The Country’s Own Bay Area
The future growth of any real estate developer is heavily dependent on the size of its available land bank, which is the collection of land acquired and held by a property company for future projects and development. It is for this very reason that all property companies are constantly on the lookout to expand their ever growing collection of land all around the country — especially within the National Capital Region (NCR). With Metro Manila becoming more and more congested through time though, these companies are starting to be forced to look elsewhere. One of the possible solutions is to build a new Metropolitan city in the provinces just outside of the country’s National Capital Region (NCR) (SEE: Clark: The Next Metro, PropertyAccess). Other developers, on the other hand, are a tad bit more ambitious and creative. They are looking to build their offices, condominiums, hotels, and shopping malls on water — literally. They are looking to reclaim and build on the Manila Bay.
This trend is confirmed by a recent report by the Business World, which showed that — as of March 2019 — there have been 22 reclamation project proposals submitted by various real estate developers and local government units (LGU) to the National Reclamation Authority (NRA). Of these 22 proposals, 15 are still pending for approval, six have already been approved, while one is already in the construction phase (SEE: Groups line up for land reclamation, Business World).
Past Land Reclamation Projects in the Manila Bay
Surprisingly though, it is not the first time that the idea of reclaiming land from the Manila Bay has been brought up. In fact — as early as the 1970s, the SM Group and DMCI proposed the Boulevard 2000 Project, which is now known as the Bay City Reclamation Project. The project spans 3,000 hectares of land, which was reclaimed from the Manila Bay, just along Roxas Boulevard. The project was eventually approved by the National Reclamation Authority in 1977.
Today, the area houses a plethora of shopping malls, condominiums, hotels, office buildings, and even casinos. These developments include the SM Mall of Asia (one of the largest malls in all of Asia), DMCI’s Aseana City (a world-class business center at the heart of the Bay Area), and PAGCOR’s Entertainment City (an eight square kilometer gaming and entertainment complex). The Bay Area is also home to some government buildings such as the Cultural Center of the Philippines (CCP) and the Philippine International Convention Center (PICC). All of these developments are said to have contributed to the rapid economic growth in Pasay and Parañaque.
Current Proposed Land Reclamation Projects in the Manila Bay
Seeing the massive success of past reclamation efforts in the Bay Area, it is not a surprise to see that the major real estate players in the country want in on the action. In November of 2018, the Manila City Government — under the leadership of former Mayor Joseph Estrada, Pasay City Government — under the helm of Mayor Antonio Calixto, SM Prime Holdings (SMPH), Manila Goaldcoast Development Corp. (MGDC), and the Pasay Harbor City Consortium signed a memorandum of agreement (MOA) for the proposed Manila and Pasay Reclamation Projects (SEE: MOA signed for Manila Bay reclamation project, Business Mirror). The construction is expected to begin by late 2019 or early 2020.
The business districts set to be created by these projects, spanning over 750 hectares of reclaimed land, are expected to significantly boost the economy of Manila City and Pasay City. According to a speech by Mayor Estrada last year, Manila stands to earn an additional PHP 50 billion per year in real property taxes (RPT) alone (SEE: Manila to earn P50 B from Solar City Reclamation Project — Erap, Journal Online). In addition, the additional economic activity is expected to generate over 500,000 jobs in the area (SEE: Manila’s multi-billion Solar City reclamation project to generate 500,000 jobs). Once materialized, these benefits should help alleviate the poverty incidence in Manila, which is actually the highest in the National Capital Region.
The full list of the Manila Bay reclamation projects approved by the National Reclamation Authority can be found in this infographic by the Business World (SEE: Approved Reclamation Projects along Manila Bay, Business World).
Opportunities Moving Forward
With the Philippine economy expected to grow at a rapid pace within the next ten years (SEE: GDP seen doubling by 2026 as Philippines “set for dynamic growth”, The Philippine Star), the demand for real estate — especially in Metro Manila — is expected to quickly grow as well. On the other hand, the supply of land — which is a scarce resource in the Metro — simply cannot keep up. Recognizing the gap between the supply and the demand, real estate developers are looking for creative ways to meet the demand.
One proposed solution is to establish a new Metropolitan area in the provinces, just outside of the country’s National Capital Region. The main problem, however, with this proposal is the proximity. At the current infrastructure levels, it would take at least two hours to travel from Manila to the closest provinces. It would still take several years before the necessary infrastructure could be built to reduce the travel time. As a result, some developers still prefer to stay within the Metro. To do this, they would need to physically increase the available land area in NCR.
The perceived solution as of the moment is to reclaim land from the Manila Bay. This strategy is based on the success of the Bay City Reclamation Project of 1977, which successfully reclaimed 3,000 hectares of land from the Manila Bay. Currently, there are six projects expected to be started within the following year. Once finished, the reclaimed land is expected to significantly increase the available office space in the Bay Area. According to expert estimates, office space is expected to increase by 78% in just three years — from 673 thousand square meters in 2018 to an estimated 1.16 million square meters by 2021.