The Driving Forces Behind Reclamation Projects

Manila Bay Reclamation, part 2

As an urban planner deeply immersed in the intricacies of urban development, I find myself engaged in a profound contemplation of the complex issue of reclamation. In the first part of this discourse, we delved into the critical context of sustainability, contrasting the merits of compact urbanization and regionalization against the backdrop of extensive reclamation projects. Now, in the second part of this exploration, our gaze shifts toward a different facet of the reclamation conundrum: profitability. While sustainability concerns often take center stage in the discourse surrounding urban development, it is essential to acknowledge that the driving force behind many ambitious reclamation projects is the promise of substantial financial gain. In the following pages, we embark on a journey to unravel the intricate relationship between profitability and reclamation, dissecting the economic motivations that propel these colossal ventures, and considering the implications they hold for the urban landscapes they shape.

Reclamation projects involve the transformation of coastal or underwater areas into usable land, often with the goal of generating economic benefits for various stakeholders. Reclamation projects have emerged as pivotal drivers of urban development, promising substantial economic gains for proponents and joint venture partners. This paper delves into the multifaceted landscape of reclamation endeavors, revealing the driving forces behind them and their potential impacts on various stakeholders.

Reclamation projects in the Philippines are strategically concentrated in and around Metro Manila, the country’s economic and political hub. This geographic focus is not coincidental but a result of careful consideration of several factors. Metro Manila serves as the Philippines’ economic center, hosting a significant portion of the country’s businesses, industries, and commercial activities. It is home to corporate headquarters, financial institutions, government offices, and numerous job opportunities. This economic prominence continues to attract people from across the nation.

As provided by various literature, reclamation efforts in the Philippines can be traced back to the Spanish colonial era when the Spanish authorities initiated land reclamation projects in Manila Bay. These projects aimed to expand the city of Manila and create additional space for development and fortifications.

During the American colonial period, particularly in the early 20th century, reclamation projects continued in Manila Bay. The most notable of these projects was the construction of the Manila South Harbor. In the post-World War II period, reclamation activities in the Philippines gained momentum as the country experienced urbanization and population growth. Several reclamation projects were initiated along the Manila Bay coastline, including the development of the Cultural Center of the Philippines (CCP) Complex.

Metro Manila has witnessed rapid urbanization over the past few decades. As the population continues to grow, the demand for urban land has intensified. People from rural areas and other regions of the Philippines flock to the capital in search of better economic opportunities, which further accelerates urban expansion.

Reclamation Project	Location	Proponent	Private JV Partner or Developer
Pasay SM Reclamation Project	Pasay City	City	SM Prime Holdings
Pasay Harbor City Reclamation Project	Pasay City	City	Pasay Harbour City
Manila Solar City	Manila	Consurtium (LGU & MGDC)	Consortium (LGU & MGDC)
Manila Waterfront City Reclamation	Manila City	City	Waterfront Manila Premier Development
Horizon Manila Reclamation Project	Manila City	City	Jbrce Construction Corporation
City of Pearl/New Manila Bay Reclamation Project	Manila City	City	UAA Kimming Group Development Corp
Navotas Coastal Bay Reclamation and Development Project	Navotas City	City	Argonbay Construction Company
Las Pinas-Paranaque Coastal Bay Project	Las Pinas, Paranaque City	City	Alltech Construction Inc.
Bacoor Reclamation and Development Project	Bacoor City	City	Frabelle Fishing Corp
Bacoor Reclamation and Development Project (outer island project)	Bacoor City	City	Frabelle Fishing Corp
Diamond Reclamation and Development Project	Bacoor City	City	Frabelle Fishing Corp
MCTE Manila Bay Reclamation Project	Bacoor Province	Province	Coastal Road Corp
Cavite 4-island Reclamation Project	Cavite City	Province	Century Peak Corp

The involvement of city governments as proponents of these reclamation projects signifies their commitment to urban development and economic growth. Cities in the Philippines, especially those in densely populated areas like Metro Manila, face significant challenges related to land scarcity and infrastructure demands. Reclamation projects offer an opportunity for these cities to expand their territory, create new land for development, and address these challenges. However, it’s important for city governments to balance economic interests with environmental and social considerations, ensuring that the benefits of such projects are distributed equitably and sustainably within their communities.

The use of a consortium involving both the local government unit (LGU) and Manila Goldcoast Development Corp (MGDC) as proponents indicates a collaborative approach to reclamation. This partnership allows for the pooling of resources, expertise, and responsibilities. The LGU likely provides regulatory approvals, legal framework, and oversight, while MGDC brings financial resources and development expertise. Such partnerships can be effective in addressing complex development challenges, but they require clear agreements and cooperation between the public and private sectors to ensure transparency and accountability. The proponents of reclamation projects, whether city governments, consortia, or provinces, play a pivotal role in shaping the trajectory of urban development. Their decisions impact land use, economic growth, infrastructure development, and the overall well-being of their communities. It’s essential for these proponents to strike a balance between the economic benefits of reclamation and the need for sustainable, equitable, and environmentally responsible development. Public transparency, community engagement, and adherence to regulatory guidelines are crucial aspects of responsible reclamation project management.

Reclamation projects in Manila Bay exhibit considerable variation in terms of size and estimated costs, underlining the flexibility of reclamation as a strategy to address urban expansion challenges. From the expansive 844-hectare MCTE Manila Bay Reclamation Project to the more modest 90-hectare Bacoor Reclamation and Development Project, these endeavors offer diverse solutions to the ongoing land scarcity issues, particularly prominent in densely populated areas like Metro Manila.

The estimated project costs attached to these initiatives highlight their significant economic implications. These substantial investments indicate the potential to stimulate economic growth within the region, creating employment opportunities and fostering local economic development. However, the variation in project objectives is noteworthy, ranging from the development of prime urban real estate to the enhancement of infrastructure and public spaces. It also indicates a profitable undertaking and huge revenue generation for the government, both local and national.

Reclamation Project	Size (Hectares)	Estimated Project Cost (PHP)
Pasay SM Reclamation Project	390	81,248,000,000
Pasay Harbor City Reclamation Project	265	62,379,000,000
Manila Solar City	146	23,000,000,000
Manila Waterfront City Reclamation	318	37,191,000,000
Horizon Manila Reclamation Project	419	56,000,000,000
City of Pearl/New Manila Bay Reclamation Project	400.7	43,700,000,000
Navotas Coastal Bay Reclamation and Development	650	27,300,000,000
Project
Las Pinas-Paranaque Coastal Bay Project	635.14	26,153,000,000
Bacoor Reclamation and Development Project (inner island project)	90	2,869,000,000
Bacoor Reclamation and Development Project (outer island project)	230	10,934,000,000
Diamond Reclamation and Development Project	100	6,235,000,000
MCTE Manila Bay Reclamation Project	844	–
Cavite 4-island Reclamation Project	472	40,749,000,000

Real Estate Development Profits

Reclamation projects open up prime urban real estate opportunities. Take, for instance, the Pasay SM Reclamation Project, sprawling over 390 hectares with an estimated project cost of PHP 81.25 billion. This translates to an astonishing PHP 20,832.82 per square meter. This figure underscores the immense profit potential awaiting developers who can convert reclaimed land into valuable properties.

Reclaimed areas often undergo swift property value appreciation. Within just a few years of development, property values can surge by 20% to 50% or even more. This exponential growth benefits not only developers but also bolsters local tax revenues, contributing to the financial well-being of municipalities.

Also, reclamation projects unlock diverse revenue streams. Land sales, property leasing, development permits, and licensing fees become significant contributors to project revenues. For example, the Pasay Harbor City Reclamation Project, spanning 265 hectares with an estimated cost of PHP 62.38 billion, underscores the financial promise with a staggering PHP 23,539.25 per square meter.

The scale of reclamation projects necessitates massive infrastructure development. Roads, utilities, and public amenities demand substantial investments, leading to multimillion-dollar contracts for construction companies. These contracts not only enhance infrastructure but also stimulate economic activity within the region.

Comparing Reclamation Project Costs to Median Land Prices

However, as an urban planner and real estate consultant, I compared the estimated project costs of reclamation projects to the median land prices in various cities in Metro Manila, based on 2021 average price data derived from dotproperty.com:

1. Pasay SM Reclamation Project: Estimated at PHP 81.25 billion for 390 hectares, this project significantly exceeds the median land price in Pasay at PHP 293,480,000 per square meter, highlighting the vast potential for property value per square meter in the reclaimed area.
2. Las Piñas-Paranaque Coastal Bay Project: Covering 635.14 hectares with an estimated cost of PHP 26.15 billion, this project’s potential property value per square meter surpasses the median land prices in Las Piñas and Paranaque at PHP 25,000,000 and PHP 28,912,000, respectively, by a substantial margin.
3. Manila Waterfront City Reclamation. With an estimated project cost of PHP 37.19 billion for 318 hectares, this project’s potential property value per square meter outpaces the median land price in Manila at PHP 53,000,000.

Location	Median List Price Per Sq.m. (₱)
Cavite City	25,634
Bacoor	45,465
Bulacan	12,924
Manila	118,195
Pasay City	92,689
Bataan	18,400
Batangas	13,239
Pampanga	26,979

These comparisons underscore the significant profit potential of reclamation projects, as property values in reclaimed areas can far exceed median land prices in established cities. However, it’s crucial to bear in mind that these are estimates, and actual property values may fluctuate based on market dynamics and the success of development.

While profit potential often serves as a primary driver for interest in reclamation projects, it’s essential to approach them with a balanced perspective. They present economic benefits and development opportunities, but they also pose environmental, social, and infrastructure challenges. Striking a harmonious balance between economic gains, environmental sustainability, and community well-being is fundamental for responsible and ethical urban development. Public transparency and comprehensive assessments are vital to ensure that reclamation projects align with broader urban planning goals and prioritize the welfare

Property Value Appreciation

One of the most significant economic benefits of reclamation projects is property value appreciation. This phenomenon refers to the increase in the market value of real estate properties located in the reclaimed area over time. It occurs as a result of various factors, with developers’ investments in infrastructure and amenities being a significant catalyst.

Reclamation projects necessitate substantial investments in infrastructure and amenities to make the newly created land suitable for development and attractive to potential buyers or tenants. These investments may include the construction of roads, bridges, utilities (water, electricity, sewage), parks, recreational facilities, and more.

Property value appreciation benefits developers directly by increasing the market value of the properties they own or have developed. They can command higher prices for their properties, leading to greater profits when selling or leasing.

Increased property values contribute to higher property tax revenues for local governments. This additional revenue can be reinvested in public services and infrastructure, benefiting the community.

Property value appreciation is often a long-term trend. While there may be initial spikes in value as infrastructure is developed, sustained appreciation can continue for years or even decades as the area matures and becomes an established part of the city.

It’s important to note that property value appreciation can sometimes lead to gentrification, where rising property values displace lower-income residents. Balancing the benefits of property value appreciation with the need for affordable housing and equitable development is a critical consideration for reclamation projects.

Government Collaboration

Collaboration with local governments can unlock financial benefits, such as infrastructure funding and tax incentives. In the case of the Manila Waterfront City Reclamation, a project covering 318 hectares with an estimated cost of PHP 37.19 billion, such collaboration can be financially significant.

In 2015 alone, Pasay City collected approximately Php 3.2 Billion in real property taxes, business permits, and work permits from the existing MOA reclamation area. With the larger proposed project, these financial gains will increase substantially.

These comparisons highlight the significant profit potential that reclamation projects offer to developers and joint venture partners. The property values in reclaimed areas can far surpass the median land prices in established cities, making reclamation a lucrative investment. However, it’s important to note that these are estimates, and actual property values may vary based on market dynamics and the success of the development.

The potential for substantial profits is indeed one of the factors that often drive interest in reclamation projects. Developers and joint venture partners are attracted to reclamation due to the opportunity to create prime real estate in desirable coastal locations, which can command high property values. This profit potential can be a significant driving force behind such projects.

However, it’s crucial to approach reclamation projects with a balanced perspective. While they can bring economic benefits and opportunities for property development, they also come with environmental, social, and infrastructure challenges. Balancing economic gains with environmental sustainability and the well-being of affected communities is essential for responsible and ethical urban development.

City of Pearl/New Manila Bay Reclamation Project

This project, located in Manila City, covers 400 hectares. Its estimated project cost per square meter is PHP 10,905.91. This relatively low project cost per square meter presents an attractive opportunity for developers.

Developers involved in this project can acquire the reclaimed land at this cost, invest in infrastructure development, and create valuable properties. Once developed, they have the potential to sell or lease these properties at a significantly higher price per square meter. This price difference between the project cost and the selling or leasing price per square meter is where developers stand to make substantial profits.

Comparing the project cost per square meter (PHP 10,905.91) with the median list price per square meter in Manila (PHP 118,195), it becomes evident that developers can potentially realize substantial returns on their investment. The difference in price per square meter highlights the profit potential of reclamation projects like the City of Pearl/New Manila Bay Reclamation Project.

Further, as with other reclamation projects, the City of Pearl/New Manila Bay Reclamation Project is likely to experience rapid property value appreciation. Developers’ investments in infrastructure, amenities, and urban development in the reclaimed area can drive property values up significantly. This appreciation benefits not only developers but also contributes to increased local property tax revenues.

The property value appreciation in these reclaimed areas can result in property values that far surpass the median land prices in established cities, further underlining the attractiveness of reclamation projects as lucrative investments for developers.

Thus, reclamation projects, such as the City of Pearl/New Manila Bay Reclamation Project, provide developers with opportunities to acquire land at relatively lower costs, develop it into valuable properties, and profit by selling or leasing these properties at significantly higher prices per square meter. Property value appreciation in these areas further enhances the economic benefits, making reclamation projects appealing for developers seeking substantial returns on their investments.

In the grand tapestry of urban development, the issue of reclamation remains a multifaceted enigma, intertwining sustainability, economic prosperity, and the intricate dance of public and private interests. As urban planners and stewards of our cities, we find ourselves in a delicate balancing act. While the pursuit of profitability can be undeniable, it is our duty to ensure that the chords of sustainability and equitable progress resonate harmoniously in the urban symphony. The journey ahead may be fraught with challenges, but it is through thoughtful planning, unwavering commitment to the welfare of our communities, and a vision that extends far beyond the horizon that we can aspire to create cities that flourish in every sense—cities where prosperity thrives, but not at the expense of our shared home.