rising cost of materials is currently the biggest challenge for developers. Rising prices would mean less buyers will be able to afford housing. She adds that nowadays rental is rising alongside the cost of basic goods, in consequence more people opt to buy homes instead of renting.
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Chamber of Real Estate and Builders' Associations (CREBA) Executive Vice President and Chief Executive Officer of CDC Holdings Inc., Melesa “Elsie” Chua says that the rising cost of materials is currently the biggest challenge for developers. Rising prices would mean less buyers will be able to afford housing. She adds that nowadays rental is rising alongside the cost of basic goods, in consequence more people opt to buy homes instead of renting.
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NewsTranscript
00:00 The topic tonight is mainly about the real estate industry, but the discussion will likely
00:03 relate to the investment climate in the Philippines and sustainability.
00:07 For that, we have invited Melissa Alcichua, Chief Executive Officer of CDC Holdings, Incorporated,
00:13 and Executive Vice President of CREBA.
00:16 With her is Tetsy Bautista, President of Jettison Realty and Development Corporation, and CREBA's
00:21 Vice President for Academic Affairs.
00:24 CREBA is the Chamber of Real Estate and Builders Associations.
00:26 It is a private, non-stock, non-private corporation that started out as a union of Philippine business
00:32 that's evolved into the umbrella organization of some 4,000 firms, individuals, and associations
00:38 directly or indirectly involved in land development and housing, construction, industries, and
00:43 various professional disciplines.
00:45 As the EVP of CREBA, Ms. Chua brings not only her exceptional business acumen, but also
00:50 her wide influence among key decision makers in helping push for the Chamber's major advocacy
00:55 initiatives to fulfill its vision for the future.
00:58 The opening sentence of that vision statement is, "Business with a social conscience."
01:02 For her part, Ms. Bautista is a human resource expert and educator.
01:06 She also has a lengthy record in the industry, but her most known accomplishment is the establishment
01:11 of the Executive Diploma Program in Real Estate Management, which is a collaboration between
01:16 CREBA and De La Salle University.
01:18 We will ask our guest, "How can we build a better Philippines for everyone?"
01:21 Ms. Yasi, Ms. Tachi, thank you for making time for Business and Politics.
01:44 I know this is a busy time for CREBA.
01:46 Yes.
01:47 Yes.
01:48 We're preparing a lot of things.
01:50 Yes.
01:51 So, there are a lot of things going on in the country.
01:54 Obviously, we're making a big rebound after the pandemic.
01:59 But how is real estate?
02:00 What are you hearing from your members?
02:02 Are they optimistic about what you're seeing, or are they a bit cautious?
02:07 Maybe let's start with Ms. Elsie.
02:09 For us, I think during the pandemic, it shows the pattern of how the buyer's preference
02:18 to live was changed.
02:21 Now, they're looking for more wellness, more space, breathing space, and more greening.
02:30 What about you, Ms. Tachi?
02:31 What are you hearing from your fellow CREBA members?
02:33 We're definitely excited about developments in real estate and housing.
02:38 First and foremost, of course, is the 4P program of President Bongbong, talking about six million
02:45 production.
02:46 That's really huge.
02:48 But it also brings to mind a lot of other elements that has to be addressed for that
02:54 dream to become a reality.
02:56 Sure.
02:57 What is the climate now as you see it?
02:59 Is it conducive to your industry?
03:02 I mean, we're hearing a lot of headwinds, although they say that the Philippines is
03:06 doing well.
03:07 But there are other things that we are affected by, coming from abroad, inflation, the supply
03:13 chain issues.
03:14 How are we managing?
03:17 For us, the challenge for the developers is the rising cost of materials.
03:22 So we cannot peg as in before.
03:27 But the people's choice of housing, the demand become more of end user market.
03:36 End user.
03:37 Yes.
03:38 And more of housing.
03:39 Okay.
03:40 Not more on investment portfolio.
03:41 I see.
03:42 Yeah, I've been hearing some people say that it depends on the segment.
03:46 Is that true?
03:47 Yes.
03:48 Because they tell me that for the higher segment of the market, it's always been steady.
03:52 Pandemic, no pandemic.
03:53 There's always a demand for it.
03:55 As you said, the investment part, I guess, which is between the two million to five million,
04:00 does it include condos or single detached homes?
04:04 These are the ones that are facing a bit of a challenge.
04:07 What has been corrected is the flipping investment.
04:10 It's not the industry or level.
04:16 In the population, 5% is a high end market.
04:20 And the biggest chunk is the 40% of lower middle to upper middle market.
04:27 So now it's more on direct end user market.
04:31 So it's positive for us and it's booming.
04:35 You'll be surprised when we were locked down, we're selling more.
04:38 Really?
04:39 Wow.
04:40 Yes, we sell more.
04:41 And people have more savings during the lockdown.
04:44 But they become so selective that they become more, how you call that, choosy in selecting
04:52 the sites.
04:53 But they prefer to have more breathing space, more landscape, more wellness conscious, as
04:59 I said earlier.
05:01 And this time after the pandemic, our housing has multiplied.
05:10 For my case in CDC, it's double the target that we have, or at least 50% of our sales.
05:19 CDC's market is mainly middle income.
05:21 Is that correct?
05:22 Yes.
05:23 Yes.
05:24 But I understand your locations are within central business or very close to CBDs.
05:29 Our position always is to buy properties on the fringes.
05:33 Okay.
05:34 So that fringes of CBD, so that it's close proximity to work, to school.
05:40 And for accessibility.
05:41 And that's good also for the environment, right?
05:43 You don't drive to work.
05:45 Yes.
05:46 Because we have to balance the pricing, as I told you.
05:48 If your market's a mid-income, there is only an amount of money that they can afford.
05:56 So if you buy property in the CBD, we cannot balance the price.
06:01 And we always use Pag-ibig program for our financing in our project at CDC.
06:06 Right.
06:07 And you were talking earlier, you were saying, the Pag-ibig fund is one of the achievements
06:12 of CREVA.
06:13 You want to expound on that a bit?
06:16 I'm talking about the advocacies of CREVA.
06:20 We're a 50-year-old organization.
06:23 We are an umbrella organization, covering all facets of real estate and housing.
06:30 Now advocacy level kami.
06:33 We go beyond the business concerns of our individual members and focus on the advocacy
06:39 that will make the industry efficient and responsive to the situation.
06:45 So isa sa mga pinaglaban din namin is the unified home lending program.
06:51 Lahat ng pera for the housing nakalagay lang sa isang hindi kalat-kalat.
06:57 So that it can have the same rules, the same procedures and everything.
07:02 Magiging masi efficient.
07:03 Walang natatapon.
07:04 Right.
07:05 So that's why very particular kami and happy.
07:08 And that Pag-ibig is able to really comply with its role in providing funds.
07:15 And not many people know that that's part of your advocacy.
07:18 Yes, we have fought for it long and hard.
07:20 Tell me about Jettison.
07:21 I mean, I'm not so familiar with it.
07:23 Oh yeah.
07:24 When we started off, the reason why I'm very familiar with production and housing is because
07:29 I started off as an accredited contractor of MoneyDDR.
07:33 Noong time na nag-umpisa pa lang si Money, kami yun.
07:37 Yung mga bundok na napupuno ng bahay, ang Jettison was one of them.
07:42 And through the years, we have evolved.
07:44 Right now we're focusing on warehousing.
07:46 Ano na lang, simple na lang.
07:49 So mahirap yung mass production.
07:52 So yun ang ginagawa namin ngayon.
07:53 But being in charge of the academic program of CREVA requires me to be on top of what's
07:59 going on.
08:00 I have to be well informed and updated.
08:02 So alam ko pa rin kung ano.
08:04 I'm very active in the advocacy of CREVA and making representations to the different agencies
08:12 in promoting the industry.
08:14 So yun ang ginagawa ko ngayon.
08:16 As you mentioned earlier, of course, the cost of goods is something that is challenging
08:22 everyone, not just your industry, but practically every consumer.
08:28 How are we coping and what is your outlook?
08:31 The US Fed seems to be signaling that they might be again raising interest rates.
08:37 They're not opposed to raising interest rates.
08:40 And I'm not sure if the Philippine Monetary Authorities are listening to that.
08:45 But of course, that raises some concerns.
08:49 What have you been hearing?
08:51 Obviously, this will affect the industry because if the interest goes high, it will slow down
08:59 our selling power, our selling of our houses.
09:03 Because like in our company, CDC Homes, we advocate like when you buy a home from us,
09:10 it's like lease to own.
09:12 So if the cost of the interest goes up, hindi nasya lease to own.
09:17 So this is a challenge for us if the interest goes up.
09:22 And you were saying the program of the government to build so many homes, what is the backlog
09:27 right now?
09:28 I mean, I heard 600,000 many years ago, but that was 6 million.
09:36 They've been saying 6 million, but they did say saan location because the jobs is only
09:42 in Metro Manila and also key cities.
09:46 So people would love to move where there is the job.
09:50 Ang problem right now is the rental is rising as well, other than the cost of food.
09:56 The outrate of buying a home, yeah.
09:58 Yes.
09:59 So instead of paying rent, when you're diligently doing your monthly amortization, it's like
10:06 you're paying your rental.
10:08 So hoping itong inflation will stabilize by 2026.
10:14 So meantime, there's a lot of projects on hold.
10:18 They tried to hold on it, but there are a lot more who continue to build like my company,
10:25 CDC Homes.
10:26 Yeah.
10:27 Of course, one of the new things also is the newly minted Department of Housing.
10:32 How is CREB getting along with the new department?
10:36 Well, it's a necessary part of our existence in the industry.
10:41 We have to live with each other.
10:44 Ang magandang change that happened because of the creation of the Department of Housing.
10:50 By the way, CREBA was the one responsible.
10:54 You were pushing for it.
10:55 No, we are the one who created the Department of Housing.
10:59 It's CREBA's advocacy.
11:03 We really work with them closely and we support the leadership.
11:08 And maganda kasi ngayon isang lugar na lang ang kausap namin.
11:14 Ang rule nila isa na lang.
11:15 One-stop shop.
11:16 Kasi dati kanya-kanya, the concept of one-stop shop and making the business easier and more
11:21 efficient.
11:22 Maganda naman, but then again, bata pa yung disood.
11:25 So marami pa rin silang dapat ayusin at malaman, mapag-aralan to make it more efficient and
11:32 effective for the industry.
11:35 But magandang development na.
11:37 As mentioned by Elsie, CREBA was at the forefront in trying to craft the law on disood.
11:46 Nirecognize siya noong chairman ng housing sa Congress, Abby Benitez.
11:53 He would always credit CREBA for being at the forefront of that law.
12:03 In the case of the Senate, it was JD Ayercito.
12:07 Sinasabi niya talaga, ang laki na naging role ng CREBA.
12:10 So let me put the million dollar question, which is how do we get rid of the backlog?
12:14 And I suppose this is not the priciest homes, diba, the segments, but more of the affordable
12:20 housing.
12:21 And as you said, a lot of people want to buy homes where there's work.
12:26 But in places like Manila, for instance, where our office is located, there are hardly any
12:32 space now for new development.
12:35 Is that still a possible goal to pursue, you think?
12:40 I still hope, and we feel at CREBA, there's still hope to fulfill and fill up the needs,
12:50 like six million housing.
12:51 So CREBA is, with our past chairman, Charlie Gurayeb, has spoken during the launching of
13:01 our CREBA legacy.
13:03 CREBA is committing to support President BBM about the 4PH.
13:13 We will commit with our group, kasi our group composed of the big top 50 developers in the
13:20 country, we can support the president by delivering 500,000 units per year.
13:25 So private sector initiative.
13:27 Yes, private sector, by way of, siguro, what I can say is, there should be a financing
13:34 to support it.
13:35 Kasi ang problema ng mga developer, but how can we collect?
13:43 That is the present dilemma.
13:45 We have to take a quick break, but very quickly, what is 4PH?
13:49 It's Pabahay sa Pamilyang Pilipino.
13:53 Pambansang pabahay.
13:55 Pambansang pabahay para sa Pamilyang Pilipino 4PH.
13:59 And another challenge, I think if the government can provide land, and that will only be the
14:04 solution.
14:05 Solve na lahat.
14:06 Yeah.
14:06 Yeah.
14:14 Yeah.