|There is no place like DMCI Homes|
Philippine Daily Inquirer , April 4, 2010
MANILA, Philippines--DMCI Group, the construction empire of the Consunji family, had always wanted to diversify into residential property development.
Ironically, in the middle of a crisis, DMCI found an opportunity to do so: During the real estate glut that helped sow the seeds of the Asian financial turmoil, it began building its own residential projects to generate a new revenue stream for the group.
At around that time, its officers saw how its own employees had to travel for two hours to get to work and another two hours to get back home. The group realized that, despite the property downturn that had badly hit most upscale property ventures, there was a market for affordable residential projects.
It has been ten years since DMCI Homes started focusing on medium-rise residential development situated just outside business districts. DMCI figured it would be less capital-intensive to undertake these projects than building high-rise condominiums.
And because the group's core competence is construction, DMCI Homes was able to come out with quick construction designs and execution, allowing a faster turnaround of cash by delivering projects ahead of schedule. Its housing units were priced significantly lower (by as much as 40 percent, according to some estimates) but of a better quality than those that were available in the market.
From 2006 to 2007, DMCI Homes was selling residential units at P40,000 per square meter. This meant a home buyer could get a 42-square meter two-bedroom unit for P2 to P2.2 million—a price range equivalent to a studio or one-bedroom unit being offered by other developers at that time.
Skeptics began singing a different tune when they saw a rise in DMCI Homes' fortune—the company delivered over 10,000 residential units in ten years.
“I guess we were prepared for a very harsh environment because we knew that, in the Philippines, crises are a part of life,” DMCI Homes chief executive officer Alfredo Austria says in a recent interview.
Austria notes that DMCI Homes customers are happy with their residences. Proof of this is that a big part of the company's business comes from referrals from friends and relatives of DMCI homeowners.
There are also a lot of “repeat” buyers—most are unit owners who wish to upgrade to a new development or those who are buying units for their children and extended families.
Austria tells the Inquirer that DMCI has also established a good working relationship with subcontractors and consultants who have grown with the company over the last decade.
Shareholders too are rewarded for braving the market with the company during those uncertain times.
“We've been reviewing our numbers … and they're quite healthy. Maybe we don't maximize profits. We could probably sell at a higher price. But our focus is really to design a product that's affordable [while] earning a little profit,” Austria says.
DMCI Homes' business philosophy is highly influenced by the group's founder David Consunji, who has built an empire relying only on his core competence without seeking any political favor, Austria says.
“He looked at construction as a profession. That's why our top [managers] are engineers,” Austria says.
DMCI is well known for building landmarks such as the Cultural Center of the Philippines, Asian Hospital and Shangri-la Hotel Makati.
Austria himself is an engineer from the University of the Philippines and was origi nally part of the DMCI construction group. He has been with DMCI Homes since its inception.
As of 2009, DMCI Homes has completed 24 projects, with 12 more in the pipeline.
To celebrate its 10th year, DMCI Homes launched three more projects: Cedar Crest, a medium rise residential development in Taguig City; The Redwoods, a neo-Asian inspired residential village in Fairview, Quezon City; and the Iris Tower at the Tivoli Garden Residences, the only high-rise garden community in Mandaluyong City.
Time is money
DMCI Homes caters to middle-income home buyers who can afford a monthly amortization of about P18,000. This means members of a single household must have a combined monthly income of around P70,000 (as a rule of thumb, a borrower must not take out a loan where the monthly amortization is more than 40 percent of the net take-home earnings).
“Financial package is also what makes it possible. That's why we're happy that we've been able to partner with several banks,” Austria says.
Because time is money, DMCI Homes strives to complete projects ahead of schedule. Consequently, the waiting time for home buyers is shorter and they are able to move in right away.
From the moment a concept is approved, the company may be able to deliver a medium-rise project in as short a time as 12 months.
Its brand proposition is to sell affordable residential units under a very private and quiet resort-like setting. It wants to create an environment where a homeowner may enjoy tranquility.
“They appreciate that,” Austria says, citing feedback from customers.
Although DMCI Homes is into residential development, it also has some leisure estate projects, such as a condotel in Boracay (Alta Vista de Boracay). But it has not completely gone into commercial or office development.
“We know our limitations and we don't want to spread ourselves too thinly, otherwise it affect our products and services,” he says.
The company is also fussy about the communities it builds. The reason why it focuses on selling two-bedroom units, rather than studios or one-bedroom affairs, is that the former tends to attract families rather than transient residents.
He says that there is a difference in managing a property when most residents are families who are in it for the long term instead of transients.
“Families are keen on enhancing property value and community spirit,” Austria explains.
DMCI Homes is oriented toward end-users, who represent 90 percent of its buyers. Investors only accounted for 10 percent.
On the Overseas Filipino Workers' market, DMCI Homes is a late-comer in this segment. Still, it managed to corner sales of up to 20 percent in this market.
DMCI Homes plans to stick to serving the middle-income market in the long run.
“We think there's a big unserved demand in the middle income market, for homes prices at between P1.5 to P2 million and P2.5 to P3 million,” Austria says.
“Most office workers have to contend with the traffic and endure the long commute from house to office. They need to live nearer to their place of work and, for their children, nearer to their schools. They need a better quality of life.”
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