Is Iloilo City headed toward a property bubble?

It’s not that I don’t want Iloilo City’s economic development to screech to a halt. But looking at the frenetic infrastructure projects now undergoing construction (private sector development), I am worried that this would lead to a property bubble. At the pace new condominiums and malls are being built, there is a real danger supply would overtake demand, and many developers will be left holding an empty bag.

The retail market, for instance, is not big enough to warrant the operation of more stores in Iloilo City. The present retail floor space that are available for rent is already more than what the market could accommodate. Just recently, SM City opened its new wing, and many store spaces are still empty. That’s not to mention a number of restaurant closures in the giant mall.

Robinson’s Mall is opening another complex in Jaro at what used to be the campus of the De Paul College. Atria has gone full blast in its operations, mostly with restaurants in Barangay San Rafael. The Florete Group of Companies is rushing the completion of its Plazuela II along the Benign Aquino Jr. Avenue. Meanwhile, Megaworld is also going full swing in its construction of its strip malls in the Iloilo Business Park.

Filinvest and Ayala Land are also racing with each other to build condominiums within a 2-kilometer radius in Mandurriao. Not too far away are condominiums of Megaworld. Also about to commence construction is the mixed-use complex of Gaisano in Bolilao, Mandurriao.

Smaller malls have also been put up in other parts of the city. Double Dragon Properties Corp. has opened its City Mall in Barangay Tagbac, Jaro. Another City Mall is slated to break ground in Barangay Ungka, Pavia before the middle of 2016. A third City Mall is going to loom large over the scenic Guimaras Strait as part of the Parola Ferry Terminal. The group of Alfonso Tan is now operating GT Mall near the Molo Plaza.

There is no mistaking that development is taking place at breakneck speed in Iloilo City. A quick glance at all these activities couldn’t fail to impress the observer. But we need to learn lessons from history — business history. Property bubbles are always a danger when development takes place at such high speed. The demand might not be able to sustain the market supply’s growth.

Among the developers, I find the Double Dragon strategy of locating its new malls in the periphery of the city more prudent. It avoids the potential congestion that might only worsen the already bad traffic situation on the Iloilo Diversion Road (aggravated by poor traffic management practices of the LGU). And as the City Malls are situated in the outskirts, they will be able to snare much of the people who want to avoid the traffic.

Of course, these developers didn’t just jump into pouring hundreds of millions of pesos in investments for malls and condominiums without extensive feasibility studies. That the developments are concentrated in the Mandurriao district seem to follow the model of Metro Manila, where malls and condominiums are built in concentric circles. The residences are  always a stone’s throw away from restaurants and shops. This is the model in Alabang, Eastwood, Greenfield in Mandaluyong and many more.

What I fear is that the buying power of Ilonggos might not be enough to fuel this growth. Even in the number of restaurants that have opened for business, one can easily see that customers flock to the newer ones, leaving the older restaurants with fewer diners. The dining market base hasn’t grown that much to make the opening of more restaurants viable. It’s the same way with shoppers.

I would want to see this growth sustained. The LGU should be laying the foundation for increasing the buying power of its people. Unfortunately, that is not happening. There are no industries that could provide good paying jobs for the people. If there are jobs being created, these can be found in the services sector — restaurants, retail outlets, call centers. This will fall short of what is needed to sustain this growth.

Our leaders should take steps to avoid a meltdown. They should not be lulled into a false sense of achievement. The public investments are being poured into the wrong areas. We are not building the necessary infrastructure for sustained development. The crash can happen sooner than anybody might expect.

 

The new jueteng lord

Few people have heard about Boy Jalandoni. That’s Julio J. Jalandoni to be exact, married to Sylvia Espino. But his name shot to national prominence on Tuesday morning, Sept. 21, when his name was mentioned as the “jueteng” lord of Bacolod City during the Senate Blue Ribbon investigation into the illegal numbers game. Boy Jalandoni isn’t even from Bacolod City. He grew up in Jaro, Iloilo City and lives in the national capital, with address at 13 Apostol St., San Lorenzo Village, Makati City.

This man has kept a low profile for many years, although a quick check on Internet search engines reveal that he was among the favored few of the Arroyo administration, having been appointed to financially-rewarding positions. He sits on the board of directors of the Philcomsat Holdings Corp. and Philippine National Oil Co.

The search didn’t end there, however. The search engines kept turning out the names “Julio J. Jalandoni/Sylvia E. Jalandoni” on the radar screen. So I plunged deeper. This became a voyage of discovery at how rich (or maybe appear to be rich) the couple have become. Several giant corporations in the country list the couple among their top 100 stockholders, rubbing elbows with corporate securities firms and the super rich of the country. Consider the following:

  • In a disclosure report submitted by Atty. Ma. Caridad Gonzales, corporate secretary and compliance officer of Globe Telecom, Inc. dated July 14, 2009 to the Philippine Stock Exchange, the spouses Julio J. Jalandoni and Sylvia E. Jalandoni are ranked number 62 in the top 100 with 2,500 shares representing 0.0018% of the outstanding stockholdings.
  • Ayala Land Inc. listed the spouses at number 59 with 1,000,000 shares representing 0.0076%.
  • Jollibee disclosed that the couple owns 110,000 shares.

I have little knowledge about the stock market, but I can surmise that these stock holdings are worth in the hundreds of mllions of pesos. How did the couple amass so much wealth? So I dug deeper. From reliable sources, I learned that Julio J. Jalandoni  is a trusted aide of former First Gentleman Mike Arroyo and his brother, the billionaire congressman Iggy Arroyo. He is described as a “bagman” of the former FG. Add one plus one, and you can easily figure out that Julio J. Jalandoni didn’t make all that fortune through hard labor. In fact, in the tradition of Jose Pidal, one can surmise that Julio J. Jalandoni is a “front” for the former FG.

Indeed, such services deserve to be rewarded. And rewarded, Julio J. Jalandoni was. The franchise for the Small Town Lottery (STL) for Bacolod City and Negros Occidental was awarded to him before the end of the Arroyo administration, although he isn’t really from the place. Indeed, it pays to be working for the right people. And recently, sources in the jueteng industry told me that Boy Jalandoni expanded into the more lucrative jueteng operations, with Iggy Arroyo as his patron in Negros Occidental. He is reputed to reap millions every month from this illicit operation.

This is how a little known individual became a national by-word when the Senate Blue Ribbon committee began its probe into jueteng operations. Retired Archbishop Oscar V. Cruz named Boy Jalandoni as the jueteng lord of Bacolod, and when he did, many people asked: “Boy who?”

While Jalandoni’s clout and power was anchored upon the Arroyos, he has his own power-base to lean on now that his patrons are out of power. Boy Jalandoni happens to be the father of Mark E. Jalandoni, deputy ombudsman for Luzon, and the acknowledged right-hand man of Ombudsman Merceditas Gutierrez.  This detail helps explain why Mark Jalandoni was appointed to the position over a more senior and better qualified candidate, Roque Dator. Jalandoni had the blessings of FG Mike, and his wife made sure he can perform the role of back-up for the Ombudsman during crunch time.

Meanwhile, the BIR might want to open the bank accounts of Julio J. Jalandoni and his spouse, Sylvia Espino-Jalandoni. The paper trail to the Arroyo plunder could start there. And the Blue Ribbon committee should summon Boy Jalandoni to its next hearing so he can start telling his story about how he became a super-millionaire.