Companies diversify into real estate for profit

Real estate is becoming the favored destination of any company that are headed for diversification.

Leading conglomerate San Miguel Corp., which has been diversifying from the food and beverage business since the early 2000s, said the margins in real-estate venture are one of the highest among all businesses.

“Name any corporation that is expanding, definitely the additional equity will go to real estate, power or infrastructure. These are the three most profitable businesses today,” said Isaac David, president of MTD Philippines, a Malaysian conglomerate that is also in real-estate business.

A check with big businesseses’ latest ventures proved David’s observation to be accurate. At least four banks—Sterling Bank of Asia, EastWest Bank, Bank of the Philippine Islands and Asia United Bank—have released equities of no less than P2 billion for their real-estate expansion.

Sterling Bank has been operating Discovery Primea along Ayala Ave. while Ayala’s Nuvali and Alveo properties have been on nonstop expansion since 2012. AUB, for the meantime, said its real-estate business is separate from the mother bank unit.

Among the four, it is EastWest’s Filinvest Land, Inc. that is taking the ambitious road to greater heights as it won a big project with the Bases Conversion and Development Authority for the development of Clark Green City.

FLI is into mall operations, subdivisions, and mid-rise and high-rise condominium development. It has landbanks in Luzon, Visayas and Mindanao aimed at future development projects of its parent firm.

Filinvest Land, Inc. developed Timberland Heights in San Mateo, Rizal, Philippines, a 677-hectare suburban housing community.

Part of the community’s design included incorporating elements of sustainable development, such as preserving the area’s natural landscape, the planting of 10,000 trees, and stipulating a requirement that buyers are to plant “at least one tree for every 250 square meters of their lots.”

These various programs are overseen by the Department of Environment and Natural Resources and the forester employed by the township. The community also has a nursery where various species of trees are grown.

The BCDA said FLI’s solid track record in building homes and villages prompt them to accept its offer to take part in the development of Clark Green City.

“The signing of this joint venture agreement with Filinvest Land jumpstarts the full development of Clark Green City as the country’s first smart, green and disaster-resilient metropolis,” BCDA President and Chief Executive Oficer Arnel Casanova said.

Casanova said the joint venture corporation would be owned 45 percent by BCDA and 55 percent by FLI. The joint venture agreement has a term of 50 years renewable for another 50 years.

“With the signing of the joint venture agreement, BCDA generated P160-million for Filinvest’s right to become BCDA’s partner for the development of the new urban core for innovation, commerce, trade and industry in the country,” Casanova said.

“Together with Filinvest Land, we will be building a new global city within the Clark Special Economic Zone that will pump-prime the economy and provide job opportunities to the people of Central Luzon and benefit the Filipino nation,” he said.Filinvest Land President and CEO Josephine Gotianun-Yap said the company would soon be mapping out development plans.

Gotianun-Yap said the Filinvest parcel would have two distinct components, an industrial zone as well as a mixed-use development with residential, office, commercial and institutional elements.

“As the pioneer developer involved in Clark Green City, we are excited to be a catalyst of growth in such a visionary endeavor. At the same time, this is also a prime opportunity for us to expand our geographic footprint in Northern Luzon,” she said.

FLI’s majority owner, Andrew Gotianun, is also a pioneer in the biofuels industry having been in it since the 1960s. JERRY MAGLUNOG