Double Dragon steps up expansion in 2018

It is the closest to exponential growth in business. At the least, it is phenomenal.

Double Dragon Properties Corp. is stepping up its pace of property development all across the country in 2018 to meet its target of opening 600,000 square meters in leasable space with 24 new CityMalls, Central Hubs (warehousing) and commercial/office space with its Meridian property on Roxas Boulevard. Along with it are new hotel developments carrying the Hotel 101 brand.

This was revealed by Ferdinand “Toto” Sia, President of Double Dragon Properties Corp., during the opening of the 26th CityMall, and the third in Iloilo City, on March 23, 2018 in Pavia, Iloilo.

“Right now, we already have 330,000 square meters in leasable space,” Ferdinand, younger brother of Mang Inasal founder Edgar “Injap” Sia, told this writer.

The City Malls are operated by CityMall Commercial Centers, Inc., a subsidiary of Double Dragon Properties, Inc. Double Dragon owns 64% of CMCCI and 34% is owned by SM Invesments Corp.

Ferdinand said the Central Hub at the Luisita Industrial Park in Tarlac will be Double Dragon’s first venture in industrial leasing that will also spread out across the archipelago. The project will rise on a 6.2-hectare property. The company has also acquired a 3.9-hectare property for an Iloilo Central Hub. Ultimately, Central Hub Industrial Leasing Corp., the Double Dragon subsidiary that will develop these warehousing facilities, will open one facility for every province to provide support for business and industrial growth in the countryside.

But what will perhaps be its biggest leap is the opening of the DD Meridian Park on a 4.75-hectare property in the Bay Area this year. Ferdinand said the DD Meridian Park will be inaugurated on May 7 this year. Already, Double Dragon has moved its corporate headquarters to Meridian, as have the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) and 2Go Group.

The opening of CityMall Pavia also signals the emergence of Pavia municipality from a sleepy bedroom community on the outskirts of Iloilo City into a bustling business hub. Situated just on the boundary between Iloilo City and Pavia, the new CityMall will give impetus to the economic development of the LGU. Also set to open in the next two or three months are Robinson’s Pavia and GT Mall Pavia; both are located just a hundred meters from CityMall.

Four years ago, Double Dragon surprised Iloilo when it dared build the 21-story Injap Tower on the Benigno Aquino Jr. Avenue (or known locally as the “Iloilo Diversion Road”). This first-ever skyscraper was the first Iloilo building to go higher than six floors. It houses the Hotel 101, a restaurant on the top floor and other amenities. Before this, most businessmen in Iloilo believed skyscrapers were not feasible.

The Injap Tower became the trigger for the upward development of the Iloilo skyline. Right now, the 18 story SM Strata (with its high floor-to-ceiling configuration) is rising a few hundred feet above Injap Tower which is just beside it. SM Strata now dwarfs Injap Tower. Elsewhere, other high-rise buildings in Megaworld and Atria have been completed.

The boldness with which the Sia brothers, and their sister, Marissa, in partnership with Tony Tan Caktiong and his Jollibee group of food companies (Jollibee, Chowking, Mang Inasal and Highlands Coffee) has propelled Double Dragon into a path of phenomenal growth since it went public in 2014. Its first IPO offering was oversubscribed 14X even before the opening bell rang. From P2.00 per share, Double Dragon stocks were traded at P31.30 per share at the close of the Philippine stock market last Friday, March 23, 2018.

On March 2, 2018, Reuters reported that Double Dragon’s fiscal year net income rose 71.8% year-on-year to P2.53 billion.

This can only be described as amazing for Injap and Toto whose first ventures in Iloilo City back in the 1980s were a laundry business, a color photography processing lab and a small hotel (Four Season Hotel in partnership with friends). Injap, the prime mover, was already regarded as “bold” at the time. He was young and aggressive, seeming to know no fear in his pioneering ventures. His laundry business, Mr. Labada, was the first in Iloilo; many people doubted it would last. Now Mr. Labada operates several branches in Iloilo City.

But Injap jumped into the fastlane when he opened Mang Inasal in 2003. Barbecued chicken isn’t an out-of-the-ordinary recipe that held the promise of mass appeal. In Iloilo and Bacolod cities, “chicken inasal” is prepared and served almost the same way, with the difference in the marination. Somehow, Injap concocted what could be described as the “perfect recipe” for “chicken inasal” and built his chain of Mang Inasal stores on this.

And the rest is history.

This property empire that Double Dragon is building will probably be described as “the house that chicken inasal built.”


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.