DMCI's fast delivery - the "good" developers and the "bad" developers

[Euro Chocozone Buyer]

Hi

 

 

Can anyone explain here why DMCI is able to deliver some of their buildings completely finished 1 year ahead of sheduled completion date???

And why are Federal Land Veritown fort, some/most of Ayala Lands projects delayed 1,5 to 2 years? And the latter developers receive

far more funding from their buildings (120K, 150K per square meter), instead of "poor" DMCI (50K to 60K per square meter).

This is a 3 Year difference between the "good" developer and the "bad" developer.

I hope you all agree that late deliveries adds to your cost of acquisition (like 3 to 5pct opportunity cost)

The bad developers receive far more funding, and should be able to outbid the good construction workers from DMCI, yet they come up

with all kind of fabricated stories about "workers shortages" and the like.

 

http://www.skyscrapercity.com/showthread.php?t=1561079&page=32

 

I kind of like DMCI in a way that they do not increase their selling price too much, even though it is obvious that their price seems to be

below market price as most of their units in the better locations seem to be sold out at least 2 years before completion date,

which points to undervaluation, and I have no doubt that upon completion a 2BR "luxury" 67SQM end unit can easily fetch 5M+ in bids.

 

In any case this 1 year difference is a gift and lowers the already low acquisition cost even more. Please tell me how you can go wrong

on this?

 

http://www.skyscrapercity.com/showthread.php?t=1188953&page=266

 

One (Singaporean??) individual rents his 2BR end deluxe unit at about PHP20K per month, so that is a PHP250,000 gift that you get

with early delivery. That can already pay half of the 12pct VAT tax.

 

Just my thoughts... with this developer I can worry less about the supply glut.

 

 

 

[drbubb]

DMCI is a very experienced contracting firm who used to be the main contractor for Ayalaland.

 

(ALI now uses its own developer, MDC)

 

There are now so many condos projects in Greater Manila so there is tremendous competition for labor, and buying materials in a way so they will be delivered on time.

With this competition, even ALI has had some time delivering its projects on time, and some of their projects, such as the Avida property where I live now, have had some delays of a few months.

 

Other developers, such as SMDC and many others have had longer delays.

 

I was not aware the DMCI was (still) able to complete its projects early. What I do know about DMCI is that their projects are like resorts, with an appealing design (for some), but they generally at fringe, non-prime, locations, where they were able to acquire land more cheaply. Does the location have something to do with faster completions? Are they able to get materials (and labor) into their sites more quickly, more cheaply? Maybe. Beyond this idea, I do not have the answer(s) for you. Maybe someone else visiting here can provide a better answer

[drbubb]

Rising Land Prices have been a big challenge for developers

Per Colliers: Q4-2015

That's been especially true for Makati, and BGC/The Fort. But less true for Ortigas.

Will we now see a shift to more development in Ortigas?

The cheaper cost (& perceived opportunities) there, may explain why Alayaland took over management of Ortigas Corp earlier this year,

ALI was always in the picture, and had previously own 50%. But the management takeover was new. The result was:

Prices were put up by 10% (some say), reflecting the greater confidence that the market had in Ayala's management.

The challenges of rising land prices, and getting work done on time, is leading to some (unlikely?) tie-ups:

1/ Ty/Sy tie - Federal Land (George Ty's company) and SMDC, the largest developer which is owned by the family of Henry Sy, have formed a JV to develop a prime site on Ayala Avenue

2/ Federal Land is seeking foreign partners:

FEDERAL LAND, Inc. is talking to foreign companies for partnerships in certain projects that the property business of billionaire George S.K. Ty plans to undertake.
“A lot of exciting discussions [are] happening on the property development [front] because [there is] a lot of foreign interest to tie up and introduce something,” Federal Land Chairman Alfred V. Ty told reporters on the sidelines of the Financial Times-First Metro Philippines Investment Summit in Makati City on Aug. 2.

Two to three foreign companies have expressed interest in partnering with Federal Land in developing residential and mixed-use spaces in the Philippines, Mr. Ty said.
. . .
“We have a lot more open mind in ventures because we like to introduce innovations. I’m just waiting for us to sign so we can announce already,” Mr. Ty said.

The Federal Land official noted the Philippines has regained its attractiveness to foreign investors “because of all the growth, the young population, the English literacy of the people and the potential of the country.”

“With the new administration, they are confident they’re very supportive so the confidence, the go signal to come in the Philippines,” he added.

 

The potential partnerships may mirror Federal Land’s joint venture with SM Development Corp. for the development of a luxury residential tower in Makati City within a 3,400-square meter property along Ayala Avenue.

The joint venture earlier announced plans to start developing the residential tower in 2017. Construction is scheduled for completion five years thereafter.

Asked where Federal Land intends to launch new developments, Mr. Ty replied: “Of course, everybody wants The Fort (in Taguig City) but land is limited, price is very high already. So, Bay Area (in Manila) is a very attractive site. Ortigas area is very attractive.”

>Ty’s Federal Land eyes foreign partners
http://www.bworldonline.com/content.php?section=Corporate&title=ty&8217s-federal-land-eyes-foreign-partners&id=131569

[Euro Chocozone Buyer]

Fast selling as well.

 

 

Just read that DMCI latest project Brixton is almost 60pct sold out, -- and it was just launched last month I believe.

http://www.skyscrapercity.com/showthread.php?t=1739427&page=12

 

What I further like about DMCI is the composition of the units in the building, as in most DMCI buildings there is about 50pct 1BR and 50pct 2BR (and some 3Br units),

this is much better than 80-90 studio units which you see in many SMDC and other developer's projects. So DMCI rentals are probably much

more long term. When I visited DMCI Flair's building two years ago, I also saw many foreigners -- it is unclear whether these people are tenants or owners,

but I saw many foreigners in that building.

 

On a side note, the Philippine Stock exchange (has?) or is going to move its headquarters to BGC. Do you think that BGC will overtake Makati s land

price in value? And while you are talking about MAKATIprime wouldn't BGCprime be a better name? Makati has a chance to become an Ortigas, IMHO.

 

Makati's land price to stabilize, but BGC and Ortigas still have growth - that's what I believe. The biggest reason why people invest in Makati is because

the stock exchange is there, -- and it tends to be associated with very wealthy people and Makati is going to lose that advantage...

 

What's your toughts about this?

[drbubb]

I may look at Flair tomorrow !

 

 

I am pretty keen on Greenfield District, for reasons I can share with you in a Personal Message.

But before pulling the trigger, I am looking at some other places, and Flair is maybe the last "other project" I will look at.

Do you know where the Flair showroom is? Is it on premises.

 

BGC has "gotten ahead of itself" - and is too expensive now IMHO.

I expect a bigger correction in Rents and maybe in prices there than in Makati and Ortigas.

 

Why? Mainly because of the truly massive supply in BGC, the high prices, and the way it is cutoff

[Euro Chocozone Buyer]

DMCI also "over"delivers on actual product.

 

http://www.dmcihomes.com/uploads/project/63facility-1461395280.jpg

http://www.dmcihomes.net/la-verti-residences.html

 

Again, DMCI's actual project has outdone its render!

 

http://www.skyscrapercity.com/showthread.php?t=1185503&page=54

 

This is so much better than Eaton, because I read that Eaton significantly underdelivers on its renders.

 

 

Some individual investors are selling their Flair units on olx.ph for PHP100K+ per square meter,

while the acquisition cost was likely around PHP50-55K 4-5 years ago, so a reasonable profit if sold.

 

What I like about Flair (and Sheridan) is its relative proximity to the Boni-MTR-staton and Makati.

 

 

On a side note, another DMCI development -- VIERA RESIDENCES -- will have a 15 to 19pct price

increase on all 2BR units, -- and this is probably because of the VAT coming into play.

 

https://www.facebook.com/vieraresidencesdmcihomes/?fref=ts

 

This is the agent that I follow. He's writing about a 19pct price increase in 2BR units (excluding

the luxury end units which already have the VAT factored in), this august 15th. 2016.

 

I find this quite strange. As VIERA is located in the middle of nowhere, -- in a bad neighborhoud

probably - Quezon city. In any case, VIERA was the building that has the design that I liked

the most, so we will see whether DMCI again will overdeliver this time. The only positive for this

one might be the fact that it is not surrounded by major traffic,

 

 

 

 

 

 

[drbubb]

"Some individual investors are selling their Flair units on olx.ph for PHP100K+ per square meter,

while the acquisition cost was likely around PHP50-55K 4-5 years ago, so a reasonable profit if sold."

 

I actually visited the Flair property yesterday, and spoke to a Sales agent there

 

 

She wanted to interest me in Brixton, a project now under-construction, but I told her that it was too far from Boni station.

Flair was already on the edge of what I would consider - because I wanted something within easy walking distance of an MRT station.

 

She gave me a tour of the amenities area, and I liked what I saw. But I did not view any units due to lack of time.

 

She told me most units were of 55 sq M, and it I rented there I could expect to pay P 20,000 - 25,000 psm.

She said she does occasionally have resale units, and I could expect to pay about P 4 million - that's P 72,727 per SM.

 

Based on a rental of P 22,500 / month, the yield would be "only" 6.75% on a P 4 million cost.

 

My feeling is that the low yields will tend to keep the capital values from appreciating much.

 

The building is actually pretty interesting for someone who needs a 55 SM flat - it looks like real value-for-money* on that rent,

and the overall feeling of the building is as if you are at a resort.

The problem may be that 55 SM could be an awkward size for that location. Usually, a flat that size would be most suitable for families.

and I saw several children playing in the public areas. The problem is that there are few schools nearby, and the traffic in the vicinity

is very bad, meaning difficult commutes for those who need to take their children to school. Perhaps there are school buses running

to schools nearby. But what is the quality of those nearby schools? And/or what do they cost?

 

A family living at Flair Towers

 

Families will be reluctant to let their young children, under college age travel by MRT. Therefore, I would say that the best flats to own in

the Boni / Shaw / Ortigas area might be smaller flats, or flats geared to singles, couples, or sharing singles (rather than families),

who can make the best use of the proximity to the MRT.

=====

 

*to be fair, I also spoke with someone who had rented their (55 sm) Fair property at P 35,000 a month.

I was even shown photos of the interior, which was nicely decorated

[drbubb]

QUESTIONS - concerning stock weakness

LOOK AT DMCI ! this is a good quality developer  - and the chart looks like it is already rolling over. If the market was as fundamentally strong as Colliers is pretending it is, would the chart be so weak? I doubt it

DMC / DMCI Holdings ... update

[Guest PH Investor]

DMCI is one of the best residential condo developer in the Philippines.

All DMCI projects have low density development with only few units per floor.

I also visited Flair in Mandaluyong. And I agree that their size are pretty awkward especially in business districts (54+ sqm and up).

But what's good is that their price are lower per sqm which makes it a good property investment.

 

[drbubb]

"... their price are lower per sqm which makes it a good property investment. "

Yes.  So long as you can find a good tenant, paying you a good Rent (per sqm)