Author: AB Agosto

AA+ Appraisal & Consultancy proudly announces the completion of its real estate consulting in Dipolog City and Batangas. The consultancy firm has been commissioned to conduct comprehensive studies on projects in Cebu, Dipolog City, Bohol, Leyte, Lapulapu City, and Batangas, demonstrating a proactive approach to addressing various challenges within the real estate sector.

A significant milestone for AA Consultants is their recent engagement as development consultants for an expansive housing project covering Dipolog City, Zamboanga del Norte. This upcoming 2.8-hectare development is strategically positioned to evolve into a vital subdivision, serving both urban and provincial populations due to its proximity to the city center. The consultancy firm has diligently undertaken feasibility and economic viability studies, laying the groundwork for a successful venture.

Recall that AA+ Appraisal & Consultancy was hired by the Japan International Cooperation Agency through its local counterpart to provide consulting services for the 19.8-kilometer Marawi City Ring Road -SP7. This project, which connects several towns in the province of Lanao del Sur, focuses primarily on residential and agricultural areas along the Marawi City Ring Road (SP7).

Gus Agosto, President, and Chief Executive Officer of AA+ Appraisal & Consultancy, expressed his enthusiasm about this new endeavor, stating, “We are truly excited to add yet another magnificent project to our portfolio of development consulting opportunities.”

Prior to this achievement, AA Consultants conducted a comprehensive feasibility study for a 50-hectare Agro-Industrial Farm in South Cebu, showcasing their commitment to diverse and impactful projects. Furthermore, the consultancy firm played a pivotal role in proposed subdivision developments in Batangas, Lapulapu City, Bohol, and Maasin, Southern Leyte, conducting highest and best-use studies and marketability studies to optimize the potential of these areas.

Beyond real estate, AA Consultants has extended its expertise to other crucial sectors, providing invaluable consultancy services for a water treatment facility delivering 20 million liters of water daily to the Metropolitan Cebu Water District. Additionally, the firm collaborated with the largest waste management company in Cebu, underscoring its commitment to contributing to sustainable and efficient solutions.

With these recent accomplishments, AA Consultants solidifies its position as a leading force in development consulting, showcasing versatility and excellence across various projects that positively impact communities and industries alike.

“AA+ Appraisal & Consultancy, along with its development consulting team, is driven by its purpose in nation-building, aiming to play a pivotal role in fostering sustainable development and progress across the country. AA+ Consultancy stands as a trusted and versatile partner, uniquely positioned to offer end-to-end solutions for a wide spectrum of development projects. Our development consulting work promotes sustainable, inclusive, and economically vibrant communities,” concluded Consultant Economist Agosto.

At the forefront of the economic landscape in the Philippines, AB Agosto recently renewed his membership in the esteemed Philippine Economic Society (PES). As the country’s largest network of economists, PES holds a pivotal role in bringing together professionals from academia, government, and the business sector. Established in 1962, PES has become a cornerstone in the international community of professional economic associations, holding the distinction of being a founding member of the Federation of ASEAN Economic Associations.

Being part of PES is not merely a membership renewal for Agosto; it signifies a connection to a rich tradition of economic scholarship and a commitment to advancing the economic well-being of the nation. In the context of PES’s international recognition, Agosto’s fifth renewal underscores the interconnectedness of Philippine economic thought with the global discourse, reinforcing the country’s presence in the Federation of ASEAN Economic Associations.

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If you own a property, it is essential to be aware of your rights when the government takes your land for public use. While eminent domain, the power of the government to take private property, is a well-known concept, its counterpart, inverse condemnation, often remains in the shadows. In this article, we will explore what inverse condemnation is, why it is vital for property owners, and how it plays out in a real-world case.

What is Inverse Condemnation?

Inverse condemnation is a legal doctrine that allows property owners to seek just compensation from the government when their property has effectively been taken, even if the government hasn’t formally initiated an expropriation or condemnation proceeding. This concept is a crucial safeguard to ensure property owners are not deprived of their rights when government actions or projects impact their land.

The Case of the Heirs of Macabangkit Sangkay: A Real-Life Example

In a notable case involving the Heirs of Macabangkit Sangkay and the National Power Corporation (NPC), the Supreme Court addressed the issue of just compensation in an inverse condemnation scenario. In this case:

• The NPC embarked on a project that involved the construction of a tunnel through a piece of land belonging to the Heirs of Macabangkit Sangkay.
• Importantly, NPC did not formally initiate an expropriation proceeding or seek the prior consent of the landowners.
• The Heirs of Macabangkit filed a complaint to seek compensation for effectively taking their property.

The Supreme Court ruled in favor of the Heirs of Macabangkit and affirmed the decision of the Regional Trial Court (RTC). The court held that the value used as the basis for compensation should be determined as of the time when the complaint was filed. In other words, the compensation would be calculated based on the property’s value at the time when the landowners initiated their legal action.

The Supreme Court justified this decision by emphasizing the principle of fairness. It noted that calculating compensation based on the market value at the time NPC entered the land or when the tunnel project was completed would be unjust. This is because it would compound the gross unfairness already caused to the landowners. NPC had entered the property without the intention of formally expropriating the land, and without obtaining the prior knowledge and consent of the Heirs of Macabangkit.

Why Inverse Condemnation Matters:

Inverse condemnation is crucial for several reasons:

1. Protection of Property Rights: It ensures that property owners’ rights are upheld, even when the government takes their property without following formal expropriation procedures.
2. Just Compensation: Property owners have the right to seek just compensation when their land is effectively taken, which is often enshrined in the constitution of many countries, including the Philippines.
3. Legal Remedy: Inverse condemnation provides a legal remedy for property owners to address government actions that infringe upon their property rights.
4. Real estate appraisers are essential in the determination of just compensation in cases of eminent domain and inverse condemnation. Their objective and unbiased appraisal expertise is crucial in safeguarding the property owner’s rights and interests in government-taking cases.

Inverse condemnation serves as a vital legal concept that protects property owners’ rights when their land is effectively taken by the government. Property owners should be aware of their rights and seek legal counsel and valuer when facing government takings to ensure their interests are protected and justice is served.

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.

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.

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.

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.

As an urban planner, I find myself at the intersection of a recent controversial issue: reclamation projects. The debate has been ignited by the suspension of reclamation projects by BBM, pending a review of its environmental compliance and impacts.

To put the urbanization landscape into perspective, let’s examine some key data points:

• The National Capital Region (NCR), occupying a mere 0.2% of the country’s total land area, is the most densely populated region, with an astonishing population density of 18,165.1 persons per square kilometer.
• Regions such as Central Luzon (Region III), and Southern Tagalog (Region IV), with urbanization rates ranging from 46.4% to 60.5%, experience significant urban growth.
• Surprisingly, the CALABARZON corridor, encompassing the urban areas of Cavite, Laguna, Batangas, Rizal, and Quezon, has surpassed even NCR in population size. With 12.61 million inhabitants, this urban corridor now outpaces both NCR and Central Luzon.
• The Philippines has 33 highly urbanized cities (HUCs), with all 16 NCR cities classified as such. Four of these HUCs, namely Caloocan City, the City of Manila, Quezon City (all within NCR), and Davao City in southern Mindanao, host over a million inhabitants.
• Conversely, regions like the Cordillera Administrative Region (CAR) and other regions in Visayas and Mindanao, stand as the least densely populated areas, posing unique urbanization challenges and opportunities.

The DENR Secretary’s recent statements have shed light on her nuanced perspective regarding reclamation projects. While her stance doesn’t outright oppose reclamation, it emphasizes the importance of considering the compounded risks associated with such endeavors. In her view, these compounded risks should play a pivotal role in cumulative impact assessments and resilience analytics, ensuring that the potential hazards are thoroughly factored in.

The Dark Side of Reclamation

In contrast, reclamation projects typically involve the filling of coastal or waterfront areas to create new urban land. While these projects offer space for development, they carry significant drawbacks. These include the disruption of vital coastal ecosystems, the displacement of communities, alterations in local hydrology, and environmental degradation.

These compounded risks encompass a spectrum of hazards, all of which need careful evaluation. Among them are the threats of liquefaction and tsunamis stemming from the movements in the Manila Trench, a geological phenomenon that requires vigilant attention. Additionally, the presence of fault systems, notably the West Valley Fault and others impacting the region adds complexity to the risk assessment process. Lastly, the Secretary underscores the impacts of climate change, including rising sea surface temperatures, sea-level rise, the projected increase in the intensity of tropical cyclones, extreme rainfall events, and the vulnerability to storm surges and flooding, as vital factors that must be considered.

Nevertheless, the Secretary acknowledges that reclamation projects can serve a beneficial purpose when executed judiciously. She points to international examples, such as Rotterdam in the Netherlands, where much of the city stands as a testament to the success of reclamation in creating resilient urban areas. Similarly, reclamation has been employed to create new land for transportation infrastructure and urban expansion in Boston, contributing to the city’s growth and development. These global instances demonstrate that reclamation, with careful planning and risk mitigation strategies, can be a valuable tool for urban development.

Compact Cities: A Blueprint for Sustainability

Alongside spreading regional development, compact cities offer a vision of urban planning that encapsulates the essence of sustainability. By concentrating urban growth within predefined boundaries, compact development champions the efficient utilization of precious urban land. Unlike urban sprawl, which indiscriminately expands cities into previously untouched areas, compact development safeguards natural landscapes, agricultural land, and green spaces on the urban fringes. These components are essential for biodiversity, ecosystem services, and overall environmental health.

A core objective of compact cities is to counteract urban sprawl—a common urban planning pitfall. Urban sprawl devours vast expanses of land, leading to longer commutes, increased infrastructure demand, and heightened environmental strain. Compact development resists this outward expansion, instead nurturing growth within existing urban confines. This not only conserves land but also fosters close-knit communities, promoting social interaction and a sense of belonging.

Further, spreading regional development represents a compelling and sustainable strategy. Rather than concentrating urban growth within a single metropolitan area, this approach advocates for the equitable distribution of economic activities and infrastructure across various regions. It capitalizes on the unique strengths and resources of each region, ultimately reducing disparities in economic development. Moreover, this approach preserves coastal ecosystems and green spaces, effectively mitigating environmental risks and fostering ecological sustainability. Avoiding over-dependence on a single urban center enhances community resilience and ensures a more equitable distribution of development benefits. Beyond its environmental and social merits, this strategy offers long-term political and economic stability by minimizing disproportionate impacts from natural disasters or economic downturns.

A Path Forward for Sustainable Development

In the grand scheme of urbanization, the choice between compact cities, spreading regional development, and reclamation projects is not merely an urban planner’s conundrum. It is a pivotal decision that will profoundly shape the future of our cities and communities. While reclamation projects may offer seemingly expedient solutions to land scarcity, they come with significant environmental and social burdens.

Compact development and spreading regional development, on the other hand, align with the principles of sustainability, resilience, and equitable growth. They envision a harmonious coexistence between urbanization and the natural world—a vision that not only serves the present but also secures a more sustainable future for generations to come.

Conclusion

Compact development and spreading regional development offer sustainable urban planning models that prioritize resource conservation, environmental sustainability, and an enhanced quality of life. These models emphasize efficient land use, reduced urban sprawl, and diversified transportation options. Reclamation projects, raise substantial environmental and social concerns. As we navigate the future of our cities and regions, embracing these sustainable models may hold the key to greener, more connected, and healthier urban environments and regional development.

Map of Reclamation Projects in Manila Bay

Image of Manila Landscape