Millennials a big market for small, affordable homes
Millennials have emerged as a strong market for affordable homes with the influx of residential units that now cost just as much as buying a car or consuming two cups of gourmet coffee a day.
8990 Holdings Inc., which has vowed to conquer Metro Manila’s mid-cost residential condominium market, reported that young adults aged 20 to 35 accounted for 55 percent of the company’s total sales last year, rising from 50 percent in 2014.
“We have consciously made our prices affordable: from P450,000 to P1.4 million. It’s like a brand new home for the price of a good second-hand car, or a monthly amortization equivalent to two cups of coffee everyday at Starbucks,” 8990 Holdings president Januario Jesus Atencio reported during the company’s recent stockholders’ meeting.
This suggested that for as low as P5,000-P6,000 a month, even young people could now avail themselves of a housing loan to buy their own unit instead of spending the same amount to rent living space close to work.
8990 Holdings builds affordable homes for the average, working class, lower-middle income Filipino family. Its market includes government workers, private employees, business process outsourcing (BPO) workers and overseas Filipinos.
“Our buyers are deeply aspirational—they want to move up from being renters into property owners. But they are practical—they want value for money. And they are optimistic,” Atencio added.
For its part, 8990 Holdings’ business model has emphasized on construction that was fast, housing finance that was cheap and a collection platform that was good, Atencio said.
In 2004, 8990 Holdings decided to use pre-cast wall panels when the industry was still building houses made of hollow blocks. “Through trial and error, many mistakes and discoveries later, we were able to scale up our technology that produced so far 43,306 solid pre-cast houses in 39 completed projects since we started 12 years ago. By the end of 2015, we had a capacity of 14,880 units. In 2016, this will ramp up by an additional 56 forms with a new capacity of 28,320,” Atencio said.
The simplest way to cure the housing backlog in the country, Atencio said, would just be to build more houses—and use pre-cast wall panel technology to build it fast.
“And you will also see our explosion in Metro Manila where we shall invade the mid-cost condominium space with some 50,000 new low priced condo homes with our very own Deca Malls as the major amenities,” he said.
For instance, 8990 Holdings is developing residential condominium towers in Cubao, Quezon City and Mandaluyong that offer “halfway” houses to urban workers. The residential units measuring 13 square meters will come fully furnished with beds, cabinets, complete toilet and bath, table and chairs, air condition units and microwave. They are priced starting at P1.2 million a unit.
In the first half of this year, 8990 Holdings’s net profit grew by 3 percent year-on-year to P2.18 billion. Gross sales rose by 6 percent year-on-year to P4.73 billion. The net margin of 46 percent for the period exceeded the guidance of 40 percent.
