Population Growth Seen to Sustain Boom in Real Estate in Davao City

By February 2, 2016Property News
Real Estate in Davao City

POPULATION GROWTH, including continued local migration to one of Mindanao’s economic and education hubs, is expected to keep Davao City’s real estate sector robust at least in the next three years.

But with no public transportation options definitely planned, it could also mean the same traffic woes that plague the country’s other main urban areas.

“The real estate industry in Davao City has boomed in the last six years. And the trend is still upwards,” said Lea C. Walker, a licensed broker who owns and manages Allea Real Estate based in the city.

This city classified as highly urbanized has a population of 1,449,296, according to a 2010 census by the Philippine Statistics Authority which also noted an average growth rate of 2.36% from 2000.

At this growth rate, the PSA said “the population of Davao City would double in 30 years.”

An analysis made by Web-based real estate firm Lamudi Philippines in September last year, partly using PSA data, predicted the city’s population would be at least 1.83 million by 2020.

Jacqueline van den Ende, managing director of Lamudi Philippines, said cities that are growing really fast are those that are also popular with online property-hunters or where numerous real estate projects are currently underway.

She said Davao is the 10th most searched city on their site.

Ms. Walker said in her experience, the “biggest sellers” have been low- and mid-cost properties, “although high end ones aren’t that far behind.”

Major Philippine property firms — including Ayala Land, Inc., Filinvest Land, Inc., Megaworld Corp., Robinsons Land Corp., and Vista Land and Lifescapes, Inc., among others — have existing or ongoing projects in the city while several homegrown developers have also been building horizontal and vertical residences, commercial spaces, and mixed-use complexes.

Davao City Investment Promotion Center Chief Ivan C. Cortez said two more companies are now finalizing transactions for investments in township projects, adding to Megaworld’s One Lakeshore Drive and Lapanday Properties Philippines, Inc.’s Ciudades.

Real estate was also the top investment in the Davao Region during the first three quarters of 2015, according to the Department of Trade and Industry (DTI)-Region 11.

“Up to 69% of the investments generated in the region are in Davao City and 50% of the total investments come from real estate activities,” said DTI-11 Regional Director Ma. Belenda Q. Ambi.

Data from the Board of Investments indicate a total of P1.469 billion in registered investments during the period January-September last year.

The two biggest investments were P322.8 million by Johndorf Ventures Corporation and P276.62 million by Davao Joyful Homes Realty Corporation.

City Administrator Jesus Melchor V. Quitain said two Manila-based universities recently purchased lots in the city.

The Lyceum of the Philippines University acquired a 12.5-hectare lot near the airport while the Mapua Institute of Technology bought a 2.3-hectare property in the Sasa area.

“I don’t see a saturation in the city’s property development within the next three years mainly because Davao’s property development is not boosted alone by demand from Dabawenyos but also [from] those planning to migrate to the city in the future,” said Mr. Cortez.


On the other hand, the city government’s target of having a Light Rail Transit (LRT) system with 36 trains operational by 2021 has hit a snag due to the proponent’s guarantee demand.

“The proponent requires a guarantee from the city government that it will shoulder 60% of the cost of the project, but the city will only entertain the project if there is no cost to the government,” Mr. Cortez told BusinessWorld.

Korea Engineering and Construction Co. Ltd. (KEC) has proposed an LRT covering 28.4 kilometers between the southern side of the city and the airport in the north with an estimated cost of P30 billion, excluding land acquisition and contingency.

“The project was already endorsed by the Davao City Public-Private Partnership (PPP) Board to the PPP Center in Manila because the project proposal requires a 60% share from the national government,” Mr. Cortez said.

The city council, meanwhile, is banking on the next administration for the implementation of the LRT plan.

“We need the approval of the national government since it will have to guarantee the project, which requires enormous financial resource[s] [that] only the national government can provide,” Councilor Jimmy G. Dureza, chair of the committee on trade and industry, said in an interview.

Mr. Dureza said they are also hopeful the country’s next leadership will consider the project a priority and have it rolled out possibly under a program other than the PPP, which he said takes too much time.

“We just have to wait for the next administration and hope that whoever wins will see the project through,” he said.

The city’s PPP Board is also evaluating the Bus Rapid Transit (BRT), one of the systems cited in the Comprehensive Public Transport Reform Strategy for Davao City conducted by consultancy firm Halcrow Group Limited for the Asian Development Bank.

The other options are a conventional bus service, a highly prioritized bus system (HPBS), and the LRT.

Halcrow’s Geoff K. Key previously said the best short-term option for Davao is HPBS, given the existing infrastructure and public transport system, which is dominated by public utility jeepneys (PUJs).

HPBS refers to a scheme wherein buses are given priority in the traffic signal system, with the aim of minimizing delay for mass transit vehicles.

“You can forget the BRT or LRT system in the short to medium term considering that it needs at least 25 meters road width, including the system road, compared with the 15 meters available,” Mr. Key said.

The city’s land use plan is also not consistent with high-capacity mass transit systems, he added.

Part of Halcrow’s study was the traffic flow along Bankerohan Bridge, a central point in the city, and found that at the busiest period of the day when it is most congested, almost 8,000 vehicles, including PUJs that each carry only 16 to 18 passengers, pass the area.

Mr. Key said a conventional bus service can carry a maximum of 60 passengers and can accommodate up to 7,200 passengers per hour per direction, whereas the HPBS has a maximum passenger load of 90 and can accommodate up to 10,800 passengers per hour per direction.

The city currently has a total of 15,115 registered public transport vehicles, of which 13,985 ply city routes while only 1,130, consisting of vans and buses, cover regional routes.

Of the total number, 7,278 are jeepneys, 3,602 are taxi cabs, and 2,105 are motorized tricycles.

KEC projections show that the peak-time passenger volume would be about 4,000 passengers per hour and 92,000 per day by 2021.

By 2040, when PSA projects population to be about three million, the daily passenger volume could reach 253,000, according to KEC.

Dae Kwon Jung, KEC overseas manager, previously said Davao, with its potential population of 10 million by 2040, could be “one of the terribly trafficked cities” in the future, considering the “increase in population and the 7.1% increase in the number of vehicles every year.”

Davao City’s landscape is undeniably changing with the construction boom and the growing number of people residing, studying, visiting, and doing business in the city.

Two buildings higher than 30 floors, to become the two tallest in the city, are now underway.

One is Euro Towers International, Inc.’s 32-storey Vivaldi Residences condominium, which will be dwarfed only by the 35-storey Aeon Towers of the Davao-based FTC Group of Companies Corp.

The Vivaldi Residences in Davao is planned to have almost the same green features as that of Eurotel’s similarly named condominium in Quezon City, considered as the first green building as certified by the Quezon City government.

But will the occupants of Davao’s green building, like their counterparts in Metro Manila, be looking down at a congested, crowded city below?

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