Land banking key to future restrictive policies
The proposed National Land Use Act (NLUA)—Senate Bill No. 3091 that seeks to forever ban the conversion of agricultural lands—has started an interesting trend among property developers: intensified land-banking activities in recent months.
Land banking is a term that refers to purchasing parcels of land and “banking” them for future sale or development.
“It requires planning and patience. This is no longer new as the big ones have been engaging for years, in accumulating raw lands around the Philippines for future projects. Most developers, particularly the small and medium players, would rather preoccupy themselves with the development, sale and lease of their existing projects,” explained Gaspar De Guzman, sales and marketing business development officer of PA Alvarez Properties Development Corp. (PAAPDC).
But the trend has changed in just a few months. A lot of developers became deeply concerned when House Bill No. 6545 or the proposed National Land Use and Management Act was approved on third and final reading last September, and when President Aquino early this month certified as urgent the NLUA, which is currently pending on third reading in the Senate.
Once the Senate passes the bill on third and final reading, both chambers of Congress will tackle the bill in a bicameral conference committee to settle conflicting provisions. It will then be sent back to plenary for ratification before it can be transmitted to the President.
The entries that concern developers include the definition of “agricultural” lands as “protected areas” and the proposed law’s intention to place them under the Department of Agrarian Reform’s jurisdiction and be protected from conversion.
Another entry states that such agricultural lands will be banned from conversion while they are in the hands of landowners, but may be converted once they are awarded to agrarian beneficiaries.
“While the importance of preserving the country’s agricultural land and critical watersheds is crucial (as what the bill seeks to protect), the proposed law, if no amendment will be made, will definitely slow down subdivision projects particularly the socialized-housing boom in the countryside (where most of the lands have been classified as agricultural). Land banking now is thus one of the few viable options left for us,” said De Guzman whose company is now on the lookout for available and potentially promising idle lands in several parts of Bulacan in the north and Batangas in the south.
Because there are few available lands left within Metro Manila (besides, vertical development projects are more suitable and very much encouraged), De Guzman said small and middle-market developers like PAAPDC have learned to move away from its base of operation (in its case, Laguna province) and look for other locations where there are huge potentials for expansion.
Aside from acquiring lands for future developments, De Guzman added that there are also options available, like entering into joint venture with the landowner.
This convenient partnership also works out well for both as the developer gets the land easily and at much less capital requirements, while on the other hand, the landowner is able to get profit from the idle property.
He said San Jose del Monte City in Bulacan is one example of a formerly purely agricultural area that has become progressive, and benefited from land conversions and joint ventures.
“Though largely agricultural, it has many idle lands that soon gave way to commercial developments and progressive residential communities. Local economy grew and thanks to wide, multilane arterial thoroughfare that connected the city to Metro Manila, San Jose del Monte and outlying areas became very accessible and have become one of the favorite targets of developers, especially those doing land banking and joint ventures,” De Guzman explained.
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