Biz Buzz: Seller beware
If you’ve been noticing a sudden dearth of advertisements about property developments like high-rise condos nowadays, it’s not because the real estate industry has suddenly become gun-shy in promoting itself.
There’s a reason behind the sudden disappearance of a lot of TV and print ads about the real estate industry, and some think there’s a sinister reason behind it.
Some of the country’s biggest property developers are sounding the alarm over a policy imposed a few months ago by the Housing and Land Use Regulatory Board (HLURB) that mandates these companies to secure prior approval from the regulator before they could put out advertisements about their projects.
You heard it right: Prior approval of the HLURB is now required for every single form of advertising about property developments in the country, whether these be in the form of television ads, newspaper or magazine ads, billboards, tarpaulins hung at project construction sites and even—get this—fliers, pamphlets and brochures handed out by sales agents.
Every single one has to have been approved by the HLURB before they could be disseminated to the public, and the so-called stamp of approval has to come in the form of a license-to-sell number that must be affixed on that particular advertising medium. Not having that license-to-sell number means the regulator can impose stiff sanctions on the property developer, extending all the way to revoking the approval for the project. Ouch!
The new rule was actually put in place by the HLURB last Feb. 14, 2015—the day of love, no less—and was, according to the agency, meant to protect property buyers from abusive real estate firms that exaggerate the attributes of their projects in their advertising.
“The rules were not crafted in a vacuum,” explained HLURB Commissioner and CEO Antonio Bernardo. “We’re the first point of contact when buyers have complaints about these real estate projects. The buyers and complainants come to us. We had to do something.”
Now, if the name of the HLURB chief sounds familiar, that’s because he’s the same guy who was the chief of the Bureau of Customs during the early years of the Arroyo administration.
In any case, Bernardo said the draconian policy was meant to protect the buyers from being fooled by misleading ads. “That’s why we require [property firms] to put ‘mandatory statements’ in their ads now like the date of completion and no disclaimers,” he explained, adding that fine-print disclaimers were used by some property firms to wiggle out of their commitments to buyers.
Still, property developers are worried about the potential for graft and corruption the HLURB policy creates, especially since the companies must approach the regulator’s field offices for each and every instance that they want to advertise or print and distribute fliers.
The HLURB policy requires the regulator to act on each request for approval within five days, but there are already anecdotal reports of field officials nitpicking on small detail in the proposed ads as a way of making life difficult for the property firms.
The result? Property sales are down across the board for any developer. Fewer ads, fewer sales.
Of course, when an advertiser is up against a deadline, how likely is he to ask the HLURB field official: “Can we do something to expedite this approval?” <wink>
Some developers are worried that the HLURB ruling opens the door to graft and turns the business model on its head. From ‘caveat emptor’ (let the buyer beware), it has now become ‘caveat venditor’—Let the seller beware.–Daxim L. Lucas
Party for one at PCGG
Many in the business community were quite surprised (or amused, depending on who you ask) that Robinsons Land actually showed up at the offices of the Presidential Commission on Good Government (PCGG) last week and submitted the lone bid for the 18.5-hectare “Payanig sa Pasig” property.
When the government first announced the auction, it heralded the fact that the country’s top property firms expressed interest to participate in the bid. Insiders, however, were saying something entirely different.
Allegedly, the so-called “interested bidders”—many of them publicly listed firms—were well aware that from the start, the PCGG was standing on shaky legal ground and only agreed to be name-dropped to appease the powers-that-be.
With the entire auction anchored on a reconstituted title (according to reports, the original one is in the possession of a company called Blemp Commercial), no functional occupancy of the land, no property taxes paid (again, these were assumed by Blemp) and even the Congressional Committee on Metro Manila Development questioning the legality of the sale, it was perhaps not surprising that companies avoided this billion-peso hornet’s nest.
Despite the failed bidding, the PCGG nevertheless expressed satisfaction that it still pushed through, despite some of their commissioners supposedly receiving threats to stop it.
Why anyone would even bother to make threats is beyond reason, given that it was the PCGG itself that kept reminding potential bidders that they would assume all risk if they participated in this problematic auction.
Is it time to bid this failed bid farewell, and move on to more realistic ways for the government to earn money? Who knows? Time will tell if PCGG will try again.–Daxim L. Lucas
Top developer
SM Prime, a relative newcomer in residential development (through unit SM Development Corp.) is expected to become the biggest residential provider in Metro Manila in terms of number of new units by 2020, according to JLL.
SM Prime currently ranks second to Megaworld, with 37,500 mid- to high-end residential units expected to be developed this year, up from 28,600 in 2014 and 16,100 in 2013. SM ranked second to Megaworld in 2014, climbing from third in 2013. The second-biggest in terms of market share this year is—notwithstanding the Torre de Manila (the residential tower project accused of photobombing the Rizal Monument in Luneta) controversy—DMCI Homes.
By 2020, SM is expected to bring about 59,500 residential units in Metro Manila, larger than any other developer. Megaworld is expected to produce 51,900 units. Ayala Land, which has started tapping the broader market in recent years, is seen to rank number 3 by 2020, with projected 41,000 units.
JLL also noted that the majority of the buyers of SM-developed condominium units were end-users rather than investors.
Overall, JLL’s David Leechiu said there was no glut in the residential property market—despite what doomsayers say—noting that the gap between demand and supply was manageable.–Doris Dumlao-Abadilla
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