The Market Monitor Minding the Nation's Business
By Lito U. Gagni
The government needs to fine-tune the policy focus of its mass-housing program if it must address this social-reform issue that has eluded six presidents for the past 50 years, according to Januario Jesus Atencio III, president and CEO of 8990 Holdings Inc., the country’s top housing developer.
Speaking at the 22nd National PR Congress at the Hotel Intercon, Atencio ticked off the various housing programs that fell on their own weight, as the housing backlog continues to rise; the National Economic Development Authority puts the current backlog at 4.2 million housing units.
Atencio, who expounded on his company’s mantra of authenticity and vision that sees profits as a by-product of its success, later gamely answered questions about 8990 Holdings’ success story that includes the hitherto unheard-of eight-day completion of a housing project.
The success of 8990 Holdings, which in 12 years zoomed to the top of the mass-housing business in the country, stems from its desire to know its customers and to be part of an engagement framework that includes teaching would-be residents in its projects to be dutiful savers.
He said various administrations have come up with their own mass-housing programs and yet the housing backlog continues to rise by 5 percent each year.These programs started in 1965 but today, after 50 years, the problems remain the same, he added.
Numerous multilateral agencies like the World Bank, have raised concerns over the balloning mass-housing backlog which means that a diferent approach should be tried. In this, Atencio sees a need to “break down into components” the problem and deal with each one. For instance, the problem in Metro Manila can be taken one at a time, say, the East Zone.
He said making a dent in the housing backlog would actually lead to further economic growth. Mass housing is a “great catalyst for the economy,” he said. Thus, while the government successfully reduces the housing backlog by growing more than the 5-percent rise in new housing needs each year, it also addresses the social issue of having families own their own homes.
For all its economic benefits, the government has, however, failed to provide the right stimuli. In fact, the entry “for aspiring mass-housing developers“ has become more challenging. The government “should lower the barrier to entry“ instead of erecting disincentives to the mass-housing business like the bureaucracy in securing permits.
Atencio, who likens real estate to painting in a canvas and creating something, said the company ensures that it knows its customer well. In their 12-year trek to the top, the company has identified three attributes of its home buyers.
8990 homebuyers are deeply aspirational and want to remove their renter-class tag and become asset owners; they know the practical value of money and they are optimistic of the future. He added that their buyers are OFWs, young, college educated, with stable jobs and with other incomes but with little savings.
The company has disrupted the mass-housing business in the country with its bold and innovative programs that benefit those without housing units.
These innovations include the low 2-percent down payment for its housing units, and a company–initiated financing program that takes into account the interests of its home buyers.
Because of these key innovations, 8990 Holdings has seen double-digit growths in its revenues and income. For the second quarter, its gross sales went up by 19 percent, from P2.1 billion to P2.5 billion while its net income went up higher by 34 percent from P981 million to P1.3 billion.