BPO demand high, top developers in construction ‘frenzy

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By: Tessa R. Salazar
Philippine Daily Inquirer

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THE PROPERTY sector’s strength was focused on the vertical developments and the BPOs and the emergence of new growth centers.

Exactly 35 days before 2011 bids adieu, Inquirer Property has asked analysts to assess the performance of the Philippine real estate industry in 2011. Their unanimous reply:

It has been a banner year for the business process outsourcing (BPO) sector.

The mid-income condo development is in the midst of a “construction frenzy.”

The demand for spaces in the Makati, Bonifacio Global City and Ortigas central business districts was even higher this year compared to last year.

The emerging growth centers like Eastwood andBonifacio Global City have “arrived” this year.

Leading global real estate services company Colliers International, which claims its research team had been tracking all the residential condominium developments in Metro Manila since 2008, said that in 2010 preselling activities were able to sell 36,000 units, and that in 2011 that number is projected to be surpassed by more than 11 percent to breach the 40,000 units sold mark.

This was revealed by Paul Vincent Chua, associate director for valuation and advisory services and head of consultancy and research.

Top 5

“There are a lot of developers who performed well this year, however, in terms of condominium units sold in Metro Manila, SM Development Corp. remains to be number one. The top five include developers Ayala LandInc., Century Properties, DMCI and Megaworld,” said Chua.

Enrique Soriano, professor at the Ateneo Graduate School of Business and senior adviser at Wong+Bernstein Business Advisory, also cited Megaworld, ALI, SMDC and Robinsons Land Corp. (RLC) as the top-performing developers in 2011.

Soriano also added that the property sector in 2011 “was single-handledly fueled by private initiatives.”

Soriano also observed “no movement in the high-end condominium segment, and aggressive construction frenzy in the mid-income condo segment representing 80 percent of all residential developments in 2011.”

4% vacancies

Chua said that in terms of commercial space uptake, the demand from the BPO sector is still remarkably high.

“If you look at vacancies in Makati, Bonifacio Global City, and Ortigas, the average vacancy for the third quarter is now less than 4 percent compared to the same period last year, which had an average vacancy rate of more than 6 percent. Even with the (addition of a) number of planned office developments in the next couple of years, we expect vacancies to remain low as the demands for these spaces are still very high.”

Soriano said the industry’s strength was “focused on the vertical developments and the BPOs and the emergence of new growth centers following the success of Eastwood and BGC.”

But have there been any downsides to this year’s flurry of developments? “The singular focus on the mid-income segment, and neglecting other asset classes,” replied Soriano. He reasoned, however, that the property sector was just keeping up with “unmet demand, fueled by buyer demand, especially (from)overseas Filipino workers (OFWs) and overseas Filipino expats (OFEs).

Morale booster

The positive analyses for 2011 and the strength of the Philippine real estate industry this year come as a morale booster, coming at a time when the city of Manila has recently been tagged as “below fair” to “abysmal” by foreign investors in the Emerging Trends in Real Estate Asia Pacific 2011 survey conducted by the Urban Land Institute.

Global real estate investors, who participated in the survey, gave Manila a score of 4.56 points out of a possible 9. Topping the survey in the Asia-Pacific region was Singapore with a score of 5.96 points, followed by Shanghai with 5.87, Mumbai with 5.79 and Hong Kong with 5.70.

Chua countered that the Philippines has been one of the few countries in Asia where foreign land ownership is limited to 40 percent. He urged the sector to look at the brighter side, particularly the lower rental rates compared to other Asia-Pacific countries.

He pointed out that for the office sector alone, with 25 Asia-Pacific cities covered by Colliers International,Makati City offers the third lowest rent, ranking No. 22 on the list with an average net rent of $21.48/square feet. The city that commands the highest rent, Hong Kong, has an average net rent of $185.91/square feet. Looking at the capitalization rate or prime yield of these cities, Makati ranked second with 9.77 percent, following topnotcher Mumbai with 10.6 percent.

Soriano said the low ranking was a wake-up call, and that the Real Estate Investment Trust law must now be implemented in the country, citing Hong Kong, Thailand, Singapore and Malaysia significantly benefiting from REIT. He added that implementing REIT would open more opportunities for investment.

When in Cebu City, please visit gregmelep.com for your retirement and real estate needs.

You can’t IMPROVE what you can’t MEASURE

By Grace Shangkuan Koo
Philippine Daily Inquirer

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Dr. Andreas Schleicher is a man with a mission. He holds thousands of pieces of data on learning outcomes from 74 countries.

He goes around the world making these statistics transparent to government officials, education ministers, university presidents, school superintendents, teachers, parents, and even bankers, hoping they would appreciate the implications of these numbers.

At the recent 37th Annual Conference of the International Association for Educational Assessment, which was held in Manila and hosted by the Center for Educational Measurement, he delivered the closing address with unmistakable urgency.

His message: Systems that are honest to themselves will understand that competencies that are measured have a very powerful impact on one’s life chances.

World’s schoolmaster

Originally from Hamburg and a physicist by training, Schleicher, dubbed the world’s schoolmaster, is one of the most influential education experts that you have not heard of.

When he first joined the Organization for Economic Cooperation and Development (OECD) in 1996, he and his colleagues proposed to design a test that would shift from measuring inputs (like spending on schools) to outputs (how much kids are learning).

The result was the Program for International Student Assessment, globally known as PISA, a two-hour test that assesses students’ capacity to extrapolate and apply creatively from what they know.

PISA tests are opposite to common school tests. Schleicher pointed out that test items that were easiest to assess were the easiest to teach, but also the easiest to lose.

What are some test items in PISA? In reading, for instance, students are given two texts about graffiti—one negatively as vandalism, another positively as art. Students are then asked which side they choose, and to judge the rationale of their arguments. In mathematics, students who are good in equations and formulas may not do well in PISA. The test requires students to use math in understanding the structure in the real world and to decide which tools are relevant and how to apply them in problem solving.

In 2000, 32 countries of OECD signed in to participate in PISA. By 2011, even non-OECD members have joined the assessment, making a total of 74 participating countries. By the way, the Philippines is not a PISA participant.

With statistics culled from 28 million 15-year-old students, Schleicher has revealed unexpected, if not shocking, results over the years.

For one, the United States has dropped from rank No. 1 to 26 in the 2011 results. The current rankings show that many of the highest-performing school systems are in Asia—specifically, China, Korea, Hong Kong, Singapore and Japan.

Not how much but where

The results further showed that outcome is not about how much a country is spending on education, but where it is spent.  A nation’s wealth only accounts for 60 percent of its school system’s performance.

The top-ranking countries do not spend the most for education, but they spend a good portion on recruiting and sustaining the best teachers.  They boast of good salaries and high prestige for the teaching profession. The governments of China and Japan put substantial subsidies on teachers’ pay.

The top-ranking school systems are also serious about teacher development.

In fact, in Singapore, only the top one-third of the graduating class in college can consider taking up an education degree and only one of eight candidates is accepted in the teaching profession. Teachers there are required to train for 240 hours.

In China, teachers have to participate in 360 hours of professional development each year. Repeat—360 hours!

After recruiting smart people into the teaching profession, the top countries exert great incentives to keep them in schools by making the job not only financially attractive, but also intellectually attractive.

In Singapore, teachers learn with and from peers. It has a strong system to recruit, train, monitor and develop teachers.

Another factor in education quality is investing in resources that can make the most significant difference. In Shanghai, cooperative consortiums are set up for the best schools to help out the poorer ones, and to capitalize on the strengths of the best teachers.

Many of the top-ranking countries attract, through higher compensation, the most talented teachers to the most challenging classrooms.

“Accountability without consequences makes no sense,” Schleicher said.  So, what happens to the poor-performing teachers?

In Japan, underperforming teachers are pulled out from classrooms for a year of retraining. In China, teachersneed to go through teacher certification every five years. Those who fail in their performances have to undergo full-time training, like the pre-service teachers.

Practical advice

At first impression, Schleicher’s statistics looked mind-boggling, and the implications, overwhelming. But Schleicher, who can talk about any of the 74 countries at a click of his Powerpoint, was able to translate effectively the statistics to pragmatic suggestions for all stakeholders.  He offered the following reform trajectories:

– We need to turn the belief that “only a few can achieve excellence” to the commitment that “all studentsneed to learn at high level.”

– Instead of teaching for rote learning, schools must teach students “meta-cognition,” or learning to learn, and to understand complex ways of thinking and knowing.  We are not only teaching a subject, but teaching a student.

– Teachers must achieve a high level of professionalism as knowledge workers and researchers by “looking outward” to peers and stakeholders for continuous learning that will improve teaching.

Implications for Filipinos

As an educator, I found Schleicher’s presentation to be excellent—informative, comprehensive, stimulating and future-forward. Regretfully, it should have been presented to government and Department of Educationofficials. Incidentally, at least half of the audience was composed of educators from foreign countries.

I have observed a lack of enthusiasm among Filipino students for math and statistics. What is disturbing is that students take this inadequacy in math rather too lightly, giving the usual alibi that “math does not like me.”

Schleicher suggested this attitude might have come from the misconception that “if I’m not good on things that can be measured, then I must be good in things that cannot be measured”—which was absolutely false.

Schleicher also said the problem of Asian schools being focused on teaching for the tests was a challenge because of pressures for high-stakes examinations in East Asia. Hence, it was imperative to understand that teaching more of the same was not the answer.

The Philippines’ performance in any kind of international educational testing has not been good at all. Conveniently, this result is often blamed on poverty. But many poorer countries are looking for ways to improve. India and Pakistan, for examples, participate in PISA.

Often, there is hesitancy on the part of our education authorities to accept the results of internationally recognized tests at face value. But by playing down the importance of these assessments, we are just delaying the hard work of a systematic investigation to find out the causes and to ask for accountability.

If we are not honest in understanding our strengths and weaknesses, we are denying our next generation of students a quality education that they deserve.

As Schleicher put it, “Students who are not prepared have diminishing life’s chances. Filipinos are not competing with fellow Filipinos; they are competing with the world. Learn from other countries. Use assessment and you will find out what you want to achieve is possible.”

When in Cebu City, please visit gregmelep.com for your retirement and real estate needs.

(Grace Shangkuan Koo, Ph.D., is associate professor of educational psychology at the University of the Philippines. E-mail her at grace@koo.org.)