Design makes a comeback
User-friendly proposition in
Joint venture like marriage for
The risky business of buying
a home, One man dream is to
house thousand wisely
Customer protection, ethical
conduct in real-estate business
Arch. Gilbert C. Yu honored by
PIA for innovation in the
Philippines Housing Industry
Noted architects urges gov't to
restore consumer confidence
Potential gold mine for RP
seen from overseas Pinoys
Architect Gilbert C. Yu was
invited to speak to the UAP
G&W's Architect Kenneth Uy,
Invited to speak about
December 2007 Articles
Design makes a comeback
As a boy, Daniel Terence Yu spent entire summer afternoons in his architect father’s office gaping at the scale models of high-rise buildings. He squinted at the glass-encased replicas, transfixed by the minute detail of doors, windows, and roofs decks, as well as by the miniature people, cars, and trees. Unsurprisingly, Yu, now 35, has become an architect himself, but with a twist – the tiny, scaled-down buildings inspired him to dream big. Whereas other budding architects daydreamed about building houses for a first project, Yu decided he wanted to build towers and shopping malls.
By the time Yu was in the fourth year of his BS in Architecture studies at the University of Santo Tomas (UST), he was already apprenticing in his father Gilbert Yu’s successful firm, G&W Architects. Winning UST design competitions for projects as diverse as a socio-civic clubhouse, a redevelopment of Quiapo residences, and even a performing arts theater turned the undergraduate somewhat cocky. The sensible mentorship of his father, plus real-world business quickly disabused him of his conceit.
“You only learn 10 percent of this possession in school,” Yu now admits “When you do projects at school, you never talk about budgets. It’s easy to design when you don’t need to face realities. In practice, you have to be very creative when working within limitations.”
Today, as chief executive architect of G&W, Yu has plainly mastered the commercial intricacies of architecture. He authored, after all, the contracts involved in the Build To Own (BTO) system pioneered by G&W. Still, his greatest architecture-related passion remains design. More precisely, design innovation.
The Ballyhoo surrounding new real estate developments in often laughable. Chichi parties are employed to lunch residential developments who’s main features range from superficial add-ons and “lucky” layouts. Doesn’t anyone talk about design anymore?
“It’s like being served bad food that’s beautifully presented,” smiles Yu. “The hype is used to cloak a lack of design innovation, which should be the core value of every new development. Design is the basis for everything! What’s the point of moving into a unit with magnificent furniture if the unit itself is poorly deigned?”
Real estate developers routinely starts with grandiose designs, only to revert to the expediency of allowing financial considerations to downgrade original plans. After the 1997 Asian financial crisis, for example, developers simply reduced the average unit’s size to maintain profit margins. Buyers were forced to accept the reality that a 20-square-meter studio (with ceiling you could touch with out stretched arms) could be called a home. When it fact it was merely a glorified shoebox.
“Have you ever noticed how concept cars always look so cutting-edge? Yet when the production version rolls out of the assembly line, it never looks even remotely close to the prototype. My experience with developers is that so much get lost in translation.”
Yu can afford to focus his energies on design innovation he has more latitude to do so. The BTO system of G&W allows Filipino to own upscale homes for at least 40 percent less than similar condominium projects. G&W avoids the high margins of less-experienced developers because G&W, builder of over 1,000 structures, is a firm composed of practicing architects that gathers multiple clients to sign individual architect’s agreements with G&W.
Basically, the homebuyer pays G&W a professional fee for their new home, which means sidestepping the whopping profit margins built into the cost of many developers. Some see it as a real estate revolution. Actually, it’s more of a restoration of that once-fundamental principle of homeownership – the architects-homeowner relationship.
Moreover, G&W’s stature has allowed it to develop a unique trustee service together with Banco De Oro. For financial matters, the homebuyer deals directly with the trusted bank – assurance that his money goes straight to the relevant development, not to servicing debts incurred from past projects.
And G&W’s proven ability to complete a residential projects in two years averts the risk of rising constructions cost, as well as saves the homebuyer rental expense as he awaits the completion of his dream home.
Really, al of the above arguments point to just one fundamental competitive advantage: G&W this year was conferred one of Asia’s most coveted architectural honors, the BCI Asia Top 10 Awards. With the business side so confidently in place, it’s easy to see why Yu can concentrate on innovating.
Groundbreaking is still six months away, final brochures are being printed, and showroom units are week away from completion, yet already 70 percent of Blue Sapphire units have been reserved by eager clients. The residential high-rise is the sixth BTO structure of G&W in Bonifacio Global city, and the brisk demands is fueled by the acclaim generated by the previous five G&W BTO buildings – and word of mouth about Blue Sapphire’s unique design.
Multi-cornered residences will comprise Blue Sapphire, meaning all the bedrooms and living/dining areas will have sweeping views from large windows. “The multi-cornered unit is not as easy to build as it seems,” says Yu. “When we designed it, we eliminated all the columns in those corners. This is an achievement in both layout and structural engineering. We have panoramic windows without columns. It feels like the room is floating because you don’t have any support and that’s quite expensive to do. If I presented that to a developer, most would never do it!”
Another ingenious innovation is the ability of the buyer to customize both the layout and the finishing of the purchased unit. In fact, more than half of Blue Sapphire buyers have opted to do so. For Yu, a buyer “should not have mold his lifestyle to what is presented to him. Instead, he should be given a choice and have a say in the first place.”
As an example, a buyer seeking for a five bedroom space can be accommodated: G&W is flexible and adept at reworking floor plans. (As an aside, a limited numbers of units will have a generous garden area, while each penthouse unit will have its own swimming pool.)
Unfortunately, the euphoria of viewing an expertly finished model units (usually designed by noted interior designers) quickly fades once the buyer inspect the underwhelming version of his own unit a executed by the developer. “Often, the finish is nowhere near that of the model unit’s. Owners then decided to redo something they’ve actually already paid for, and this opens up the building to structural damage life pipes bursting, etc.”
Just a exciting, therefore, for homebuyers is the proposition of dictating the finishing of their Blue Sapphire unit, either with the help of their preferred interior designer or with the in-house design team of G&W. “Some people like the warmth of wood, others prefer the polish of tiles or granite, and still others want the coziness of wall-to-wall carpeting. To each his own preference, and we completely support this freedom of choice.”
Yu laments that his professions has been devalued in thee cutthroat times. His father, Gilbert, often recounts stories of a time where architects were regarded as artists in a high profession, unlike in these days where they are often looked down on as hired pawns of big developers. “My dad has been made ninong by his clients, meaning they have become his friends,” says Yu. “Our BTO system reconnects us architects with our end users. When my brother and I went to the US, our clients picked us up from the airport, took us out for dinner, and showed us around town. I can’t explain how happy that makes me feel.”
With the imminent rise of Blue Sapphire, it looks like Yu’s circle of clients-turned-friends is about to widen even more.
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November 2007 Articles
User-friendly proposition in condominium development
By Chino S. Leyco
Build-To-Own is the latest concept in property development that has piqued the interest of hopeful homeowners. What does it mean and how does it help bring down the cost of owning or investing in a condominium unit?
Wit BTO, homeowners directly engage the service of team of construction professionals who build their homes at direct cost. Thus, non-project related add-on costs usually tacked on by middle-men developer are eliminated.
The system is explained thoroughly by Terence Daniel Yu, chief executive architect and senior associate of G&W Architects, Engineers Project Development Consultants, a 35-year-old firm that bills itself as the only “architect-led,” not developer-led, company.
Terence Yu says they are called “business architects” for having come up with the idea of BTO, which gives homeowner protection through the involvement of a trustee bank.
“In our BTO, instead of building for developers, we build for the end-users Therefore, the end-user only pays for the cost of the construction,” he says, nothing that people normally go to a developer when buying a condo unit. “But the developer does not really take care of the construction expert,” he points out.
Terence’s brother, Gibson Austin, BTO business development head further related that firm eschews speculative market prices and uses actual cot as bases for pricing its units. In the BTO system of G&W, payments made by unit owners go directly to a depository and disbursement bank, which ensure that the fund will only be used for its intended purpose.
Gibson says the buyer can save 40 percent by directly hiring construction industry professionals, the same people that developers hire to design and build their projects.
“forty-percent savings is realized by eliminating the middle-man developer’s profits, overhead, interest expenditure, and other nonbuilding related costs,” says Gibson. “BTO projects have significant savings,” he adds.
He shares that other condo developers required buyers to pay12 percent value-added tax, documentary stamps tax and transfer taxes upon condo turnover.
“With BTO projects, you will only pay the registration fees and your share in the legal fees for forming the condominium corporation,” Gibson clarifies.
Besides cost savings, investors and end-users of BTO projects are rewarded with high-quality condominium development and property management services. All these add up to better property values for your condominium investment.
Terence affirms that the construction industry I growing not only in the Philippines but elsewhere in Asia For architect-businessmen like the Yu brothers, being in this business at this time is “a good long-term investment because the price of the steels, concrete continue to go up.”
And for property speculators, it means condo units will be more expensive to build in next years. Gibson says, “The reason why consumer fell that there is an improvement is because of speculations.”
According to him, some companies speculate to spike up the cost of their development higher. “That’s how they make profit, but that is not a healthy way to do business because the consumers will suffer,” Gibson says.
The G&W has invested in its new building the Blue Sapphire, a 27-story residential and commercial condominium development in Bonifacio Global City that will be completein two years.
“They buyers are really the end-users,” Gibson elaborates, observing that “more people from different countries want to live here.”
Blue Sapphire is situated in Crescent West, the best are in Gobal City; sandwiched between Manila Golf and the 2.7-hectare Crescent Park.
Because G&W is an architect-led firm, buyers can expect an innovative design combining function and aesthetics. It boast a unique corner layout ranging from one to three bedrooms that can be customized to suit the needs and lifestyle of the unit dwellers.
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October 2007 Articles
JOINT VENTURE LIKE MARRIAGE FOR CONVENIENCE
By Architect Gilbert Yu
JOINT-VENTURE (JV) PROJECTS BETWEEN landowners and developers are a boon lately, especially after the bank closed their lending window to plain land mortgages without a financial plan incorporated into it. Left and right we see the merging of forces – big businesses fuse their efforts and assets for this type of housing development, condominium tower and the like.
Most layman investor or homebuyer see this as a good indication – of two big groups that have joined together to do a project that redounds to reliability and soundness. But, what they don't know is that it is not as simple as it may seem. Primarily speaking joint ventures arise from the developers' shortage of capital or refusal to infuse capital to purchase land – avoiding risk by pushing it to someone else. On the other hand, land owners welcome this offer to develop their property at a value much higher than what they can fetch from just selling the property.
LIKE THE MARRIAGE OF CONVENIENCE
In many ways joint venture is more similar to a marriage for convenience. It is a mutually beneficial partnership that doesn't have the foundation of loyalty to last long, and is not really tied down to keep the vows like "for poorer or for richer till death do us part." Yes there is nuptial bliss but the union isn't strong enough to weather tough times together; that going on separate ways or through divorce litigation is a quicker and better solution than working things out during bad times.
When a marriage goes bad and marital disputes arise, the children are the victims of these unfortunate circumstances, similarly if a J.V. partnership ends up in litigation… the victim is the buyer – patronizer of the unhealthy union.
KNOW JV CONTRACT DETAILS
Aware of the risk, buyers of a joint-venture project should insist to know the details of the joint venture contract from the seller developer.
Be aware of the responsibility of each partner. As the land owner gives his land to be developed, the other partner does the work of marketing and handling the project. In the meantime it is only the developer collecting money from the buyers while the sales contract doesn't require land owner to have direct responsibility to the homebuyers or any legal obligation whatsoever.
In some cases, the risks are higher when a government entity is the land owner partner. Changes in the administration often result to alteration or renegotiation sometimes with impossible demands that the developer cannot cope with. Then problems arise, the buyer who paid and buy in good faith are left in a quandary.
Take the case of a high-end development for a golf and country club in Northern Luzon under the auspices of a government authority. The developer experienced some form of success with its offer of high-end housing but allegedly defaulted on payment obligations to the government. Only after the government entity issued a warning that it would retake the property did the developer pay up partially.
The danger of litigation always exists between the developer and the landowner at the expense of the buyers which have no knowledge of the details of the partnership.
In some cases, incomplete fulfillment of the developer's obligation cause the landowners refusal to surrender the land title to be processed for the issuance of a condo title. And when this happens the buyer cannot do anything, leaving them hanging and their investment in thin air again. LAND TITLE SHOULD BE PUT IN TRUST
For buyers who already took the risk of buying in to a JV project, insist that the JV contract be transparent for review by a lawyer to see if they're properly protected even when there’s a quarrel between the JV partners.
Absolutely there should be no compromise. Since 3rd party landowner is involved, insist that the land title be put in trust. This will work to the buyers’ advantage because it means that the landowner recognizes your contract with the developer.
But if the said condition is not possible and the buyers still feel that they are treading with a shadow of a doubt… Once a contract is drawn, the buyer should assert their rights by requiring the landowner-partner to be a binding 3rd party signatory, for the simple reason that land is also included in the sales.
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September 2007 Articles
The risky business of buying a home…
One man’s DREAM is to HOUSE THOUSANDS wisely
By Architect Gilbert Yu
I am excited with the emotion and feeling of gratitude occupying my whole heart! Gratitude for all of you who believe in our ideas, and in so doing give us this opportunity to do something new, innovative and most of all something good for our society.
I remember, during the launching of PENHURST PARKPLACE. I said: The construction and housing industry have a problem, and a big one at such. Homebuyers say they can’t afford, while seller, despite high prices and high mark up, still go bankrupt!
This is a crisis, if no one shall come afford with a solution straighten the stalemate, then our industry will never recover, much less expect another property boom. Quite fortunately, we people in the industry understand that when there is a problem, WE HAVE TO DEPEND ON OURSELVES TO SOLVE OUR OWN PROBLEM! We in the industry will stand up to save our own future.
The present methods of building homes and selling it to buyers is full of flaws, it is outmoded! It’s inefficient, overpriced, over-borrowed, and it is selling mortgaged properties with no protection to buyer! It is driven by the speculation in a created artificial market, on non-existing demand intentionally created by unethical middlemen who are out to make quick money.
Because of agreed, one just forgets that the main purpose of building homes is to house people. IT SHOULD NOT be treated as commodity to make speculative profit upon!
If hoarding staple like rice and corn to create shortage is evil and illegal, then creating artificial market demand for housing to raise prices and take advantage of homebuyers is also evil and wrong.
As architects and as a leading development consultant firm, realizing what is happening in the industry, having moral and social obligation to help house our people, we hereby took our responsibility and duty to bring you and industry this reform, introducing to you the BUILD TO OWN SYSTEM. To lower the prices of decent homes with nothing mortgaged to make it affordable to the emerging new generation and their families.
Gone will be the days of overpricing, large complete buildings left standing empty and unoccupied, while homeless people remain homeless!
The BUILD TO OWN SYSTEM provides you with an alternative to the monopolized old system It allows technical people like architects, engineers, contractors, and suppliers to serve directly to the consumer, instead of serving the middle man who then sell it to you.
The new system will respect the other legitimate professionals like the realtors and property brokers, who work very hard to bring opportunity and information to buyers. They deserve proper compensation.
Land developers like the Bonifacio Land will also benefits more people can afford to live here now1 While before only a few super rich can afford it. You will sell more land.
I look at today as HISTORICAL, because we are changing by reforming an accepted norm of practice. But here in this world nothing is absolute. Change is progress. Old and defective systems that benefit a few must give way to the new that benefit the majority.
My congratulation goes out to those who dare to change and choose the new system!
“We have to depend on our own problem! And the solution is: Build not Buy.”
BUILD TO OWN SYSTEM – Building homes at direct cost.
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August 2007 Articles
By Architect Gilbert Yu
The Philippines is in the middle of a property boom because of the sound fiscal management by President Macapagal-Arroyo and her economic team.
Given this scenario and part of the my advocacy to protect the homebuyer, my life passion to house our countrymen with the best quality home they can afford
A professional architect for more than 37 years, I abide by very simple rules that when it come to dealing with my clients – do what has been asked of you and be truthful about all details of the project. This is the first of a series of ti[s I am sharing to empower the homebuyer.
1 – Don’t believe the flyers.
Promise of places in the sky at only P9,000 a month with no down payment sounds too good to be true. Flyers don’t tell you everything. They don’t mention the ballooning payments and, most important of all, they don’t say when the project will start and when the unit will be delivered to homebuyer.
2 – Be insistent
As a homebuyer, you must ask the right question and insist that you should be answered adequately, completely and truthfully. In more developed countries there are escrow or trustee banks that handle real estate transactions. The homebuyer pays to the bank and the bank release money to the developer based on construction accomplishment.
Given the inadequacy of out laws, our first question to the developer is: how is my money spent and where does my monthly payment go?
It is a very simple and practical question that you may find their sales agents stumbling over. If the agents cannot answer, go to some one higher until you are satisfied.
3 – Investigate
Find out who are behind the project, if it is a new or old corporation and how much their paid-up capital is and if they have the capacity to finish the project. You will be surprised to know that many corporations that develop billion-peso projects have only P1 million in paid-up capital sometimes even less.
Ask about the track record if they claim to be an experienced developer. Another vital question to ask is about the land ownership. Many developers do not own the land their project is built on. Typically, this is mortgaged to the bank or the developer and the landowner may have a joint venture.
4 – Study the joint-venture agreement
Know that this is your right. You must secure an agreement from the developer and the landowner or the bank that after the homebuyer has fully paid for the property, based on the monthly payment scheme of the developer, they must release the property to the homebuyers and free it from any dispute or lien.
5 – Put everything in black and white
We may not have the proper laws in the construction and real estate industry, but the only one that can protect you as a homebuyer is you and your insistence in asking the right questions. And once you get the answer, demand that the answers be written in the contract.
Remember, if the developer can answer you questions truthfully and adequately, then, you can consider yourself protected. Otherwise, just walk away and find another. There are many out there who share the same passion we have to provide shelter for everyone who can afford it.
Architect Gilbert Yu is the founder of G&W Architects.
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July 2007 Articles
Customer protection, ethical conduct in real-estate business
By Gibson Austin Yu
The misfortune of relatives and friends who have been burned by other real-estate developers. Wood planks replaced by cheap vinyl, claustrophobic ceilings, leaky pipes. These are the usual litany of disappointment that turns the thrill of moving to a new condo unit into horror.
This was the kind of skepticism from potential clients of Penhurst Parkplace condominium. The 23-Story residential tower was to be fist of six highly acclaimed Built-To-Wn(BTO) projects by the award winning firm. In 2002, real-estate horror stories spooked many prospective clients, who were therefore too wary to appreciate the ingenuity of the architect-led system that would soon transform an entire industry.
Instead of turning defensive, Gibson O. Yu, head of Fort Bonifacio Global City Division of G&W Architects, patiently listened to their anxieties. And even greater fear, however, gripped then. How do we know, they asked Yu, that you will not turn run away with our money?
It was Yu’s baptism of Fire. Day after day, the sympathetic Yu answered each question not with grandiose promise, but with respectful logic. Our model units are located within the building itself, he told them, understanding that much of their indignation stemmed from being bedazzled by beautifully finished model units only to later realize that the actual unit looked nothing like it. This will not be the case at Penhurt Parkplacem he assured. In fact, by locating [the model units] inside the same building, clients got a good feel of the lobby and hallways. What you see is exactly what you will get, Yu told them.
Moreover, he guaranteed that their money will be safeguarded in trustee bank so that only Banco De Oro can disburse it. This means their money cannot be diverted, for example, to service old debts because a third-party project manager appointed by the bank will ensure it goes only to the Penhurst Parkplace project an to nothing else, he explained.
There were many other questions, but Yu assuaged clients fears so completely that commitments were made for 100 percent of Penhurst Parkplace units in just three months. G&W eventually complete construction of the tower three months ahead of schedule, transforming its residents from recent converts to fiercely loyal clients. Word quickly spread about this novel, principled way to own your home.
Major changes in the industry are necessary to protect those who need homes – particularly the need to educate them on distinguishing between a professional realtor and an in-house salesperson.
Professional realtors VS Salesperson
G&W Architects regards professionals realtors (licensed real-estate agents) as indispensable partners in helping Filipinos realize their dreams of homeownership.
Abroad, home buyers respect the counsel of realtors, who are admired for their professionalism and independence. Foreign realtors are perceived to dispense objective about what property would best serve their client’s needs, Regretfully, Yu said, the credibility of many professionals realtors in the Philippines lay in letters, mostly because the general public often confuses them with the in-house salespersons employed by many developers. Some of these in-house salespersons even misleading refer to them selves as “property consultants.”
There are developers who explicitly train their in-house salesperson to resort to pressure tactics to gain a sale. Unfortunately, the public often lumps professional realtors together with those who actually perpetrate these hard-sell techniques, Yu rued, “How can a salesperson give meaningful and unbiased advice if they are only allowed to sell their developer boss’s product and nothing else?”
Overly exuberant marketing schemes employed by some developers have also unfairly tainted the reputations of professional realtors.
“There’s a science to how some big developers market theirs projects,” explained Yu. “One way is by practicing the ‘numbers game,’ wherein they hire a battalion of fresh graduates, promising millions of pesos worth of commissions if they sell enough units. The developer is banking on each salesperson being able to sell to relatives. If the developer simply hires another one to replace hind or her,” elaborated.
Empowering the realtor
G&W decided it was high time to empower professional realtors, knowing this is crucial to empowering their clients. G&W hold symposiums that share its experience with professional realtors, enlightening them that before they could responsibly market a project, there are three crucial pieces of information they need to know about the developers.
“First, how are the funds of the clients protected? Does the developer have the right to divert theses funds to non-related projects?” said Yu. “Second, what is the disposition of the land? Before you can generate a CCT, the land must be’ clean.’”
He stressed further, “We empower professional realtors by telling them that if they know the land is mortgaged, then the payments of the clients should be directly made to the mortgaging bank as assurance that the land will be fully paid. Payments should not be diverted to other projects.”
Continued Yu, “The third piece of the information professional realtors must extract on behalf of the client is: When does construction really start? From an architectural point of view, there I scheduled to start. This knowledge allows them to corroborate of a development is on schedule or not, since timeframes are well defined for different phases of construction. Upon the advice of the realtor, a client may thus file official complaints early into the construction against lagging developers.”
Kensington Place and The Grand Hamptons Tower 1 and 2 – al also situated in Bonifacio Global City – followed the resounding success of Penhurst Parkplace, providing that an ever-increasing number of real-estate client have complete embraced the BTO system pioneered by G&W. Sapphire and Blue Sapphire will soon rise in the same area (ground breaking for the latter has yet occur and already 70 percent of it unit have been committed to homebuyers).
Clearly, G&W’s decision to empower homebuyers through its all out support of licensed professional realtors was insightful one. Because ethnical business conduct lends G&W the credibility that is critical in the industry, Gibson Yu’s job has become easier noadays.
“We learned that people don’t look at condiminiums as commodities, they look at it as their home,” he said. Need further proof that G&W understand how to build not just condominium units but authentic homes? Both Gibson and his father residents of Penhurst Parkplace.
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June 2007 Articles
Arch. Gilbert C. Yu honored by PIA for innovation in the Philippine Housing Industry
Last March 17, 2005, Arch. Gilbert C. Yu, founder & chairman of G&W Architects was conferred as an honorary fellow of the oldest existing organization of architects in the country. The illustrious award was given to Arch. Yu by the Philippine Institute of Architects for his diversified contribution by Innovating the Architectural Profession and the Industry, through Ethical and Non-Traditional Ways. Already a Fellow of the United Architects of the Philippines (UAP), Arch. Yu was chosen to be recognized by the PIA even if he’s not a member.
Pioneer of the new method, Build-to-Own (BTO) system, Arch. Yu made it his personal commitment to provide the same protection and savings found in other more developed countries like Singapore and the USA, to prospective homeowners in the Philippines. The success of the Build-To-Own system has been seen through G&W projects in Bonifacio Global City, namely Kensington Place and Penhurst Parkplace, which was fully owned in 3 short months, and was delivered in 21 months, 3 months ahead of schedule.
With Build To Own, the landscape of the real estate industry in the Philippines will have taken its first big step towards a more consumer protection oriented industry.
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May 2007 Articles
Noted architect urges gov’t to restore consumer confidence
By Marianne V. Go
Noted architect Gilbert Yu is urging President Arroyo to restore consumer confidence in the face of increasing corporate distrust following such high-profile cases as the College Assurance Plan (CAP) and Pacific Plans (PPI) and even the ongoing squabble between Fil Estate and the Bases Conversion Development Authority (BCDA).
Yu particularly concerned about the housing sector which could be a huge economic driver because of its multiplier effect. Despite claims by some developers that the real state market picking up, Yu disputed the supposed recovery of the real estate market.
He cited the fact that in Metro Manila which has a population of 13 million, it cannot absorb even the 2,000 units of housing being sold.
This compares, Yu said, with Singapore which has mere population of three million but is able to sell 10,000 to 15,000 housing units.
He pointed out that consumers are now more scared to invest in long-gestation projects such as housing and condominium developments following the experience of pre-need plan investors. “People want to hold on to their cash because they are afraid that they will have no recourse if the development is not completed,” Yu said.
Reports of big developers such as Fil Estate having problems with government, Yu said, also tends to turn off possible home buyers.
He therefore urged the Arroyo administration to mandate that payments of home buyers be directed to an escrow/trustee bank instead of being paid directly to the developers who may not be able to finish the project to the required specifications.
In almost all other countries, except the Philippines, Yu said, their government requires all developers to have an escrow account with trustee banks and are not able to touch the money of the buyers until their projects have been substantially completed and properly inspected and approved by the proper government housing authority.
In the Philippines, Yu lamented, there are still 2,500 pending cases with the Housing and Land Use Regulatory Board (HLURB) filed by homebuyers against deceptive developers for non-completion and failure to deliver of the projects up to now.
Such negative experiences is scaring other potential home buyers which causing the stagnation of the housing and real state market.
Yu warned, “without government protection, big business credibility will slowly deteriorate, consumers will hold on to their cash”, thus resulting to our economy to remain bleak and stagnant.
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April 2007 Articles
Potential gold mine for RP seen from retiring overseas Pinoys
By Marianne V. Go
The country faces a potential investor gold mine from retiring overseas Filipino workers, according to Architect Gilbert Yu. Yu pointed out that the first wave of OFWs that left the country 40 years ago are now set to retire and are intent on returning to the Philippines because of the much cheaper cost of living.
Yu estimates that each retiring OFW may be bringing home anywhere from $100,000 to $150,000. With even at least 20,000 OFWs coming home each year, Yu calculates, there would be an inflow of $2 billion or P110 billion annually.
Most of these OFWs, Yu said, would probably invest their hard-earned savings in buying a retirement home. The potential investment in the housing and real state sector, Yu pointed out, would help spur the economy anew. However, Yu said, the government should already prepare the housing and real estate sector for the potential inflow. Failure to do so, Yu warned, could lead to possible swindles or bad experience on the part of the retiring OFWs. If such a thing happens, Yu said, the returning OFWs may choose not to bring back their funds and instead keep them abroad. Even now, Yu disclosed, advertisements abroad (particularly in the United States) for Philippine real state and housing developments carry warnings that such projects may not assure completion.
The California Department of Real Estate, for instance, Yu cited, advises potential Filipino-American buyers to consult a lawyer or a knowledgeable professionals about such real estate developments. He stressed that any bad experience on the part of returning OFWs could spread like wild fire and convince others not to invest in the Philippines.
Yu pointed out that returning OFWs would not only bringing in cash, but would also result in a “brain gain” much like what China is experiencing.
China’s economic resurgence, Yu noted, is partially fueled by returning Chinese who have earned and studied abroad and are now investing back in China and bringing home their learned expertise.
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March 2007 Articles
Architect Gilbert C. Yu was invited to speak to the UAP
Architect Gilbert C. Yu was invited to speak to the UAP (United Architects of the Philippines) on Build-to-Own, and how architects can offer new services to help provide high quality and affordable homes. Also included in this event were different proposed solutions in which architects can take the lead to provide services to provide homes at direct cost, and alleviate the growing demand for superior quality affordable housing in the Philippines.
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February 2007 Articles
PROTECTION! Homebuyers should insist
The recent economic fiascos opened up the world’s eyes that even giant corporations are vulnerable to bankruptcy. Worst, the true victims are actually the common people whose lifetime savings build up the corporation’s financial existence.
In the case of the last property collapse, most people thought that the victims were the developers and it’s directors including the bank who lent money to this corporation. In reality, homebuyers are the biggest victims, losing their life savings with no way to recover and still owning nothing except broken dreams of owning their home. Banks, although hit, at least got in return foreclosed properties with value that may pick-up later. Developers, on the surface, seem to have suffered greatly, but in actuality only the limited assets of the corporation was liquidated and the real owners behind the corporation still keep their personal assets and wealth in tack. As a result, banks and financial institutions have instituted protective measures and shut down all lending windows to future projects that left developers with no capital source.
Presently, we see traces of seeming recovery of the market through new large projects launching left and right featuring no down payment and small monthly payments as bait attracting unsuspecting middle class home user market. These projects have long delivery periods of 5 to 7 years with at least an added 6 months grace period for completion, even when the actual construction of the project can be finished in less than 2 years. This is already a “Pre-need” product, different from “Pre-sell”. The deliberate extension of the development timeframe coupled with the economic situation of the Philippines makes the project very vulnerable to inflationary cost. Future homebuyers should be careful and institute protective measures to protect themselves from another possible collapse that will make them another victim. The following are some pointers homebuyers should take note before signing a contract to purchase their home.
Seller does not own what he is selling
Almost in all cases, the developer / seller only conditionally owns the property he is selling. The land is usually owned by a third party either thru a joint venture with a landowner or mortgaged to a bank. If the developer / seller does not satisfy his obligation to the third party landowner or bank, the homebuyers are unable to get their purchased units. Developer sales contracts contain a clause absolving him from responsibility of non-delivery if caused by litigations initiated by a third party which he does not disclose to homebuyers, as if to declare non-responsibility for contract default. In such cases, Homebuyers should insist on disclosure of condition and ownership of the property especially the land part and accordingly insist the third party to be a signatory to the deed of sale stating that after payment to developer, the Third party agrees to release the property to the homebuyer each and individually.
5 to 7 years delivery is “PRE-NEED” not “PRE-SELL”
Almost all products launched and sold in the market now states a delivery time of after 5 to 7 years with 6 months grace period. This in reality is already selling “Pre-need” plans since from the beginning to 4th year, buyer is already paying money to the developer with no activity on the construction site and no expenditure, similar to pre-need educational or memorial plans. It is totally different from “Pre-sell” where the homebuyers pay right before and during construction. Under SEC and Central Bank rules, all pre-need plans should be placed on an ESCROW account so that buyers will not be cheated by diversion of funds. In such cases, homebuyers should insist and require the seller to follow SEC and Central bank regulations to put money in ESCROW to protect his payments.
All protection for Seller, None for Homebuyers
Usual sales contracts from Developers include terms, penalties and interest for default payments on the part of the buyer but never contain guarantees and damages clause if developer fails to deliver. Homebuyers take a one-sided risk of owning nothing! To avoid this, Homebuyers should ask for absolute guarantee bonds from a reputable bonding company to cover for developer’s non-delivery through refund of buyers payments including interest and penalties.
Do you know where your payments go? – Paying-out bank debts from past failed projects.
Payments for Homebuyers units are easily diverted to other expenditures than the project with no accountability to the buyers where the money goes. At this time when Developers are in deep financial trouble and difficulty, it is very possible that payments are being diverted to pay off debts from past failed projects. So, homebuyers should be more discerning and demand transparency on where their money is being used especially when project has not started yet and developer has no expenditure.
With the present fast pace of change and development, many industries like agriculture and education are unable to catch-up. More so, with the existing housing laws, enforced by government agencies like as HLURB which has outlived their effectiveness and in some ways have become obsolete. The very license to sell issued to govern the selling of housing products does not guarantee the house you purchased will be completed.
Instead of waiting for new legislature to protect the homebuyers, we should ourselves be more diligent in investigating the ownership structure of the project and insistent on third party guarantee bonds to guarantee project completion. For since the ratifying of the condominium law in the 1970’s, we have never seen any developer with failed project or fully paid undelivered projects go to jail for his misdeeds, nor any bank directors getting jailed for false management and declaring bank holidays. But Thousands of homebuyers and depositors have lost their life savings with no where to turn for justice.
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January 2007 Articles
G&W's Architect Kenneth Uy, Invited to speak about Real Estate
Architect Kenneth Uy of G&W was invited to conduct a seminar at the recent WorldBex construction expo, to provide a report on construction industry initiated projects, and how to help solve housing problems in the Philippines.
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