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Industry Analysis: Real Estate Industry

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The document discusses the real estate industry in the Philippines, including the types of products and services offered, production processes, and dominant players in the industry.

Commercial, residential, and mixed-use developments are discussed as the main types of real estate projects.

Ayala Land Inc., Robinsons Land Co., SM Investment Corp., Belle Corp., and Vista Land and Lifescapes Inc. are mentioned as the five dominant real estate developers in the Philippines.

UA&P

UNIVERSITY OF ASIA AND THE PACIFIC

Industry Analysis: Real Estate Industry


Entrepreneurial Management

2012, June 4

Facilitator: Mr. Edwin Pineda Recomite, Erika Reyes, Monica Verzosa, Vincent

1. Brief description of industry A. Product and/or Service The real estate industry gives people an opportunity to have a better life by providing them houses, jobs and entertainment. The industry also makes the country look modern and livable. It is an integral part of our countrys development to create commercial and residential areas that are business and community and likewise important, environment friendly. The real estate industry makes these things possible. B. Production Process and Industry Linkages In the real estate industry, there are commercial and residential or mixed-use developments. A commercial area consists largely of business entities like banks, call centers, malls, corporate buildings etc. Residential development, on the other hand, creates livable places for people to reside in and suitable to raise a family. There are some real estate developers that combine commercial and residential concept in one project hence calling it a mix-use development. C. Dominant Players There are five real estate developers that are battling for supremacy. First is Ayala Land Inc., second is Robinsons Land Co., third is SM Investment Corp., fourth is Belle Corp. and lastly Vista Land and Lifescapes Inc. All of these developers have commercial, residential and mixed-use developments in their portfolio. Ayala Corporation is the largest and the oldest conglomerate in the country. It is owned by the family of Jaime Zobel De Ayala, chairman emeritus of Ayala Corp. Under Ayala Corp is Ayala land one of the top developers in the country. It is famous for developing Makati, which used to be a barren land before. The Ayala family transformed Makati in to the financial district of the country and an important location for international affairs. They are also responsible for the development of Fort Bonifacio in Taguig City, which was originally a Philippine Army Camp. Robinsons Land is one of the countrys highly regarded developers of mixed-use properties. It was incorporated on June 4, 1980 to serve as the real estate development of JG Summit Holdings Inc. It controls the chain of Robinson malls around the country, which comprises of twenty nine malls. Lance Gokongwei, whose father is chairman emeritus John Gokongwei, is the chairman of Robinsons Land. SM investment Corp, which is owned by the Sy family, is the biggest mall developer in the country. It has forty-one malls under its control. The biggest is SM Mall of Asia located in the reclaimed area of Manila Bay and it is also one of the biggest in the world. SM also develops high-end properties

like Tagaytay Highlands, a world-class mountainside resort and residential complex. When talking about leisure and gaming development, Belle Corp comes first in to mind. It is developing the Belle Grande Manila Bay that sits on six hectares of prime land. This development will boost the tourism of our country and put our country on the map as a world-class destination for leisure and gaming purposes. Vista Land, which is owned by the family of Sen. Manny Villar, is the largest home building company in the country that gives importance to lowpriced mass housing. Developments under Vista land are, Brittany, Crown Asia, Camella Homes, Communities Philippines and Vista Residences. There are also five real estate players that are still making a name for themselves at this point and time and getting closer in becoming part of the list of elite developers in the country. These are, Megaworld Corp, Empire East Land Holdings and Global-Estate Resorts Inc. (these three are controlled by Andrew Tan), Filinvest Land Inc.( part of the Gontianum group of companies) and Cityland (Washington Sycip Chairman). Megaworld Corp posted an all-time high net income amounting to Php 5.09 billion in 2010. While Filinvest land and Cityland posted a net income of Php 2,940,340,000 and Php 447.9M respectively.

D. Point of View of the Analysis The real estate industry is a very competitive industry to invest in. People who are planning to have their own real estate company at this age will have a difficult time building their reputation because they will start from zero. Having an excellent track record in this industry is something that cannot be done overnight. You also have to need a large amount of capital for you to start this kind of business. You will have to inject a lot of money in a real estate company. If you are the type of person whose bank account is like the Ayalas then you might have a chance to compete with other real estate developers in the country.

2. Market A. Market: Who, Size, Growth, Location Since our countrys economic output is slowly rising up and the influx of dollar remittances from our OFWs is steadily increasing every month and the need of more space for BPO companies is soaring, there is a huge demand in in owning a property or a condominium in the Philippines. Top real estate developers are exploiting this growth momentum by allotting unprecedented amounts in their capital expenditures for new development such as Ayala Corp. It is releasing a staggering amount of Php 90 billion to fund 67 new projects for new markets and new locations this year. There is a huge growth

happening right now in the property sector that the country never experienced before. Hence intensifying competition between the countrys major real estate developers. B. Volume and Value of Sales The following are the sales revenue of the top five real estate developers: Ayala Land:

Robinsons:

SM Investment Corp.

Belle

Corp.

Vista Land

C. Pricing Structure The pricing structure in a real estate business depends on the floor size of the room, what floor is it located and the location of the room, if it is over looking the bay or the high-rise buildings of Makati. Here is a sample of a price structure of Ayala:

D. Product Position The dream of any real estate developer is to provide every single one of us a home to live in. Knowing that the Philippines has a high poverty rate, this fuels the real estate developers to build houses the are affordable to us especially to our indigent countrymen and offices to provide jobs to the people. Ayala Land and Belle Corp caters to the wealthy people of the country. Popular developments of Ayala land are, Ayala heights, Ayala Alabang Subdivision and South Forbes. People who have a sizable bank account can afford to buy a lot in one of the subdivisions of Ayala. Same as for Belle Corp, which is well known for developing world-class resorts like Tagaytay Highlands. Belle is now developing a first class hotel and casino in the reclaimed area of Manila bay. On the other hand, Vista land, Robinsons Land and SM provide for the middle-income society.

E. Distribution Channel Each of the top five real estate developers have call centers that can assist you in buying a property or a condominium. You can also go straight to their offices and find out personally the details of the property like location pricing, size etc. It will not be a hassle for you to get a hold of a representative of a real estate developer because satisfaction of customer is their first priority. F. Brand Identity: Advertising, Selling Expense

Real estate developers have ads in magazine, newspapers, radios and televisions and flyers/leaflets distribution. The point of their ads is to let the consumers know that their development is the safest, most relaxing and most enjoyable place that you will ever live in. Developers want to catch your attention by putting pictures of the sceneries of the location and placing a picture of a beautiful actress with it. G. Analysis of Market Prospects During the year of 2006-2007, the real estate industry was not performing well. There was a 7.5% decrease in the number of housing units from 187,001 units to 172,967 units. But for the past four years, there is a robust growth in the property sector due to the following reasons. One is the positive economic development of our country, second is the increase of inundation of expatriate workers and finally the increasing dollar remittances from our OFWs. Real estate developers are looking for new locations to develop to coup up with the demand. The average of 200,000 housing units a year in 2008, grew enormously for the past four years. The real estate market in the Philippines is growing fast like we never seen before. With this the government should carefully check the production of houses of the developers so not to overproduce in the future. We do not want another housing bubble explosion like what happened in the U.S. III. Suppliers A. Nature of Raw Materials The real estate industry is mainly composed of several corporations, who fund, plan and execute the projects such as commercial sites, growth centers and residential areas. These projects cater to the needs and wants of consumers belonging to all classes. These needs would be the need for shelter, need for recreation and need for growth. Prior to completing the project, corporations must first acquire their raw materials either manufactured, outsourced, or via a contractor. It is certain that expenses of real estate companies would highly accumulate if whenever they decide to manufacture their own materials. This is why; most real estate companies would rather outsource their materials so to cut costs due to their strict budget. Most real estate companies outsource their raw materials not by partnering with several businesses but through a contractor. Real estate companies choose tying up with a contractor for a reason that it would lessen their costs, their efforts and time to a certain project. The quality of the raw materials being used is essential in this business because the quality of the materials would reflect the quality of the work being done. For any real estate company, it is a standard they must have a permit to operate and their essentials or simply, the materials. The said permit would include the receipt of building permit, mayors permit, Housing and Land Use Regulatory Board (HLURB) permit. While the following are needed or

considered as standard materials:


Material (articles) Compressed earth block, mud brick, rammed earth Concrete Conveying systems Elevator or "lift" Escalator Composites Thermal protection Moisture protection Doors Stile and rail, raised panel, wood clad Access, sliding glass doors, tambour Folding doors, garage door, storefront Door hardware Electrical systems and equipment Surface finishing Plaster & gypsum board Cement render Ceramic tile, quarry tile, pavers, mosaic Dropped ceiling, coffered ceiling Flooring - wide plank, terrazzo, carpet Wall covering, wallpaper, acoustic Paint, wood stain, faux finishing Staff Fire suppression equipment Furnishings HVAC (Heating, ventilation and air conditioning) Masonry, mortar (masonry), grout Adobe, brick, glass brick, terra cotta Artificial stone Cinder block or concrete block Stone dry stacked or mortar set Urbanite, broken-up concrete Metals Structural steel: I-beam & column Rebar Wire rope and cables Metal joist, decking, framing, trusses Metal fabrications Stairway, ladder, railing, grating, Strut channel Decorative metal "Openings" include Doors & Windows Plastics Plumbing fixtures and equipment Building safety Security systems Specialties Telecommunications equipment Wood, carpentry Rough carpentry (unfinished) Heavy timbers, log home, post and beam Engineered wood, dimensional lumber Stud, joist, rafter Treated lumber & wood decking Sheathing, subflooring, panelling Plywood, shiplap, tongue and groove Oriented strand board Parallel strand lumber or "para-lam" Glue-laminate or "glue-lam" Finish carpentry or "architectural woodwork" Veneer, plastic laminate, wood panel "Case goods" Millwork, bookcase, cabinets Ornamental woodwork Trim, molding or "moulding" Chair rail, baseboard, casing, sill refer to: Category Category: Appropriate technology Category: Concrete Category: Vertical transportation devices

Category: Composite materials Category: Thermal protection Category: Moisture protection Category: Doors

Category: Electrical systems Category: Finishes also "gyp-board" or "drywall" Category: Tiles Category: Roofs Category: Ceilings Category: Floors Category: Walls House painting Category: Fire suppression Category: Furniture Category: HVAC Category: Masonry Category: Bricks also: "Concrete Masonry Units" (CMU) Category: Stone

Category: Metals

Category: Doors Category: Plastics Category: Plumbing Category: Building safety Category: Security Category: Architectural specialties Category: Telecommunications Category: Wood Category: woodworking see also: List of woods

Windows Casement, double hung, bay window Curtain wall, skylight, dormer Source: Wikipedia

Category: Windows

These are all considered to be as the primary raw materials because without the said materials, the structure would not be completed and thus, no business will be established. This could also lead us to an assumption that the top five real estate companies uses the same set of materials since the standard building materials are one of the essentials of the structure and of the business. However, it could also be so that the materials used by real estate companies varies depending on the firms quality acceptance level and where the materials were outsourced.

Investment: Materials
SM Ayala Robinsons Belle Vista land

Fig 3.1 would discuss how big do the top 5 real estate companies invest for their materials. It is evident that SM Development invests the most with 48.78% of the total investments. This is followed b Ayala with 17.48% of total investments, Robinsons with 12.10%, Belle Group with 11.78% and Vistaland with a total of 9.86% of total investments.

B. Number of Suppliers The real estate industry in the Philippines is the second most engrossed industry in the country with a total of 15, 118 registered realtors based on the study of ASPBI or Annual Survey of Philippine Business and Industry.

The real estate industry is known to be as the 5th industry in the services sector, which contributes to the growth of GNP. As of 2007, the real estate industry was able to contribute 3% to the total growth of the countrys Gross National Product or GNP and is also known to have a growth rate of 5% - 6% per annum.

Generally, a real estate company would have numerous suppliers since the project consist of different departments and would involve a minimum of 2, 000 workers. However, due to quality control and budgetary planning, real estate companies have established contracts with construction firms, engineering firms and architectural firms, which then lessened the number of suppliers that the company deals with. Due to the reason that they aim to yield notable savings to be invested for their future projects, Ayala Land, as of 2011 had been actively outsourcing their supplies from China. Ayala Land also secured ties and relationships with their suppliers through the supplier-partnering program. With this program, Ayala Land was able to acquire a stable supply, which was priced lower than that of the market material-costs. Ayala Land was also able to renew a three-year contract to their cement supplier, La Farge. In addition to that, Ayala Land closed more than a hundred commodity supply

contracts as of 2010. Not only did these partnering agreements aid Ayala Land with their direct cost savings, but they too was able to generate administrative benefits such as a reduction of processing time for the Purchase requisition-to-Purchase Order cycle for project and non-project materials, general contracting and other services. Ayala Land managed to continue streamline operations and more than that, utilize their established shared-service platforms. In 2008, Amicassa Process Solutions, Inc. was successfully launched by Ayala Land for their residential sales backroom processes. After which, Ayala land started relocating their transactional accounting functions to Aprisa Business Process Solutions Inc., a subcontracted body that made the consummation of the first period implementation of Ayala Land possible back in 2010. Due to the proven success of the established shared-service platforms, Ayala Land plans to sustain, utilize and maximize the uses of the sharedservice platforms for general processing functions within the institution. We forged an agreement with our longtime architectural services provider to exclusively design the building templates, based on updated and more efficient BPO office building standards. Working with one firm and using an adaptable master template has significantly reduced our time-to-market. This allows us to respond more quickly to the requirements of major O&O companies and enables us to increase our market share - Ma. Victoria E. Aonuevo, Group Head for Ayala Lands Leasing Group This is a market that wont wait a long time for space when they are ready to expand. We need to have the right configurations, available in the locations where they are also looking to expand - Ma. Victoria E. Aonuevo, Group Head for Ayala Lands Leasing Group In line with Ayala Lands aim of generating notable savings, Robinsons land also implement procedures through which they too could reduce project costs. Robinsons Land allocate these procedures to various construction firms that undergo several processes such as a bidding process and a management evaluation before any supplier would be able to engage with the parent company, Robinsons Land. The contractors provide the materials or the supplies that are used for construction. However, if whenever the parent company believes that they have an advantage of providing their own supplies instead of outsourcing them, then Robinsons Land would provide their own. For SM Development Corporation, they usually acquire their materials from their company-owned businesses that are either located here in the Philippines of based internationally. This is due to SM Developments continuous product innovation and strengthening of their supplier base. It is also part of their SOP or standard operating procedure that they foresee incidents that may occur as they qualify their suppliers. These suppliers are selected based on peer reviews, capabilities and of course, experience. Belle Corp. on the other hand has successfully maintained operating flexibility due to their continuous effort with their cost control so to be able to sustain the positive results of the business despite being faced with a demanding circumstance.

Belle Corp. was also able to sustain their reputation in terms of product quality as well as sufficiently providing their market niche with needs and/or wants such as Belle Corp.s high end properties. Vista Lands site developments and construction works are usually outsourced to numerous contractors that are both accredited and qualified based on the needs of the company, Vista Land. Most often than not, contractors are awarded after having been completed a large-scale project based on the contractors competitive bidding and experience. While contractors who are to work on a small-scale projects will just be contracted based on their previous works peer reviews from certain contractors. The contractors financial capability, resources, experience, resources and track record of adhering to quality, cost and time of completion commitments are the basis of Vista Lands site developments and construction works through which their supplies are outsourced. Vista Land maintains an arms-length relationship with various accredited independent contractors, which is the reason for them, not being dependent on one or a limited number of suppliers. Vista Land would rather not uphold long-term arrangements with their contractors due to the reason of Vista Lands aim to be conservative and private as a corporation. The chosen contractors would only provide services that are based on a particular project or particular number of housing units. To be able to ensure that quality of all developments are complied, a team project composed of engineers examines certain processes and updates of the developments. The team projects qualifications include: Directly managing site development and construction activities; Coordinating the activities of the Company's contractors and suppliers; Overseeing quality and cost controls; and Ensuring compliance with zoning and building codes and other regulatory requirements.

Having said all these qualifications, it is just fitting that Vista Land had been ruthlessly aiming to minimize costs and assure that selling price is anchored to what had been accustomed through lowering material costs in a way that the company would usually buy in bulk.

Aside form the individual suppliers and contractors of real estate companies; there is also an organization as to where a group of numerous organizations come together to form one association who is responsible for establishing and implementing guidelines with regards to real estate companies. This association is Chamber of Real Estate and Builders Association or commonly known as CREBA. CREBA, as mentioned, is the union of Philippine business and trade associations in the real estate, housing and construction industry. At present, CREBA acts as the aegis of over 4,000 firms and individuals who are either directly or indirectly related to housing, real estate or the construction industry.

The Chamber of Real Estate and Builders Association or CREBA has key housing agencies through which they are able to tie up with various government sectors and then, aids CREBA to establish and implement the said rules and regulations towards the real estate companies. These key housing agencies would include Housing and Urban Development Coordinating Council, Home Development Mutual Fund, National Home Mortgage Finance Corporation, Home Guaranty Corporation, National Housing Authority, Housing and Land Use Regulatory board and Social Housing Finance Corporation. Role or Description HUDCC is considered as the highest policy body in housing developments. Also, HUDCC Housing and Urban coordinates the activities that are Development Coordinating done and are to be done by the Council or HUDCC government agencies so to assure the success and completion of the project of the National Shelter Program. The Pag-Ibig Fund serves as a primary contributor to the National Savings Program. This Natinal Saving Program provides Home Development Mutual affordable shelter financing for a Fund or the Pag-Ibig Fund typical Filipino Worker. This fund also cover the funds of both the private and government sectors and is a requirement for all SSS or GSIS members. NHMFC is the prime home mortgage institution of of the government. It is also so that they are to attract private institutional National Home Mortgage funds to engage into long-term Finance Corporation or housing mortgages. Lastly, NHMFC NHMFC is to utilize long-term funds provided by the government to purchase mortgages and to operate a secondary viable home mortgage market. A government owned and controlled corporation who promotes sustainable home Home Guaranty Corporation or ownership by providing risk HGC guarantees and fiscal incentives to banks and other financial institutions who will grant housing development and home financing Key Housing Agency

National Housing Authority or NHA

Housing and Land Use Regulatory board or HLURB

Social Housing Finance Corporation or SHFC

in return. A government owned and controlled corporation under the HUDCC who is responsible with housing development and resettlement, sources and schemes of financing, and delineation of government and private sector participation by implementing comprehensive and integrated housing programs. An agency who protects buyers of housing units and home land from exploitative player in the industry by enforcing laws, guidelines, rules and regulations. SHFC is an agency that works alongside with SHFC who executes memorandum and implements trust agreements. SHFC is also the sole creator of the Local Community Mortgage Programs which and is continuously being practiced and improved.

CREBA is also known to have allied industry associations who are responsible for the welfare of the people interested with housing and real estate developments. These industry associations would include the Real Estate Brokers Association of the Philippines, Philippine Association of Real Estate Brokers, National Real Estate Association of the Philippines, Subdivision and Housing Developers Association, Organization of Socialized Housing Developers of the Philippines, Philippine Institute of Environmental Planners, Philippines Constructors Association, United Architects of the Philippines, Philippine Association of Building Administrators, Philippine Association of Realty Appraisers and the Institute of the Philippine Real Estate Appraisers. Allied Industry Associations Role or Description REBAP is an organization who constantly articulates its stand Real Estate Brokers regarding the housing issues Association of the Philippines that affect the real estate or REBAP industry and the public it serves. The PAREB is known as the largest real estate service Philippine Association of organization in the country. Real Estate Brokers or PAREB is responsible for the PAREB genuine and sustainable development of the industry

with the help of the government and together with the constant promotion and expansion or trade ties so to ensure dynamism and equality within the industry. NREA is a group of real estate contributors, government agencies and legislators. NREA National Real Estate conducts symposiums, Association of the Philippines conventions and development or NREAP courses so to spread competency towards the real estate reforms, initiatives, advocacies and legislations. SHDA is known to be as the biggest and leading Subdivision and Housing organization of housing Developers Association or developers due to its continuous SHDA coordination with government agencies and allied professionals. OSHDP is the organization who promotes the welfare of all Organization of Socialized practitioners within the industry Housing Developers of the and the development of lowPhilippines or OSHDP cost housing so to attain that state of viability within the industry. PIEP is an agency of environmental planner, who professionally trains students and planners to advance the study of environmental planning. PIEP is to execute Philippine Institute of these trainings according to the Environmental Planners or interest of the nation while PIEP taking advantage of the opportunity to promote the professional status of environmental planners and encourage future environmental planners. PCA is a group of Filipino Contractors who conducts researches about the latest Philippines Constructors issues and trends of real estate Association or PCA development and holds conventions through which they are able to address certain

United Architects of the Philippines or UAP

Philippine Association of Building Administrators or PABA

Philippine Association of Realty Appraisers or PARA

Institute of the Philippine Real Estate Appraisers or IPREA

issues affecting the industry. UAP is a professional nonprofit organization who is mainly focused on the design profession. They execute such professionalism by holding educational programs, producing public practice documents, hosting national conventions and by supporting all chapters. PABA is an organization who conducts relevant studies so to be able to relay information towards the interested practitioners and open full opportunities for the practitioners, due to the aim to encourage the development of quality building PARA is also a non-profit organization who provides patronage among all other real estate organizations and is affiliated with certain government sectors. PARA also provides education, publications so to be able to exchange data from all sectors. IPREA is an agency through which they promote the recognition and development of the valuation profession globally by providing seminars, symposiums and the like

C. Availability of Substitute Supply Strictly speaking, it would be difficult for real estate companies to find a substitute not only for their suppliers but the very supplies as well. It would be difficult for real estate companies to replace their current suppliers. One, there had been stable ties and terms that are already established. If ever any real estate company would decide to change their current supplier, then it would require added money, time and effort to conduct outsourcing, qualifying and training as opposed to keeping the established ties and using the money, time and effort for further investments. It is also difficult to find a substitute for the supplies due to the fact that the current supplies are the trusted and proven supplies for this certain business which is

why these raw materials are considered to be the essentials for the real estate business. The possible substitutes for the current supplies are yet to be researched and proven as safe and trusted supplies to construct the project. Another factor why it would be difficult for any established real estate company to replace its current supplies would be the fact that if they replace their supplies, then it would imply that they are risking their expected sales and/or income for again, the quality of the materials to be used would reflect the quality of the work being produced. With this, it is probable that relying on one certain supplier would be a threat to any real estate company. This is because the operations of in this business would demand a huge amount of money and labor. If ever the supplier backs out of the deal, then the real estate company would be rattled looking for a new supplier in a short period of time and thus, not being able to examine and qualify deserving suppliers. D. Contribution of Suppliers to Product Quality As mentioned, quality is very crucial for any company. This is because the quality of any good would reflect the good that is further produced. For the real estate companies, the quality of their raw materials plays a big role in their production of goods. This is again, based on the fact that the product being produced is not just any good it is a structure that holds people and thus, the product that is to be produced should be durable enough to hold and shelter the people. These finished goods, the residential areas, commercials sites and growth centers, are offered to the people and it is the people who will establish the position of the real estate companies in the market. If whenever the quality of the goods produced do not suffice the qualifications of the consumers, then it is probable that real estate companies sales would relatively drop. With that, the quality of the supplies contributes to the quality of the goods and the quality of the goods contributes to the sales of any company. E. Cost Contribution of Suppliers to Total Product Cost

The cost contribution of suppliers to total product cost may vary depending on the changes in supply and demand, availability of supply, economic conditions, and government controls. For Ayala Land, they were able to yield more procurement savings through ebidding, tighter negotiations with suppliers, increased partnering and international sourcing. These objectives are seen to generate significant savings, which will be carried onto their projects over the long run. Ayala Land chose to continue outsourcing their supplies from their partner supplier due to the stable supply and below-market material costs, which is actually favorable in their part. Having said that, it is therefore that the costs of the suppliers contribute to Ayalas total product cost.

Robinsons Land obtains most of their supplies from their suppliers and/or contractors while taking into consideration certain agreements. Robinsons will soon engage themselves to these construction materials once it is proven that Robinsons Land has an advantage to it. Usually, a seeking contractor would be required to bid a project by listing all of the items required together with the costs of the project materials any contractor wishes to charge the real estate company. This costing of materials that are separated from the bidding is for the sole purpose of reducing project costs; if Robinsons would be able to acquire certain materials at a more competitive cost, then the company would result to a separate purchase order. Having said that, it is therefore that the costs of the suppliers contribute to Robinsons total product cost. Same with Ayala and Robinsons, SM Development also obtain their materials from their suppliers through consignments. In this strategy, SM is to endure the risks and rewards that come with the arrangement. Also, in this arrangement, SM believes that the consignment acts as the primary key for the sale of goods and a way to conduct transactions with the consumers. Given that, only when the actual sales from consumers have been transacted would sales revenue be renowned. And thus, only when the related inventory stocks are sold under this arrangement would SM Development be liable to the suppliers. Having said that, it is therefore that the costs of the suppliers contribute to SM Developments total product cost. For the Belle Group, all of their real estate properties are sold at a cost that includes all direct materials, labor costs and indirect costs that are related to the development of the project. If whenever the cost of construction exceeds the cost of contract, then it is probable that the Belle Group would adjust job performances, job conditions, as well as estimated profitability. Also, the costs of Belles properties would include all acquisitions costs together with direct attributable costs towards the development of the property until its saleable condition. With that, it is therefore that the costs of the suppliers contribute to SM Developments total product cost. Vista Lands interest on the business, on the other hand, differs based on the value of the land at which it was bought and will be sold against the total cost of development. Within the joint venture developments of Vista Land, the parent company, Vista Land, will be the one to bear all costs related to the development of the land and the construction of subdivision facilities; while the joint venture partner will be the one to provide the land onto the project. Vista Land also utilizes their resources, such as their people (architects and engineers) as they are trained to design structures and develop plans through which they are to maximize efficiency and minimize costs. With this, Vista Land is assured that by being equipped and through their extensive expertise, they will be able to sustain competitive prices, increase sales and most importantly, reduce costs.
The factors that affect the time and costs of the completion of the development are: Shortages of materials, equipment, skilled labor Adverse weather conditions Peso depreciation Natural disasters Labor disputes with contractors and subcontractors Accidents

Changes in laws or in Government priorities Other unforeseen problems or circumstances.

If whenever these factors are agitated relentlessly, then it is highly probable that it could result to project delay, excessive costs and thus, yield a negative repercussion towards the company, which will actually force the company to sacrifice its margins. It is so that these factors would affect the total development and further sales, which makes it difficult for Vista Land to sustain their margins since their estimated selling price was just centered from the market data and the historical experience which are all provided by the public. Having said that, it is therefore that the costs of the suppliers contribute to Vista Lands total

product cost however is in difficulty to increase their product cost so to be able to increase or maintain margins and at the same time, provide for the accepted buying price of the consumers.

F. Analysis of Suppliers Indeed, constructing any property would require a massive amount of materials so to complete the development. Given that, only a few hardware or construction stores could be able to provide the sufficient volume that any real estate companies. Then, the real estate companies would select among those few who has the volume of supplies the best set of suppliers considering all their qualifications and requirements. On the other hand, some real estate companies hire a contractor to manage and handle most of the supplies and thus, the supplies will be dependent on the contractor since the contractors themselves are to provide the materials. However, in some cases, if the real estate company believes that they have an advantage of providing their own supplies rather than outsourcing them through their suppliers, then it is likely that they would procure and undertake these said supplies. Another instance would be that some real estate companies do not engage themselves on long-term supplier relationships. This is because they dont want to be dependent on these suppliers and thus, being able to foresee situations and prepare themselves for any situation that may come. Lastly, it is also proven that the supplies being provided and the costs that suppliers charge their employers contribute both to the quality of the products produced and of course, the total product cost. As a whole, the success, the quality and the costs of any property would basically be dependent on the real estate company who developed the estate since it is them who invests, plans and decide about the necessary details, requirements and qualifications of the estate. IV. Substitutes As mentioned, the substitutes of the real estate companies would be the government owned properties, programs and corporations. It was also mentioned that the real estate industry varies from residential areas, commercial sites and growth centers. Of course, the main provider of the substitutes also provides the market with

the same properties, investments and or services however, in a different range, different price and also, not as many than that of the properties that real estate companies had been constructing. Residential areas would include condominiums, town houses, subdivisions and most probably, apartments. Having said that, the government also have projects wherein they are able to provide housing for Filipinos but is not as abundant, not as fine and do not have fast processes as the real estate companies have. For the residential areas, it is the Home Development Mutual Fund or commonly known as the Pag-Ibig Fund who provides these housing needs to Filipinos. The Pag-Ibig Fund serves as a primary contributor to the National Savings Program. This National Saving Program provides affordable shelter financing for a typical Filipino Worker. This fund also cover the funds of both the private and government sectors and is a requirement for all SSS or GSIS members. If we are to compare the developments produced by Pag-Ibig fund against than that of the real estate companies, we would notice a huge disparity.

Income

Ayala Land Pag-Ibig Fund

As we could see, Ayala Lands income from residential developments is 58.88% of the combined income of Ayala and Pag-Ibig while Pag-Ibigs income is only 41.12% of the combined income. This 58.88% amounts to P16, 006, 000, 000 while the 41.12% is only P 11,176,142,950. With this, it is evident that a real estate company, such as Ayala Land earns more than that of the government owned corporation and programs. This fact is probably due to the abundance and availability of supply or units from Ayala Land that are to be sold compared to the units that PagIbig has. Also, another factor would be that the Pag-Ibig fund requires so much and undergoes so many processes unlike with the real estate companies, if youre interested and has the capability to pay, then you would already be able to acquire a unit. Lastly, another factor to consider would be that the cost or the price of the units being sold. It is evident that the units from Pag-Ibig are relatively low compared to the buying price of Ayala Lands unit. Since the price of the properties from Pag-Ibig

is low, it is so that most buyers would prefer the properties from Pag-Ibig. However, since not everyone is given the chance to purchase such properties from the said program, due to limited funds and resources, majority would just purchase from a real estate company. Commercial sites on the other hand would include shopping malls, stadiums, amusement parks and the like. Again, the government has numerous projects and sectors as to which could also provide the same service. Just like shopping malls, our government owns Duty Free. However, the difference would be that shopping malls are composed of retail outlets from various firms while Duty Free is just like a grocery store with imported items and work in a consignment basis. If we are to compare Robinsons Malls versus Duty Free, it is unmistakable that Robinsons income is much higher compared to the income of Duty Free. Duty Free is a government-owned corporation who is responsible in operating a duty-and tax-free merchandising system in the country. Duty Free is one of the innumerable ways of being able to generate foreign exchange and revenue for the government with a goal of having been able to supplement services to tourists and at the same time, to be able to create value.

Income

Robinsons Malls Duty Free

Robinsons malls has 97% of income based on the combined income of Duty Free and Robinsons Malls while Duty Free only has 3% of the combined income. That 97% amounts to P6, 023, 000, 000 while the 3% is just P184, 000, 000. Again, Robinsons Malls income is 32 times more than that of Duty Frees, which is again, same with the residential developments. However, there are so many factors to consider as to why Robinsons Malls income is 32 times bigger. The first factor would be that the given income information is the accumulation of all Robinsons Malls incomes from different branches. If ever we are to consider the income from one Robinsons Mall branch, then it is probable that there wont be much of a difference. Another factor to consider

would be again, shopping malls are composed of numerous retails outlets as compared to Duty Free who depends its sales from the products sold that are just consigned by their suppliers. Another factor to consider would be that only members and balik bayans are allowed to go to Duty Free this then limits the number of probable market while shopping malls are open to the public. Last probable factor to consider would be that Duty Free has a limited number of items through which a consumer could choose from since they only have imported products, unlike shopping malls, they practically have everything. Given the fact that Duty Free only offers imported products, then it is fitting to say that most of the products are pricey compared to the products sold to shopping malls and thus, creates a market niche. Another sector that is under commercial sites would be the stadiums or arenas where in huge events are being held. An example of these commercial sites would be The Big Dome or the now called Smart Araneta Coliseum. If we are going to use a commercial site that belongs to the top 5 real estate companies, then we could use the SMX Convention Center by SM Development while the CCP is the perfect example for a commercial site that is owned by the government. The Cultural Center of the Philippines or the CCP is an affiliate of the office of the president and the National Commission for Culture and the Arts. CCPs purpose is to promote and preserve Filipino arts and culture through exchange programs, symposiums, exhibits and the like. If we are going to compare the two stadiums, SMX Convention Center and the Cultural Center of the Philippines, again, there is a noticeable difference between the two.

The Cultural Center of the Philippines had been falling short based on their financial performance. Based on some research, the CCP hasnt been performing nor improving for the past six years. Back in 2006, CCP had a shortage amounting to P84.79-million. In 2007 and 2008, CCP had a P38.8-million and P89.13-million loss respectively. For 2009, CCP had a shortfall of P12.17-million. And the most recent, having P52.24-million worth of deficit in 2010; and P38.76-million insufficiency in 2011, it could be assumed that CCP had been dependent on the subsidies provided for them by the government however, is still not able to generate sufficient corporate returns and thus, makes the execution of their operations critical. On the other hand, SMs SMX Convention center generated a massive P4.1 billion of revenues for 2011. This is a good indicator for SM since they were able to generate an increase of 11.2% from their P3.7 billion of revenues back in 2010. These revenues were largely due to the increase of sponsorship revenues, the amusement revenues bowling and ice-skating operations together with the SM Science Discovery Center and the SM Storyland as well as the success and increase of ticket sales sold. Again, there is a huge difference between the GOCC (government-owned and controlled corporation) and the property owned by SM Development. Just like in the other discussed situations, there are several factors to consider as to why the GOCC was only able to generate such and why the private property was able to acquire so much. One factor to consider would be that SM Development has more funds to advertise and invest on the activities and the structure that could occur on the SMX Convention Center. While CCP, being under the government with limited funds and having been at loss for the last 5 years, it would definitely be difficult to make remarkable revenues and even out their losses for the past years. Another factor to consider would be that The SMX Convention Center is more up to date in terms of the faade and the facilities that they could offer for the sponsors, performers and the viewers. The last factor that we could consider would be the established reputations of these two commercial sites. As discussed, the CCP is known to be a stadium where in Filipino culture is preserved and thrived this reputation would just then limit the number of potential clients, productions or events that may occur within the site. With that, it will be a huge disadvantage for the government for there will be a vast amount of sponsorships and accommodations will be spurned and thus, a huge amount of sales would be lost as well. On the other hand, SMX convention has an autonomy reputation since they do not limit themselves on cultural shows, educational or artistic exhibits and the like. This is because; the SMX Convention got most of its revenue from international sponsorships and shows.

An addition to commercial sector would be the banks that we trust. A bank that is considered as a government- owned and controlled corporation (GOCC) would Land Bank. Land Bank is a financial institution supporting the agrarian reform and an institution that promotes countryside development. At present, Land Bank is considered as one of the top 5 commercial banks (in terms of assets, loans and capital) and is known to be the largest formal credit institution in the rural areas. While Banco De Oro (BDO), a bank under the SM Group is a universal bank offering a vast

array of services such as lending, Deposit taking, Foreign Exchange, Brokering, Trust and Investments, Credit Cards, Corporate Cash Management and Remittances through subsidiaries. Comparing the two banks, again we would see a huge disparity. And as predicted, the private owned bank earned almost a hundred times more than the government owned bank.

Net Income

Banco De Oro Land Bank

As it is evidently seen, Banco De Oros net income surpasses the net income of Land Bank that you hardly see the net income share of Land Bank in the graph. If we are to look at the percentage, Banco De Oros net income is 99.93% of the whole or combined graph. This 99.93% amounts to P10, 005, 000, 000. On the other hand, Land Banks net income is just 0.07% of the total graph, which is equal to P6, 818, 497. Again, there are a number of factors to consider as to why the individual banks performed as such. One factor would be that Land Bank branches would usually be situated in rural areas as expected since Land Bank is known to be a supporter of the Agrarian Reform, and thus, fewer activities to conduct due to the limited opportunities that they have. Another factor would be the limited services that Land Bank offers this is actually in connection to the fact that Land Bank is mostly situated in rural areas. Lastly, aside from the obvious that BDO has more branches than Land Bank, it is also one of the most commercial banks that most of the firms that people are to transact with are affiliated with BDO and thus, more account holders, savings and the like. The last sector for real estate companies would be growth centers. Growth centers are also considered as a commercial site however, growth centers are most of the time multi-functional unlike commercial sites which are conservative in terms of their type identification that they just serve for the sole purpose or the type of their business (e.g. a bank will only be a bank and nothing else)

The growth centers would include the recently established Northpoint in cebu (developed by Ayala Land) and the ever famous, leisure and gaming developments. The gaming development that is at the same time a GOCC is the Philippine Amusement and Gaming Corporation or the commonly known PAGCOR. PAGCOR is a 100% government owned and controlled corporation that works under the direct supervision of the Office of the President. PAGCOR was established as a riposte and to put an end to the then growing illegal casino operations within the country; which explains why PAGCOR imposes strict rules and regulations to the established gaming centers and even to those who are interested to create one. While the gaming development that is privately owned will be POSC or Pacific Online Systems Corporations, which is a 35% gaming affiliate of the Belle Corporation.

Net Income

PAGCOR POSC

As we could see, the situation had a 360 degree turn for at this point, it is the GOCC PAGCOR who earned five times more than the private owned gaming center, POSC. Here, PAGCOR took 83.7% of the combined net income of the private owned and government owned gaming center amounting to P2, 013, 000, 000 of net income for 2011. While POSC, a private owned gaming center only took 16.3% of the whole graph amounting to P392, 000, 000. Again, like in the other situations, there are numerous factors to consider as to why things worked differently. One factor to consider would be the fact that a gaming center is a business that is quite critical since the activities being performed within the entity is illegal even though the establishment itself is legal. This is again why PAGCOR is under the direct supervision of the President. Having said that, it is relevant to state that since PAGCOR is a government-owned corporation and that the business is quite precarious, it is then that PAGCOR has the advantage at this point while POSC is just secondary for they have to meet with the rules and regulations imposed by the government. Another factor would be again, its reputation. PAGCOR was able to establish this government reputation making it safe and secure while engaging in the activities of POSC is quite risky for some. The last factor we could consider would be

that PAGCOR doesnt only get its revenues from the gaming center alone they too get it from the gaming activities conducted by most low-income or minimum wage paid citizens such as the Philippine Charity Sweepstakes Office or PCSO. And since this activity is widely patronized by the public, it is then that PAGCOR got its revenue from the huge amount of sales acquired through a huge volume. As a whole, having substitutes for this industry is quite difficult to determine since there is no specific indicator as to which is a substitute of which. Based on the given situations, it is the private owned properties and developments that have an advantage in this industry. This is probably because of the abundant funds available for investment unlike that of the government owned properties. Lastly, it is also probable that the reason behind the fact that the private sectors are most of the time the ones favorable in the situation would be that they are able to provide the needs and perhaps the wants of most people. This is again, their advantage since they know that the provider of their substitutes could not provide the amount of properties and services demanded from them by the consumers. With this, it is therefore that our GOCCs are surpassed by the established real estate companies due to the long-term proven of success by the private sectors. V. Industry Barriers A. Capital Requirements In the real estate industry (residential and commercial aspects), the capital requirements fully depend on the size and depth of the project. However, for the top 5 real estate giants, their capital expenditures to start a new project never goes below Php 3 billion over the past 4 years, with the residential portion being of the highest capital expenditure. For example, with Ayala Land, their 2010 capital expenditures went up at least Php 37.8 billion, 24% more than the previous year. Ayala Land even said that:

Our activity levels were simply unprecedented as we launched a total of 57 projects with a total investment value of more than Php 62 billion much more than at any other time in your Companys history.
For Robinsons Land, they said that:

Capital expenditure incurred for fiscal years 2011, 2010 and 2009 amounted to Php 13.9 billion, Php 6.5 billion and Php 6.3 billion respectively
For 2012, Robinsons has budgeted Php 13 billion in capital expenditures covering land and constructions. These will be funded through cash from operations and borrowings. They also included that in that Php 13 billion, 38% (or Php 4.94 billion) is allocated for residential condominiums and housing units while 62% (or Php 8.06 billion) will be spend for commercial like malls, office buildings and hotels. For more examples, SM Prime Holdings said that:

Our total estimated capital expenditure for 2012 is Php 21 billion.


B. Sourcing of Materials As stated in the supplier portion of this research paper, the supply aspect of the real estate industry is not as easy as other industries such as food and beverage. In this light, the sourcing of materials in the real estate industry are only between the contractors, developers, and the company itself. The suppliers of this industry are limited as more and more companies gear toward the Green Revolution. Nonetheless, the real estate industries follow this framework when it comes to sourcing of materials:

Robinsons Land said a quote about the real estate industry:

Most of the materials used for construction are provided by the contractors and developers themselves themselves in accordance with the agreements, although sometimes the company will undertake to obtain the construction materials when it thinks that it has an advantage in doing so.
The company typically will require the contractor to bid for a project on an, including separating the costs for the materials that it intends to charge the company. If the company believes that it is able to acquire any of these materials (such as cement or steel) at a more competitive cost than is being quoted to it, it may remove these materials from the project bid and then enter into a separate purchase order for the materials, to reduce project costs. C. Access to Distributional Channels In terms of the real estate industry, it is the individuals and companies who maximize the internet from a marketing perspective who will benefit the most. This is one of the many distribution channels of the Philippines real estate industry. In this industry, the two biggest financial costs over the years has been lead generation and office space. The integration of the internet in the real estate industry has helped

reduce both of these costs and will continue to lower costs as new technologies become established and accepted in the industry as well as in the Philippines. Most successful real estate agents understand that real estate marketing is about generating cost effective leads and that until you talk with a prospective client it is a numbers game. For the top real estate companies, when it comes to online marketing through the internet, the more people they are able to direct to their website, the more leads they will generate. Another form of distribution channel in the real estate industry is wherein the real estate companies put up booths or stalls in different malls. In those stalls, the real estate agents hand in information pamphlets to the people circulating in their area. This has been proven to be a strong marketing technique for most real estate companies such as Ayala Land and SM Prime Holdings. Another distribution channel or marketing technique of the real estate industries in the country is the practice of having an open house (for the residential properties) for several weeks or few months. This has been proven to gather the most market. As for the commercial properties, the real estate companies heavily rely on the location of their property. Furthermore, the most effective distribution channel for these top real estate companies is visual advertising. Visual advertisements such as street billboards, digital media, as well as mobile advertising (posters posted in bus liners) are also utilized by the real estate companies to take advantage of the heavy traffic evident in the highways and roads of Metro Manila. D. Analysis of Industry Barriers To summarize, the entry barriers of the Philippines real estate industry (both for commercial and residential properties) are: Capital requirements. When it comes to capital requirements, the real estate industry is one of the industries that require the largest amount of capital both for setting up an operating. As evident in the information from the top real estate companies, one has to shell out at least Php 3 billion in capital to start up a big-scale real estate project. However, with a few hundred thousand pesos, one can put up smallscale real estate projects such as apartments, mini condominiums and commercial properties. Sourcing of Materials. For the big-scale companies with big-scale real estate projects, sourcing of materials is relatively easy because they are already partnered with big-scale contractors and developers who usually supply them with the materials needed to put up and operate their projects. In addition, since these top companies have been in the industry for at least 5 years, they already have tied up with suppliers and contractors since then. Access to Distribution Channels. In Metro Manila alone, distribution channels in the real estate industry ranges from visual advertisements, online marketing, to real estate agencies. The only barrier for anyone who would want to enter in this industry is having enough

capital to undertake big-scale advertising and marketing. This is very important for the real estate industry because even if their property units are not taken, they are being paid for through maintenance costs and overhead expenses

VI. Competitors A. Competitors These are the top 5 companies competing in the real estate industry.

AYALA LAND INC. Profile & Background Ayala Corporation is one of the oldest and most respected business groups in the Philippines with a diversified business portfolio that includes real estate development, banking and financial services, telecommunications, water distribution infrastructure, electronics manufacturing services, automotive dealership, overseas real estate investments, business process outsourcing, renewable energy and power. Founded in 1834, Ayala has built a pioneering legacy in various industries and to this day maintains leadership in key sectors of the Philippine economy. Through its strategic investments, Ayala realizes its mission to ensure long-term profitability, increase shareholder value, provide employment, participate in the national development agenda and enhance the lives of Filipinos through its innovative products and services.

History Ayala Corporation is the holding company of one of the oldest and largest business groups in the Philippines. It maintains a tradition of excellence, and integrity has run continuously through seven generations, adhering to the principles and ideals that had brought it to existence 177 years ago. One pioneering family started a business in 1834. That business grew and engendered others. As it does today, Ayala harnessed some of the best talents in the Philippines. Today, Ayala is one of the biggest, most respected, and most widely diversified conglomerates in the Philippines, with leadership positions in real estate development, banking and financial services, telecommunications, electronics and information technology, water infrastructure development and management, and other domestic and international operations. Ayala began its role in urban development in the mid-1800s, by participating in the construction of the Puente Colgante, believed to be the first suspension bridge in the Far East, and the Ayala bridges in Manila. In 1888, it introduced the Philippines' first tramcar service. Ayala continues to contribute to Philippine economic and social growth

through its diverse business interests, maintaining its tradition of excellence in every endeavor. Today, Ayala is gearing up to move further forward, drawing on its heritage and experience to fulfill its brand promise of "Pioneering the Future." Owner Jaime Augusto Zobel de Ayala is Chairman and Chief Executive Officer of Ayala Corporation and a Member of the Management Committee of Ayala Corporation (Ayala Group). He has also served as a Member of the Board of Directors since 1987. Mr. Zobel is Chairman of Globe Telecom, Inc., Bank of the Philippine Islands, and Integrated Micro-Electronics, Inc.; Vice Chairman of Ayala Land, Inc., and Manila Water Company, Inc.; Co-Vice Chairman of Mermac, Inc., and Ayala Foundation, Inc.; and Director of BPI PHILAM Life Assurance Corporation, Alabang Commercial Corporation, Ayala International Pte Ltd, and Ayala Hotels, Inc. Mr. Zobel is a Member of the Mitsubishi Corporation International Advisory Committee, JP Morgan International Council, and Toshiba International Advisory Group. He is a Philippine Representative to the Asia Pacific Economic Council. He is also Chairman of the Harvard Business School Asia-Pacific Advisory Board; Vice Chairman of the Asia Business Council; Member of Harvard University Asia Center Advisory Committee; Member of the Board of Trustees of the Singapore Management University, and Asian Institute of Management; Member of the Asia Society and the International Business Council of the World Economic Forum; Chairman of the World Wildlife Fund Philippine Advisory Council; Vice Chairman of the Asia Society Philippines Foundation, Inc.; Co-Vice Chair of the Makati Business Club; and Member of the Board of Trustees of the Childrens Hour Philippines, Inc. Mr. Zobel holds a B.A. degree in Economics (cum laude) from Harvard College (1981) and an MBA from the Harvard Graduate School of Business Administration (1987). Capabilities Ayala pioneered in the Philippines the development of master-planned communities. Its first major modern endeavor, in Makati, began in the 1960s and became the country's premier business district. That success is being replicated in other places, particularly in Cebu City, in suburban Alabang in Metro Manila, and in Canlubang, Laguna. In residential property development, Ayala serves the different markets through Ayala Land, Inc. and its own units: Ayala Land Premier, Alveo Land, and Avida Land. In commercial center development, Ayala Land continues unparalleled achievements, which include Ayala Center in Makati; Ayala Center Cebu; Ayala Center Alabang; TriNoma in Quezon City; and Market!Market! and Bonifacio High Street in Bonifacio Global City, all of which serve as the life hubs of their communities. In every undertaking, Ayala Land maintains Ayala's core values of integrity and excellence. It innovates even as it applies time-tested approaches to community

planning and development.

Financial Performance: Balance Sheet, Income Statement

Balance Sheet

Income Statement

ROBINSONS LAND CO. Profile & Background The strength of a company, founded on the vision of its leaders, driven by a team, sharing the same core values, starts with one mans dream, and an entrepreneurial spirit. From its beginnings, JG Summit Holding's real estate arm has grown to an industry leader in land real-estate development. Each space, a vision woven in the community's pursuit for growth and development. Each structure, responsive to the changing needs of the Filipino. Robinsons Land Corporation pursues its commitment of making life better for the Filipino people. Harnessing its greatest resource, our people. Robinsons has always engaged at businesses, that not only create value for share holders, but also result in a developmental impact on society. From affordable housing development, to community outreach programs, that sustain livelihood for thousands of Filipino

families. Robinsons Land is one of the most respected and recognized names in the Real Estate Industry. They also mention that the need to improve these further, they need everyone to be totally focused in building the Robinsons Land Brand. They are committed to transform every property to high quality developments that create superior value to our customers and for our shareholders. Every Robinsons Land project carries with it, the reputation of having the highest standards of quality in service. That, is the Robinsons Land Brand. History Robinsons Land Corporation is one of the Philippines leading real estate companies and serves as the real estate arm of the JG Summit Holdings, Inc. The company is involved in the development and operation of shopping malls and hotels, mixed-use properties, office buildings, residential condominiums, as well as land and residential housing projects in key cities and other urban areas nationwide. The company was incorporated in June 4, 1980 and had its Initial Public Offering (IPO) on October 16, 1989 and was listed in Makati Stock Exchange and Manila Stock Exchange. It had another follow-on offering in October 2006 for P10.87 billion. At the end of 2009, RLC employs more than 3,700 employees (1,424 permanent and 2,288 contractual). As of November 8, 2010, RLC has a market capitalization of P47.3 billion. Owner Frederick D. Go Mr. Frederick D. Go has been the Chief Operating Officer and President of Robinsons Land Corp. since August 28, 2006. Mr. Go serves as the Chief Operating Officer of Big R Stores and Robinsons Convenience Store. He serves as the President of Robinsons Recreation Corporation. He is the Group General Manager of Shanghai Ding Feng Real Estate Development Company Limited, Xiamen Pacific Estate Investment Company Limited, and Chengdu Ding Feng Real Estate Development Company Limited. He served as an Executive Vice President of Robinsons Land Corp. He served as Chief Operating Officer of the Commercial Centers, High Rise Buildings, Housing and Land Development and Hotels Divisions at Robinsons Land Corp. He serves as Vice Chairman of Robinsons Savings Bank and Robinsons Bank. He has been a Director of URC International Co. Ltd. since June 2001. Mr. Go has been a Director of Universal Robina (Cayman), Ltd. and Universal Robina Corporation (URC) since June 2001, Cebu Air, Inc. since August 2007 and Robinsons Land Corp. since May 6, 1999. He serves as a Director of Robinsons Recreation Corporation, JG Summit Petrochemical Corporation, Waltermart-Handyman, Inc., Robinsons Savings Bank, CFC Corporation, Robinsons Handyman Inc., Robinsons Venture Corporation, Robinsons-Abenson Appliances Corporation and the Philippine Retailers Association, Robinsons Recreation Corporation, Robinsons Convenience Stores, Inc., Robinsons Distribution Center Inc., CFC Corporation, North City Properties, Inc., Robinsons Ventures Corporation, Handyman Express Mart, Inc., Cebu Light Industrial Park and Philippine Hotels Federation. Mr. Go received a Bachelor of Science degree in Management Engineering from the Ateneo De Manila.

Capabilities Robinsons Land Corporation (RLC), one of the Philippines' leading real estate companies, is involved in the development and operation of shopping malls and hotels, and is also one of the country's most reputable developers of mixed-use properties, office buildings, residential condominiums, as well as land and residential housing developments, including socialized housing projects located in key cities and other urban areas nationwide.

Financial Performance: Balance Sheet, Income Statement Balance Sheet

Income Statement

SM CORPORATION Profile & Background SM Prime Holdings is the Philippines' largest mall operator. Publicly listed since 1994, it now owns and runs world-class malls all over the country, providing millions of square meters of floor area for a fully integrated shopping, dining, and entertainment experience. SM Development is a fast-growing residential property developer focusing on the premium middle market, expertly balancing key housing factors of quality, style, durability, and affordability. History The roots of SM date back to the 1950s when entrepreneur Henry Sy, Sr. established a shoe store in Carriedo, the then-central business district of Manila. His aggressive and adamant strategy helped him gain large profits within a few years and he later expanded his business in Quiapo to become a fully functioning department store named "Shoemart", specialising in the sale of shoes, the sector of which the store originally was. Shoemart was later abbreviated to SM and became commonly known as "SM" or "Shoemart" by the locals. The SM in Carriedo was later abandoned and moved in the present site in Quiapo near the Manila LRT Yellow Line. The old site was demolished in 1982. The first SM Supermall, SM City North EDSA, was opened in 1985 and started the Philippine "malling" phenomenon[citation needed]. Sy observed the malling hobby of Filipinos and opted to make every SM Supermall like an amusement park. All SM Supermalls contain at least one or more amusement facilities, such as cinemas, bowling alleys, convention centres and game arcades. Located in several cities and areas in Metro Manila, as well as major provincial cities, each SM is easily accessible and situated by places of public interest (churches, schools, major roads and highways, etc). SM opened its first department store outside Metro Manila (SM Delgado) in Iloilo City in 1979 and was relaunched in 2004. The first ice skating rink in the Philippines was opened in SM Megamall in 1991. With this first, SM introduced Filipinos to an art-sport otherwise unpopular in tropical countries. The SM Supermalls also house 146 cinemas (with over 103,708 total seating capacity), making SM Prime Holdings the largest cinema operator in the country. As of 2006, SM Prime Holdings is embarking on an aggressive expansion program within the next five years. In preparation for this expansion, SM Prime Holdings, Inc. has amassed a total landbank of 96.6 hectares in 10 strategic locations. Included are attractive properties in provinces where urbanization is steadily underway, such as Cabanatuan, Pangasinan and Bulacan. By 2006, five additional SM Supermalls will be operational, including the SM Mall of Asia. This is SM Prime Holdings' most expensive project to date. The SM Group has engaged in other retail endeavors through other SM related

companies such as, among others: Watsons Personal Care Stores, Inc., a joint-venture with Hutchison-Whampoa Ltd. of Hong Kong; International Toy World (Toy Kingdom); Ace Hardware Philippines, a joint-venture with Ace Hardware Corporation USA; Star Appliance Center; Surplus Shop; Sports Central; Baby and Co.; Home World; and Our Home. The amusement center is SM Storyland. Owner Henry Sy In 1958, Sy established a small shoe store in Quiapo, Manila that marked the establishment of SM Prime Holdings. In November 1972, the small shoe store became SM Quiapo, SM's first standalone department store. On November 25, 1985, he established his first SM Supermall, SM City North EDSA. He is the Philippines' richest man, gaining $5 billion in 2010, amid the global financial crisis. The huge gain was due to his holding company, SM Investments Corporation, which has interests in Banco de Oro, inter alia. Forbes magazine's 2008 list of 40 wealthiest Filipinos, revealed the Sy family's net worth was $6.2 billion. Earlier, he was the second wealthiest individual in the Philippines, next to Lucio Tan, and (as of 2010) 201st in the world. Sy is considered a tai-pan. The Sy group is the operator of Banco de Oro and owner of Chinabank. In 2006, he bought the remaining 66% of Equitable PCI Bank, the Philippines third largest lender, in which he already had a 34% stake, and merged it with Banco de Oro in 2007. The merger created the Philippines' second largest financial institution with resources of close to $17 billion. Rumors say that the Sy family has a personal stake of $4 billion in these three banks, although there is no sufficient evidence to strongly substantiate that. Sy sold his 11% stake in San Miguel Corporation, Southeast Asia's largest food and beverage conglomerate for $680 million. Henry Sy, Sr., was named "Management Man of the Year" by the Makati Business Club in 1999 and was conferred an Honorary Doctorate in Business Management by De La Salle University in January of that year. He organized the SM Foundation Inc., which helps underprivileged and promising young Filipinos. Capabilities At SM, we strive to bring luxury to all our customers. We take our service a step further by making visits to SM stores, malls, residences, hotels, convention and leisure facilities a personal and unique experience--one that welcomes everyone, one that is memorable. It is no wonder we serve millions at SM; we make luxury affordable.

Financial Performance: Balance Sheet, Income Statement Balance Sheet

Income Statement

BELLE CORP. Profile & Background Belle is the leading Philippine developer of high-end residential and leisure properties. Its developments are located in a recreational area comprising mountains, rolling hills, and lakeshores about 90 minutes south of Manila in Tagaytay City and Batangas province, with spectacular views of Taal Lake and the surrounding countryside. The Belle Group owns approximately 1,280 hectares of land around existing finished and in-process projects, on which it will develop future projects over at least the next five years without the need for substantial new land acquisitions. Belle's marketing focus has been to nurture relationships with buyers and to maintain its reputation for quality and reliability. Primary target customers are high-income individuals and top corporations, in the Philippines and overseas. History Once a dormant mining and oil exploration company, Belle Corporation shifted focus towards property development in 1989. Willy N. Ocier, the companys current Vice Chairman, for sometime had been dreaming of one day developing an upscale resort in one of Luzons favorite weekend getaways. Then a successful stockbroker, Mr. Ocier spent his free afternoons driving to breezy Tagaytay to enjoy the clean air and at the same time, look for properties. It was then that he chanced upon a 360-hectare pristine site overlooking the majestic Taal Lake, which now forms part of the countrys premier destination for luxury livingthe Tagaytay Highlands. Today, Belle is the leading Philippine developer of high-end residential and leisure properties. Its developments are located in a recreational area comprising mountains, rolling hills, and lakeshore about 90 minutes south of Manila in Tagaytay City and Batangas province, with spectacular views of Taal Lake and the surrounding countryside. The Belle Group owns approximately 1,280 hectares of land around existing finished and in-process projects, on which it will develop future projects over at least the next five years without the need for substantial new land acquisitions. I do what I do because of the fulfillment of being able to build structures and reshape landscapes that will forever be there, and being able to maintain these well so that these become part of other peoples lives, Mr. Ocier said. Owner Willy N. Ocier Mr. Willy Ng Ocier serves as the Chairman, Chief Executive Officer and President of APC Group Inc. Mr. Ocier serves as Principal Executive Officer of Belle Corp. Mr. Ocier served as President of Pacific Online Systems Corporation from July

29, 1999 to September 2007. He served as the President and Chief Operating Officer of Eastern Securities Development Corporation. He serves as Chairman of Tagaytay Midlands Golf Club Inc., and PhilCom Inc. He has been Chairman of Sinophil Corporation since June 3, 2005. He serves as Chairman of Aragorn Power and Energy Corp. and Aragorn Coal Resources, Inc. He has served as Chairman of Philippine Global Communications, Inc. Mr. Ocier has been Co-Vice Chairman of Belle Corporation since June 24, 1999 and serves as co-vice chairman of Tagaytay Highlands International Golf Club Inc. and Highlands Prime Inc. He served as Chairman of Pacific Online Systems Corporation from July 29, 1999 to September 2007. He serves as a Director of Philippine Global Communications, Inc. He has been a Director of Leisure & Resorts World Corp. since July 2009; Pacific Online Systems Corporation since July 29, 1999 and Sinophil Corporation since June 25, 1999, Abacus Consolidated Resources and Holdings Inc. since 2007, Belle Corp., since June 24, 1999, Highlands Prime Inc., since February 15, 2001, Vantage Equities, Inc., since 1999 and APC Group Inc., since 1999. He serves as Director of Asian Alliance Investment Corp. He is a member of the Manila Golf Club Inc., Wack-Wack Golf and Country Club and Manila Polo Club. Mr. Ocier holds a degree in Bachelor of Arts in Economics from the Ateneo de Manila University. Capabilities Belle Corp. develops more than residential properties. They are also into developing commercial properties such as international golf clubs, country clubs, and the famous The Spa and Lodge of Tagaytay Highlands. Their residential properties also range from high class to middle class. Financial Performance: Balance Sheet, Income Statement Balance Sheet

Income Statement

VISTA LAND AND LIFESCAPES INC. Profile & Background Vista Land is the Philippine's largest homebuilder. It was incorporated on 28 February 2007 and was listed on the Philippine Stock Exchange on 25 June 2007. It is the market leader by far in terms of total number of houses built, having constructed more than 200,000 homes in 22 provinces in Luzon, Visayas and Mindanao The Company currently ranks among the top listed property firms in the country in terms of total assets, earnings and market capitalization. With well-known and distinct brands - Brittany, Crown Asia, Camella, Lessandra and Vista Residences, and through its provincial marketing arm Communities Philippines - Vista Land caters to all income segments in the different provinces of the country. The range of product offering starts at Php 800,000 (approximately USD 18,400) up to Php 48,000,000 (approximately USD 1,100,000). Vista Land has demonstrated its continued confidence in the Filipino market through its plans for further expansion into new areas in the country. With the widest geographic reach among all property developers in the Philippines, the Company continues to solidify the status of "Camella" as a truly national brand. History Vista Land is the Philippine's largest homebuilder. It was incorporated on 28 February 2007 and was listed on the Philippine Stock Exchange on 25 June 2007. It is the market leader by far in terms of total number of houses built, having constructed more than 200,000 homes in 22 provinces in Luzon, Visayas and Mindanao.

The Company currently ranks among the top listed property firms in the country in terms of total assets, earnings and market capitalization. With well-known and distinct brands - Brittany, Crown Asia, Camella, Lessandra and Vista Residences, and through its provincial marketing arm Communities Philippines - Vista Land caters to all income segments in the different provinces of the country. The range of product offering starts at Php 800,000 (approximately USD 18,400) up to Php 48,000,000 (approximately USD 1,100,000). Owner Manuel Paolo A. Villar In 1975, with an initial capital of P10,000, Villar purchased two reconditioned trucks and started a business delivering sand and gravel for construction companies in Las Pias. This eventually segued into building houses, as Villar took out a seven-year loan from a rural bank offering low interest rates, and began what would become the country's largest home building company, with an emphasis on low-priced mass housing. A notable innovation of Villar's companies was to sell house and lot packages, when the common practice at the time was to sell lots for future homeonwers to build upon.He initiated mass housing projects through economies of scale, utilizing the cost advantages of developing a large scale project in order to bring down housing prices. The number of homes built by Villar's companies totaled to over 200,000 units. In July 1995, Villar's flagship property, C&P Homes, was listed on the Philippine Stock Exchange and grew by more than a third in one day, ballooning Villar's 80% stake in the company to $1.5 billion. Villar had concentrated on low-cost housings which were bought by the home buyers themselves, giving opportunities for the low and middle income Filipino families to acquire homes. He also wanted to set an example to Filipino entrepreneurs that what they set their mind on can be achieved. Vista Land and Lifescapes, Inc. , a family owned business of Villar , is also listed in the privately owned Philippine Stock Exchange. Their shares of stocks were bought primarily by foreign funds which had given the government, as well as the PSE, good revenues. Villar has received several awards for his achievements during his profesional and business career, including being one of the Ten Outstanding Young Men in 1986, the Agora Award for Marketing Management in 1989, Most Outstanding CPA by the Institute of Certified Public Accountants in 1990, and Most Outstanding UP Alumnus in 1991. In 2004, he was named the Most Distinguished Alumnus, the highest recognition given by the University of the Philippines Alumni Association.

Capabilities Vista Land & Lifescapes Inc. operates in the Apartment building operators sector. Vista Land & Lifescapes Inc. (Vista Land) is a Philippines-based investment holding company. Through its subsidiaries, the Company is engaged in residential real estate development. Its projects include master-planned developments and standalone residential subdivisions which offer lots and/or housing units to customers in the low-cost, affordable, middle-income and high-end market segments. The Company operates through five business units: Brittany, which caters to the high-end market segment in Mega Manila (MM); Crown Asia, which caters to the middle market housing segment in MM; Camella Homes servicing the low-cost housing

segment; Communities Philippines which offers residential properties outside the MM area in the low-cost, affordable and middle market segments, and Vista Residences, Inc. which caters to the development and selling of residential high-rise condominium projects across the Philippines. Financial Performance: Balance Sheet, Income Statement Balance Sheet

Income Statement

B. Market Growth and Market Share The real estate industry has been booming for the last 8 years. First, it was residential housing. Then came business process outsourcing (BPO). Now, its the retirement industry. These three sectors are contributing to the fast growth of the real estate industry in the Philippines, which has been enjoying a boom since late 2004. According to the National Statistical Coordination Board, the Philippine real estate industry continued its outstanding performance with a significant rise of 17.1 percent (at constant price) in Gross Value Added (GVA) in 2006, the highest annual growth achieved since 1967. The 2006 growth, an acceleration from its 15.4 percent performance in 2005, surpassed the high 16.1 percent growth recorded in 2004. Level-wise, real estate GVA at constant prices reached Php 14.3 billion in 2006, higher than Php 10.6 billion and Php 12.2 billion recorded in the years 2004 and 2005, respectively. The robust annual performance in real estate industry was also driven by increased renting and leasing operations as a result of the opening of upscale giant super malls and commercial and shopping centers (also by the real estate industry). The growth was further sustained by the strong production and sales of residential developments in subdivisions and high-rise condominium projects fueled by the significant contributions of the remittances of Overseas Filipino Workers (OFWs) and Filipino immigrants. Likewise, the growth of Business Process Outsourcing (BPO) sector continued to boost sales and occupancy of office spaces, especially in the leading commercial business districts in the country.

In the eighties, the performance of the real estate industry was affected by the economic and political developments in the country. While it grew by 13.6 percent and 13.9 percent in 1980 and 1982, respectively, the sector plummeted by 25.3 percent in 1984, its worst performance in almost 40 years. It was during this time that the economy declined by 7.3 percent due to a number of reasons, to include, decline in world demand for Philippine exports and shattered investment confidence in the country brought about by political events, among others. From 1991, the industry gradually increased, attaining a 10.7 percent growth in 1996 before slowing down in the next five years to a low of negative 10.7 percent in 2001, the second lowest annual growth rate since 1967.The slowdown was largely attributed to the 1997 Asian financial crisis, which was felt not only by real estate players and consumers but also by the entire economy. Starting at 2002 however, the industry picked up and remarkably recovered until its boom in recent years including the all-time high of 17.1 percent in 2006. Up until the first quarter of 2007, the growth showed brisk performance of the sector. Indicators such as expansion of existing malls and shopping centers, increased office space demands from the call center industry and business process outsourcing (BPO) sector, and stepped up priming activities of major real estate establishments likewise indicate that the growth could continue for the coming quarters. As for market share (this analysis is based only on the top 5 real estate companies competing for their total market share until 2011), Ayala Land remains to be the leading in the real estate industry, with a total market share of 27% of the total market of the top 5 companies. With just 3% below the leading real estate company, Robinsons Land has garnered 23% of the total market. SM Investments Corp. follows in the third rank with a total of 21% in market share. Next is Belle Corp., with 15% of the total real estate market share and the last among the top 5 companies is Vista Land & Lifescapes Inc., with only 1% below Belle Corp.s 14%.

C. Reputation and Brand Identity The residential and commercial/office and segments of the Philippine realestate industry have shown remarkable reputation because of their year-on-year growth in terms of the number of development projects, as well as sales. These developments indicate that it is now on a growth trajectory expected to be sustained in the short to medium term. The promising outlook for the residential sector of the local real-estate industry is fuelled by rising incomes due to the steady growth in the economy for the past several years, as well as massive interest among overseas Filipinos wanting to establish permanent or temporary residence in the country of their birth or ancestry. The continuous influx of expatriates in the country likewise contributes to the demand for such residential facilities. This growth cycle is backed up by the real estate industrys strong reputation and brand identity especially in the years to come. The reputation of each company in the real estate industry depends heavily on the owner of that certain company. While the brand identity of the real estate company relies fully on the properties it develops. So far, the growth in the real estate industry is because of the stronger reputation and brand identities the top real estate companies are giving to the industry. Take for example Ayala Land. Ayala Land has been known to be the leading brand in the real estate industry for its excellent and high class properties together with its inclination to the Green Revolution. Its new slogan, We are not just developing Earth, were appreciating it, it has truly marked itself to have a brand identity of more than developing Earth. And with the Ayala family as its head, the reputation of the company will surely be safe and growing in the years to come. This company has added the Green Revolution touch to the real estate industrys reputation and brand identity. On the other hand, for the second top real estate company, Robinsons Land carries the reputation of quality customer service, making sure that each shareholder receives nothing more than high-class developments and properties. SM Investments Corp. also adds to the real estate industry the reputation of one-stopshop convenience center, putting up commercial as well as residential properties in each strategic location for the benefit of the people dwelling in those locations. Belle Corp. is also contributing the brand identity of exclusivity in the real estate industry, making high-end and high-class country clubs and villages with memberships. It is also into appreciating Earth by adding recreational properties that fully support the Green Revolution. Lastly, Vista Land & Lifescapes Inc. has contributed the reputation and brand identity of properties for everyone as the company makes high-class, middle-class, and low-class housing and commercial properties. They have truly given each Filipino citizen the privilege of having homes and running businesses through their very affordable yet quality residential and commercial properties. The promising outlook for the residential sector of the Philippine Real Estate industry is fuelled by rising incomes due to the steady rise in the Philippine economy for the past several years, as well as massive interest among overseas Filipinos wanting to establish permanent or temporary residence in the country of their birth or ancestry. The increasing number of expatriates in the country likewise contributes to the demand for such residential facilities.

The similarly rosy outlook for the commercial/office sector of the Philippine Real Estate industry is driven by the upsurge in the number of Business Process Outsourcing (BPO) companies that are setting-up shop in the Philippines. The employment and income boom generated by these companies in turn fuel a consumer boom that has resulted in the take-up of more commercial spaces. These developments indicate that the Philippine Real Estate industry is now on a growth trajectory that is expected to be sustained in the short to medium-term. The Philippines is thus expected to emerge from this cycle as a country with bustling metropolitan areas with ultra-modern skylines and picturesque housing estates. These will in turn make the country a better and more conducive place to live and do business in and thus will lay the foundations for future industry growth. D. Degree of Diversity and/or Integration The real estate industrys diversity and integration go far as water companies, banks, properties, telecommunications, and more. Ayalas forward integration are the following: Ayala Land (PSE:ALI) is the Philippines' largest fully integrated property developer and one of the most successful developers of prime commercial spaces in the country. It is engaged in masterplanning and developing growth centers with a mix of residential, shopping center, office, hotel, and leisure components. Bank of the Philippine Islands (PSE:BPI) is the largest Philippine bank in terms of market capitalization and the third largest in terms of total assets. It has a lead position in intermediation capacity, corporate and consumer lending, remittances, and electronic banking. Globe Telecom (PSE:GLO) is a major provider of telecommunications services in the Philippines. Formed out of a partnership between Ayala and Singapore Telecom, the company operates one of the largest and most technologically advanced mobile, fixed line, and broadband networks in the country. Manila Water (PSE:MWC) is the sole provider of water and wastewater services in the East Zone of Metro Manila. It now has existing operations in other parts of the Philippines, and in Vietnam. Integrated Micro-Electronics (PSE:IMI) is manufacturing services (EMS) provider in the region. a leading electronics

Ayala Automotive Holdings Corporation is a leading vehicle dealership network of both Honda and Isuzu brands with a 7% share of Philippine auto industry sales. LiveIt Investments is the holding company for Ayala's investments in the business process outsourcing (BPO) sector. AG Holdings is the holding company for the Ayala group's international property investments in the United States and Asia.

AC Energy Holdings is Ayala's power generation holding company with investments in the development of solar, wind, and mini-hydro energy sources. Driven by its brand promise to "Pioneer the Future" and guided by a new generation of managers, Ayala is transforming itself into an organization that empowers individuals, cultivates thought leadership, and rewards initiative. It is also committed to a development agenda that sees entrepreneurship as the engine for progress to a better future. Robinsons Lands forward integration are the following: Robinsons Malls: Robinsons Land Corporation owns and operates one of the largest and most successful chain of malls in the country. Each commercial center in the chain is created from a vision, developed into a concept, designed by expert architects and engineers, constructed by dependable firms, leased by a dynamic marketing team, and operated by service-oriented and customer-focused personnel. Robinsons Properties: The Residential Buildings Division is the company's business unit that is responsible for residential, leisure and retirement projects which cater to the middle and upscale segment of the market. Working in synergy with other units of Robinsons Land Corporation, the division has created a number of successful mixed-use properties in key metro-locations. Robinsons Offices: Robinsons Land Corporation is a leading provider of office space to Business Process Outsourcing (BPO) companies in the country. Its building projects feature above-industry standards, premier choice of location, geographic spread, and world-class facilities and infrastructure. These buildings were designed by seasoned professionals offering locators large floor plates and contiguous spaces with widely spaced columns. High-speed telecommunication and broadband data lines are made available through major providers. Robinsons Hotels: Robinsons Land Corporation's Hotels Division owns and operates six hotels - IHG-managed Crowne Plaza Galleria and Holiday Inn Galleria in Ortigas Business District and the RLC-managed Summit Circle Hotel in Cebu, Summit Ridge Hotel in Tagaytay and two Go Hotels in Cybergate Plaza, Mandaluyong City and the newly opened Puerto Princesa, Palawan. SM Investments Corp.s forward integration are the following: Banco De Oro: Banco De Oro is among the country's top five banks in terms of resources. It is a full-service universal bank providing a wide range of corporate, commercial, retail, and investment banking services through its 717 branches in key business and commercial areas, nationwide China Bank: Chinabank is the first privately-owned local commercial bank in the Philippines. It was incorporated and started operations in 1920 and went public in 1965. Now a universal bank, it provides, among others, deposits and related services; international banking services; insurance products; loans and credit facilities; and trust and investment services. Belle Corp.s forward integration are the following: The Tagaytay Highlands International Golf Club Inc.: It is home to Asias most exciting golf course, as well as a plethora of sports and recreational amenities for golfers and non-golfers alike. It showcases the countrys first and only cable car system that provides magnificent views of the golf course and the countryside. The Country Club at Tagaytay Highlands: It is a one-stop-shop recreation

center. It houses nearly every leisure activity imaginable, both for the young and the young at heart. The three-level Sports Center encourages an exciting sporting life with an indoor basketball court, billiards hall, 14-lane disco bowling center and indoor squash courts, among many others. After an exhausting workout, have a treat at the Gourmet Avenue which showcases Toscana, offering a wide selection of pizzas and pastas; Chiang Mai, serving Thais best sellers; and Akasaka, serving oriental Japanese cuisine, among others. Vista Land & Lifescapes Inc.s forward integration are the following: Brittany Corporation: Brittany Corporation was established in 1993. It caters to the high-end market segment in the Mega Manila area, offering luxury houses in master-planned communities, priced at Php9.0 million and above. Brittany's first development, the La Residencia de Bacoor was launched in 1993. Among its current projects are Amore, Portofino Courtyards, Portofino South in Daang Hari, Alabang; Crosswinds and Grand Quartier in Tagaytay City; Georgia Club and Augusta in Sta. Rosa, Laguna; La Posada and Marfori Tower in Sucat, Muntinlupa. Crown Asia Properties, Inc.: Crown Asia Properties, Inc. was established in 1995. It caters to the middle market housing segment in Mega Manila, primarily offering houses priced between Php3.5 million and Php9.0 million. Since 1996, Crown Asia Properties, Inc. launched its projects under the "Crown Asia" brand name. Among these developments were Amalfi in Dasmarias, Cavite; Valenza in Sta. Rosa, Laguna; Brescia in Commonwealth, Quezon City; Fortezza in Cabuyao, Laguna; Marina Heights in Sucat, Muntinlupa; Ponticelli in Daang Hari, Alabang; Citta Italia and Carmel in Bacoor, Cavite. Camella Inc.: Camella, Inc. was established in 1977. It caters to the low-cost and affordable housing segment in Mega Manila, offering houses prices between Php 800,000 and Php 3.5 million. Camella markets its projects primarily under the "Camella" brand. Among these developments are Cerritos Heights and Lessandra Heights in Daang Hari, Alabang; Camella Vecina in Cabuyao, Laguna; Cerritos East in Pasig City; Camella Molino in Bacoor, Cavite; Grenville Residences in Taguig City; Pristina in Imus, Cavite and Fronterra in Las Pias City. Communities Philippines, Inc.: Communities Philippines, Inc. was established in 1991. It offers low-cost and affordable residential properties outside the Mega Manila area priced between Php0.8 million and Php3.5 million. Communities Philippines' provincial development efforts started in Cebu, Cagayan de Oro and Pangasinan.

E. Competitor Strategies Competitor strategies differ from each other. For example, with Ayala Land, it is their unique differentiation strategy, using contemporary designs, providing excellent customer service, offering an attractive line-up of shops and entertainment concepts, and incorporating a strong sustainability platform. For Ayala Land and Belle Corp., their competitor strategy is mostly focused on offering high-end properties and service while SM Investments Corp, Vista Land & Lifescapes Inc., and Robinsons Land Corp. focus on giving low to high-end properties and services. One competitor strategy that all the top 5 real estate companies do is the close monitoring of leading market indicators of both the company and the competitors. Monthly

industry reports, sales reports and forecasts are reviewed, summarized and distributed to the management committee by a centralized group within the company. Another competitor strategy is the marketing strategies. Each real estate company have their unique taglines, giving the market the big picture on what that certain company stand for and give service to. For example, with Ayala Land, it is their tagline:

For SM Investments Corp., it is their slogan We got it all for you that symbolizes their one-stop-shop convenience idea. SM Investments Corp.s competitor strategy wins the middle class with its Savemore concept:

On the other hand, Belle Corp.s competitive strategy is exclusivity via its membership in all the properties it develops. Since its market is the higher class, it plans to win the high-class by giving them the feeling of exclusivity and ownership. F. Analysis of Competitors The real estate market has been booming since 2004 and it has been foreseen that this industry will be still be growing 10 years from now. With the top five real estate companies competing very closely with their total market share, the competition becomes more and more challenging as new concerns and issues arise such as the Green Revolution and decreasing available land in the Metro. With issues like these and more, the present real estate companies and the companies to follow should focusing and putting more concentration in the reputation and branding they would like their market to envision. And to fully grasp their market and even to capture more market share, diversifying and integration is of great importance. The top leading real estate company Ayala Land Inc. has been successful in its endeavors to capture customer retention and loyalty and is still on its way to even greater market share as it excels in the issues mentioned above. Robinsons, with a little amount of market share below Ayala, is on its way as well. However, there are still a lot of competitors to be seen and the top five companies should surely not overlook those competitors such as Megaworld Corp., Global-Estate Resorts. Inc., Filinvest Land

Inc., Empire East Land Holdings, and Cityland Inc.

PORTERS FIVE FORCES


SUBSTITUTES Number of close substitutes: Low and Favorable

Real estate industry, being a broad industry would definitely have its close substitutes. For the residential section condominiums, town houses, apartments, villages and subdivisions, its close substitutes would be the government owned lands to where government provide housing for. An example for this would be the Pag-Ibig fund and the Caritas Foundation. For the commercial section Malls, Resorts, Offices, Growth Centers and Hotels, its close substitutes would be the governmentowned recreational parks and lands such as Zoos, Museums and other establishments. This is favorable to the established real estate companies since they, among the few prominent real estate companies, are the only ones who provide such offers to consumers. This is also favorable to them due to the fact that they, the established real estate companies, when looked at the whole perspective would seem as if they monopolize the whole market. On the other hand, it is unfavorable for a new entrant because it would require some time to be at the same pace as those of the established real estate companies. Switching cost: Low and Favorable

As mentioned, the established real estate companies, when looked at the whole perspective, would seem as if they monopolize the market. Given that, it is fitting that the market could not easily find a substitute for the offerings provided by the real estate companies and thus, would be favorable for their part since consumers would have no choice but to patronize it. Another factor why the products in a real estate industry has few substitutes would be because of the fact that the properties condominium, land, offices etc. is something that is to be consumed on a long-term basis unlike food, which could easily be replaced and has innumerable substitutes. Price substitutes: Low and unfavorable

The price of the substitutes in this industry is relatively low as compared to that of the price of the properties produced by the real estate companies. However, despite the fact that the substitutes prices are lower, these said substitutes arent abundant enough to suffice the demand. This then would make it favorable for the part of the real estate companies because again, even though the substitutes imposed a competitive pricing, they arent able to provide all of the needs of the consumers and thus, a room for the established real estate companies to penetrate. Number of firms producing substitutes: Few and Favorable

As a whole, there are innumerable amount of players in the industry. However, if considering the prominent established real estate companies, only 30% of the total players are dominant players and thus, 70% of the total players are indirect competitors and is still considered as substitute. These dominant players are the producers who could provide the abundant amount of products, which other lowend real estate companies couldnt. Also, these dominant players provide products that cater to both high-end consumers and low-end consumers. This offering is then,

their competitive advantage and thus, favorable to the established real estate companies making it possible to gain a notable share of the market. On the other hand, the only dominant firm that is producing a substitute of the good of the real estate companies would be the government. With that, it is favorable for the part of the real estate companies since the government only has limited resources and capacity. Aggressiveness of substitute producers: High and Unfavorable

Among the dominant real estate companies, all of them are seen to be aggressive producers. They are considered as aggressive because one, all of them has readily available resources such as funding and people. Two, all of them are highly advertised making themselves and their products known to the market. Lastly, the real estate companies worth, based on their stock prices do not differ from each other. Also, among these dominant real estate companies, their product lines are within range from each other. This could provide an assumption that they dont want to be outdone by other players in the industry; which then makes it unfavorable for all of them since there is a rigorous competition in their business and in the industry. However, if we are to qualify whether the government, the firm producing the substitute of the good, is an aggressive producer or not, then they would fall as a nonaggressive producer. This is again due to the fact that they, the government, have limited resources, funding and capacity to be at range with the established real estate companies. Contribution to quality of substitutes: Low and Highly Favorable

Having said that the dominant substitute producer is the government, it would then imply that the government only has limited funding. It is also probably that only a certain amount of property to subsidize for the people. In this case, it would mean that most of the properties constructed by the government is of low quality due to the strict budget. This is again, favorable for the part of the established real estate companies since they could guarantee their consumers that their goods are of higher quality as compared to that produced by the government. Lastly, most consumers nowadays are wise consumers they dont easily fall for a low-cost property, they also look at the durability, affordability and practicality of the property.

SUPPLIERS No. of Suppliers: Scarce and Critical

Given that the proponents would be given a chance to enter the industry, granted that there would be a multitude of suppliers who will provide for us, the producers. However, there are only a few suppliers who could provide the adequate amount of supplies needed by any real estate company since real estate businesses would require a huge amount of volume of supplies for a project to be completed. Having said that, supplies would then be considered as a critical success factor of a real estate business. It is a critical success factor because as mentioned, any real estate project would need a huge amount of volume of supply and would require numerous individuals to control and manage these supplies. If ever a real estate company would choose to outsource their supplies from different suppliers as compared to what is accustomed getting their supplies from one supplier, then it would be more expensive and would require more time to finish each project. With that, the

number of suppliers would then be in a state of scarcity and is critical to the business. Availability of substitute supply: Scarce and Critical

In relation to that of the number of suppliers, the availability of a substitute supply would also be scarce and critical to the company. As mentioned, only a few suppliers could provide the adequate amount of supply that any real estate business would need. With that, it is most probable that these established suppliers would rather provide their supplies and services to the established and prominent real estate companies since they know that these established real estate companies are already a certain source of income for the suppliers; in other words, these established suppliers would most likely accept projects from big companies and reject small companies and perhaps, the new entrants of the industry. Hence, a new entrant would have a difficult time to execute and complete the project and most especially, compete in the industry. Supplier profitability: High and Favorable

In the real estate industry, suppliers normally yield a remarkable earning even just from one project alone. This is because big companies usually engage their supplies through contractors. These contractors are responsible to provide all the necessary supplies, manage these said supplies and instruct the laborers. With this, they are able to secure and manage their supplies plus their laborers at a lower cost. This is favorable not only for the part of the supplier but for the producer (real estate companies) and the laborers as well. It is favorable for the supplier since they are able to yield remarkable earnings. It is favorable for the producer since they are able to acquire the necessary products, services at a lower cost and lesser difficulties in managing these aspects of the project. Supplier contribution to buyers quality: Very Important and Highly Favorable

It is incontrovertible that supplies being acquired by producers play a big role in the edifices that real estate companies build. This is because the raw materials that real estate companies acquire will be used for production, which will later on probably be a determinant of their standing in terms of sales and credibility. For a new entrant, it is essential that they consider the quality of their supplies due to the established real estate companies proven success and quality of production. Once quality is assured, the new entrants could then gain competence as to compete in the industry. However, a firm must not be too dependent on the materials that their supplier provides them with; they too shall conduct quality control management so to assure quality and practice the companys efficiency and effectiveness. Switching cost: Neutral

As discussed, there are only a number of suppliers who could provide the adequate amount of supplies that one real estate company needs. Given

that, it would be difficult for a real estate company, most especially a new entrant, to switch suppliers. In connection to this, it would also then be difficult for a real estate company to manage costs since it is the supplier who controls the price of the raw materials being provided. In this case, the real estate companies has a neutral stand regarding this matter because then again, it is the suppliers who control prices and thus, makes it favorable and/or unfavorable to the real estate companies. Threat of suppliers to create their own markets: Low and Unfavorable

Having said that a supplier/contractor yield remarkable earnings, it could be assumed that just by providing raw materials to established real estate companies, would content any supplier. However, it is likely that they create their own markets because one, they already have enough funding since they, again are profitable by providing supplies to real estate companies. Two, they are in control of the materials and the workers which is again, to their advantage. Lastly, having been able to work for prominent companies, not to mention being credited by these real estate companies, it is impossible that they didnt get contacts and/or connections that could possibly help them create their own market.

Entry Barriers Capital Requirements: High and Unfavorable o Entrants in the real estate industry will have to have capital requirements of at least hundred thousands and that is only for the small-scale real estate developers. For medium to big-scale real estate developers, the capital requirements will be millions and even billions. There will be concerns such as land, land titles, contractors, subcontractors, suppliers, and the like. Brand Loyalty: High and Unfavorable o The brand loyalty in the real estate industry is high since the market in the industry does not easily switch from one developer to another. Moreover, the customers give a lot of time and effort to think about which property to take which means that the property they choose is most likely be the company they will be loyal about since there are a lot of factors to consider in choosing a property. The brand loyalty, however, is unfavorable since it for a real estate company, they would have to look at many aspects and would take them years to build strong brand loyalty and strong foundation for their market. Access to Technology or Distribution Channels: High and Very Favorable o The real estate companies, especially the leadings ones, will need to heavily advertise and market their products since the industry has a lot of competitors. In addition, the concept of choosing a home or a house is very important to the Filipinos; hence, the real estate companies take

a lot of capital and great effort in advertising and marketing their properties to the people. Even for the commercial properties, it takes business lessees a lot of time to find and think of which property to lease. It is also very favorable since there are a lot of distribution channels the real estate companies go into; most of which does not require a huge amount capital. That includes online marketing, billboard ads, stalls, and fliers. Cost of Switching: High and Very Unfavorable o The cost of switching to different properties (especially the residential aspects) is very high. For the residential people, they would have to go through a lot of processes to switch housing and a lot of installments and down payments. For the commercial lessees, they also would have to go through the same processes. All of these take months. It is also very unfavorable since the buyer would then have to go through the process of looking for the right property all over again. Volume of Sales: Neutral o The volume of sales highly depends on the size of the real estate business. For the small-scale real estate developers such as small apartments and condominiums, their sales would be relatively small. As for the big-scale real estate developers such as the top five companies, their sales would be relatively high, reaching millions and even billions in sales revenues. Access to Raw materials: Low and Unfavorable o For the small-scale real estate developers, the access to raw materials would be relatively high. But for big-scale developers, their access to raw materials is low because there are not many suppliers in the country who are as big as those big-scale developers. It is also unfavorable since one would have to have a lot of connections and networks to access good suppliers of raw materials. Learning Curve: Neutral o The learning curve of the entry barriers in the real estate industry highly depends on the size of the business and the kind of property undertakings (residential, commercial, offices, etc.).

Competitors Number of Players: Many and Unfavorable o There are so many players in the real estate industry, ranging from the 2-door apartment sellers to the villages and resorts sellers. It is unfavorable because the demand in the real estate industry, although high, is not cyclical; meaning if a person buys a home, it is not weeks or months that he/she switches to another home. It takes years and for some, never, to switch into other company properties. Hence, the more players they are, the smaller the demand is as well as the market share.

Growth of Industry: Low and Highly Favorable o Anyone who would want to undertake in the real estate industry should expect a low and timely growth of at least 10 years (if he/she wants to be as big as the leading real estate companies). Once the business starts growing in the latter years, however, the growth will be faster than the first years and then that is the time the real estate developer/investor will reap the rewards thereof. Furthermore, it is highly favorable for the returns of real estate are so huge and the growth of real estate companies grow even faster and faster as they spend more and more years in the industry (especially in the booming real estate industry of the country). Product Life Cycle: Very Long and Highly Favorable o The product life cycle in the real estate industry is the redeveloping of land and properties of the company or even other companies (i.e. buying and redeveloping foreclosed properties). The land in the country is recycling itself through the different developers over time. However, that time would mean more or less 50 years or for most companies, generations. Industry Cycle: Mature and Unfavorable o There are a number of mature and stable real estate companies including the companies included in this industry analysis. These companies have been in the industry for more than 10 years and for that, a new entrant in the industry might consider his/her entrance to be unfavorable in that case. Capacity Increases: High and Unfavorable o The industrys leading companies have very high capacities over the years with evidences like the big resorts and country clubs as well as big villages and residential condominiums and hotels. Those are the potential possibilities for any entrant in the real estate industry. However, it is considered unfavorable because the bigger the capacity of the competitors are, the smaller the market share is for the new entrant. Importance of Reputation: Very High and Very Unfavorable o Good reputation is of highest importance for anyone who would desire to enter the real estate industry. Property ownership is something that takes time and effort for one to think about. It is not as easy as choosing which food chain to dine in. It is something that each person thinks about as included in his/her future especially in the Filipino culture. That is why a good reputation is important for anyone who would want his/her brand to stand out in the real estate competitive market. However, as one company becomes highly trusted for good reputation, the harder it would be for new entrants to gain hold of his/her market share. This is because in the real estate industry, once the customer is satisfied with the company, he/she is most likely to be loyal to the company almost immediately.

Degree of Integration of Competitors: High and Very Unfavorable o The leading companies have integrated into other businesses such as water companies, telecommunications, and more. This leads to exclusivity, meaning the company is more likely to lead and/or convince his/her customers to his/her other lines of businesses. This makes the new entrant have a harder time to gain hold of his/her market share because integration also contributes to the brand loyalty of the customer. Brand Loyalty: Very High and Very Unfavorable o As mentioned above, a good company can get hold of a customers brand loyalty just by satisfying his/her needs and wants in the real estate industry through having a good reputation and having integrated businesses. This becomes unfavorable for new entrants in the grounds that it is hard shift a customers trust and loyalty because of the degree of importance of the property to the customer him/herself. Consumer Number of buyers: mostly OFWs They are the ones who have money to invest in a property. Having an investment in a property is better than just putting your money in the bank. Brand loyalty: neutral There is no customer loyalty in this industry because it all depends on how much the person is willing to spend and the place where they want their house to be located. Switching cost: neutral It really depends on the consumers in how they expect from our products Importance of our products quality to buyers: important and highly favorable The satisfaction of buyers is the number one priority in this business. Developers worked hard to reach a reputation that is not questionable by anyone. They do not want their reputation to be ruined because in this line of business, reputation is everything. Degree of differentiation: high and favorable It is in the location and the amount of property that makes each of the developers unique. There are properties for people who have big bank accounts and others are for middle-class people. But all the developers have one goal and that is to provide everyone a better life by building them houses. Threat of buyers to produce their own inputs: hard and unfavorable You will need a lot of experience and money for you to start this kind of business. It will be difficult for a new player to enter because he lacks experience and he has no track record yet. People are very meticulous on the history of the developer. Market knowledge: unfavorable and low

It will take an extraneous research for you to have a complete knowledge about the real estate market. It is not just about buying pieces of land and developing it but also checking if the location is safe and livable. There are a lot of considerations that you have to keep in mind in this line of business. Sources: http://en.wikipedia.org/wiki/Mixed-use_development#Mixed_Use_Development_in_Asia http://en.wikipedia.org/wiki/Fort_Bonifacio http://www.robinsonsland.com/ http://www.ayalaland.com.ph/about/history-heritage http://business.inquirer.net/tag/belle-corp-leisure-and-resorts-world-corp http://en.wikipedia.org/wiki/Manny_Villar http://www.alveoland.com.ph/Venare.php http://www.bworldonline.com/content.php?section=Economy&title=The-Philippines:-Propertysurge-takes-shape&id=51931 https://mailattachment.googleusercontent.com/attachment/?ui=2&ik=022d537469&view=att&th=1374fb28 60aeb405&attid=0.4&disp=inline&safe=1&zw&saduie=AG9B_P_PN7IYGXyLT_N_077MX4pl&s adet=1337502366702&sads=ahCP_yLTQ9ohDp2AWpa-JVyuXw0 https://mailattachment.googleusercontent.com/attachment/?ui=2&ik=022d537469&view=att&th=1374fb28 60aeb405&attid=0.5&disp=inline&safe=1&zw&saduie=AG9B_P_PN7IYGXyLT_N_077MX4pl&s adet=1337503009018&sads=7odSULDpHSyOGcwFwqXDp8Nzd2E https://mailattachment.googleusercontent.com/attachment/?ui=2&ik=022d537469&view=att&th=1374fb28 60aeb405&attid=0.1&disp=inline&safe=1&zw&saduie=AG9B_P_PN7IYGXyLT_N_077MX4pl&s adet=1337499892604&sads=tWbqH4Yu0cxyygzpJvOzgBsfMaw&sadssc=1 http://www.robinsonsland.com/downloads/download-annual-report/2010-Annual-Report.pdf http://bellecorp.com/company-history/ http://www.philippine-real-estate.info http://mb.com.ph/node/349298/property-markethttp://www.philstar.com/Article.aspx?articleId=535856&publicationSubCategoryId=66 http://www.bworldonline.com/Research/populareconomics.php?id=0204

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