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Philippine builder Century Properties bets big on tourism

To achieve its goal of doubling revenue by 2020, Manila-based upscale real еstatе developer Century Properties Group is venturing into new growth areas such as the tourism and leisure sector.

“If you look at the tourism figures, the Philippines is now seeing 5.3 million tourist arrivals [and] that pales in comparison compared to our neighbors. Thailand, for example, has 25 million tourists. Vietnam is a smaller country with 60 million population [yet it attracts] 6 million tourists. So I believe there is a big potential in terms of tourism development in the Philippines,” Executive Chairman of the Board Jose Antonio told CNBC’s “Managing Asia.”

Tourism is one of the four pillars that make up Antonio’s future gameplan for the company he founded in 1986. Called the “Century 2020” blueprint, Century Properties is looking to diversify into tourism projects and horizontal developments—a special form of joint ownership between the owners of a building—for first-time home buyers, on top of its focus on Philippines’ residential market.

The 68-year-old founder told CNBC that he hopes the company’s revenue can see an equal contribution from key areas such as commercial leasing, residential condominium towers, horizontal residential units, as well as leisure and tourism projects within the next 5 years.

“The ultimate objective is not to rely on one segment of the market. While the residential upscale market is healthy, we cannot rely on one segment. Looking at diversifying will give us that growth,” said Antonio who’s also referred to as “Ambassador” due to his position as special envoy to China from 2005 to 2008 under former president Gloria Macapagal-Arroyo.

To bolster its move into the tourism and leisure sector, Century Properties is allocating 6-8 billion pesos a year for projects such as hotel and integrated resorts. The company has thus far acquired properties in Batangas and Palawan earlier this year, alongside a partnership with Novotel to open its first hotel property in Mandaluyong city by 2019.

To be sure, there have been hiccups along the way as the company stepped out of its comfort zone.

For one, Century Properties entered into an investment agreement with Japanese casino mogul Kazuo Okada in 2013 to develop a luxury residential and commercial project in Entertainment City – touted as a Las Vegas-style gaming and entertainment complex. However, the agreement fell through, prompting the Philippine builder to seek legal action against its Japanese partner. Both parties reportedly reached an amicable settlement in May.

When asked about the incident, Antonio said: “The first lesson learned is to choose well who you are dealing with. Maybe the chemistry [with the Okada Group] wasn’t there. Another lesson learned is that sometimes there are things that are lost in translation when there’s a language barrier. I wish the Okada Group all the best.”

Despite the unpleasant experience, the Philippine developer is still keen on getting into this part of the leisure industry.

“I think it is one spot that will generate a lot of activity in the next few years, considering the investments being poured here. If we can create our own version of the Las Vegas strip, I think it will be very good for the country,” Antonio, named as the 25th richest man in the Philippines by Forbes in the magazine’s annual ranking in 2012, said.

Century Properties also made its foray into retail business earlier this year, with the opening of its first shopping center in its 3.4-hectare mixed-use development “Century City” in Makati city. Admitting “not [knowing] much about retail,” the CEO said he does “not expect to dominate” a sector controlled by well-established homegrown companies such as SM Group.

“We have both residential and commercial buildings in ‘Century City’ and this community will likely be about 10,000 people. They will need to visit the supermarket regularly, buy clothes and will need F&B [services]. We don’t expect to dominate or even parallel our peers in the business. Instead, our retail is about complementing the buildings that we have in our development.”

The ambitions of Century Properties, however, do not extend geographically.

Despite being the first real еstatе company from the Philippines to develop a luxury condominium in New York City, Antonio is ruling out overseas projects for now.

“We are very, very busy in the Philippines and to spread ourselves too thin might be a challenge. We are looking at doing a lot in the Philippines because there’s still many opportunities here,” he said.

Property prices in the Southeast Asian country have surged over the past few years. According to Antonio, residential prices have surged at an average of 8 percent per annum over the past 5 years. While market watchers have warned about a bubble forming, the real еstatе tycoon remains optimistic that the best days for the Philippine residential market are not over.

“I am not [expecting] a sharp slowdown because supply is not that huge. Secondly, low interest rates allow people to look at real еstatе as a real alternative for their investments,” he told CNBC.

Source: CNBC | October 30, 2015


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