November 6, 2017

DM Wenceslao receives highest certification

MANILA, Philippines — DM Wenceslao & Associates Inc., master developer of Aseana City, announced its readiness to bid for large scale Philippine infrastructure projects following the upgrading of its recent rating to a Quadruple A (“AAAA”) construction firm.

The highest classification and license category is issued by the Philippine Contractors Accreditation Board to firms that have shown financial capability, expertise and experience to undertake extensive and large scale construction works.

The “AAAA” rating came at a time President Duterte is ramping up infrastructure spending under his Build Build Build program to boost economic growth and reduce poverty. The government will budget P8-9 trillion for new roads, railways and airports from this year to 2022.

“We are in a good position to avail of opportunities available in this ‘golden age of infrastructure,’” said Engr. Paolo Wenceslao, COO of DM Wenceslao and Associates Inc. “The Quad A license recognizes the continuous growth of our company over the last 50 years. It started from a small company and is now one of the few that holds an ‘AAAA’ license.” As of the writing of this article, only eight construction companies were granted AAAA rating.

Founded in 1965 by Engr. Delfin M. Wenceslao with a vision to transform the urban landscape, the firm debuted in the construction of roads and bridges and government housing. To date, it has completed more than 100 construction and infrastructure projects throughout the country, including ports, bridges and expressways. In 1991, it took part in a massive reclamation project in Manila Bay that includes the 200-hectare Aseana City that is now emerging as a key central business district of Metro Manila given its strategic location. Aseana City serves as the company’s landbank for its own development projects.

Aseana City is now the site of the $1 billion hotel and casino complex City of Dreams Manila, as well as retail, commercial, office and residential developments. DMWAI built two office buildings, Aseana One and Aseana Two, which house banks, business process outsourcing sites, logistic companies, among others. Aseana Three is set for completion in 2017.

Business ( Article MRec ), pagematch: 1, sectionmatch: 1 The developer has in the pipeline a number of other projects including commercial and residential buildings. Its first residential development, Pixel Residences, is set for completion by 2019. The upscale residential development has larger format apartment units catering to the higher mid-end sector of the market.

DMWAI’s construction business allows it to easily deploy construction capabilities and expertise, as well as in-house resources and personnel such as experienced architects and engineers, for its own real estate projects and its maintenance and operation of Aseana City. As a contractor, it also offers an integrated range of services and products for the entire project cycle from pre-construction planning, construction and development, to post-completion property management.

July 24, 2017

Developer cited for high-value portfolio of projects

With new hotel, retail and office developments set for completion from now up to 2021, Aseana Holdings Inc., a subsidiary of the DM Wenceslao group and developers of Aseana City, was recently cited by BCI Asia for its high value portfolio of hotel, retail and office developments in the pipeline.

BCI Asia conferred on Aseana Holdings the Top 10 Developer Awards 2017 for having “made the greatest contribution to the built environment in the prior year,” according to the BCI Asia website. The BCI Asia awards are held in seven territories in Asia namely, the Philippines, Hong Kong, Indonesia, Malaysia, Singapore, Thailand and Vietnam.

Aseana City is at the nucleus of the country’s emerging entertainment resort hub that will account for at least 1,500 more hotel rooms from 2017 up to 2020 including the newly opened 903-room Okada in adjoining Entertainment City.

This is in addition to the existing inventories of the City of Dreams, Red Planet, and Solaire Hotels and Resorts set for expansion.

Aseana City will also host the nine-hectare Ayala Aseana mall including a 350-room Seda hotel by 2019.  It is also part of an office hub covering several developments along the Bay Area projected to register a gross floor area of 739,000 sqm by 2021.

According to Delfin “Buds” Wenceslao, managing director of Asean Holdings, Aseana City is carefully managing its remaining land inventory of the 204-hectare development.

“Our vision is to create a next generation city which ensures that it will be a future proof first world business district offering the unbeatable advantage of its prime and strategic location within Metro Manila,” he said.

Aseana City’s holistic masterplan and unique entertainment and tourist uses have been its key differentiator. At the same time, it is accessible to Southern Metro Manila’s and Cavite’s populous residential areas. The completion of the LRT 1 Cavite extension by 2021 will heighten this advantage even further.

This early, the NAIA Expressway has made Aseana City accessible from Laguna and Cavite as well as the Ninoy Aquino International Airport.

July 15, 2017

Rising interest in the bay

There is a fairly good reason why local property developers and conglomerates are increasingly drawn to the available reclaimed land in the Manila Bay area.

One should note that while there has been a growing appetite for office, residential, and retail projects in Metro Manila, there is however a lack of developable land in established business districts, thus compelling many developers to look for alternative landbanking options.

“The strong demand for office buildings will be complemented by residential and retail projects hence the need to reclaim more developable land,” said Paul Vincent Ramirez, Colliers International Philippines director for valuation.

“As developable land in Metro Manila’s major business districts becomes scarce and prices continue to surge, it is only practical for developers to look for viable landbanking alternatives such as reclaimed land in the Manila Bay Area,” Ramirez added.

Rising land values

Data from Colliers showed that the value of reclaimed land in the Manila Bay area now ranges from P200,000 to P250,000 per sqm, growing by an average of 30 percent annually over the past five years.

According to Colliers, the value of land in the Manila Bay area is significantly higher than the original cost of reclaiming it, which stood at P10,000 to P20,000 per sqm. However, acquiring property in that area is proving to be financially viable given the 40 percent difference in cost compared to land in established business hubs across the country’s capital.

As a point of comparison, remaining land in the central business districts of Makati and Fort Bonifacio ranges from P500,000 to P600,000 per sqm, rising about 20 percent a year.
Gaining popularity

Also, the popularity of reclaimed developments such as the Aseana City is gaining traction among developers and this reinforces the viability of reclaimed land as a highly feasible landbanking strategy.

Colliers noted that aside from outsourcing firms, traditional companies engaged in logistics, advertising, construction, online shopping, and consultancy have aggressively been expanding in the area, on the back of the country’s strong economic growth.

“The development of mixed-use communities across Metro Manila is becoming more popular as these projects integrate the live-work-play-shop lifestyle. The reclaimed land in the Manila Bay area is a feasible option for mixed-use projects as shown by the growing popularity of D.M. Wenceslao’s Aseana City,” Colliers said in a statement.

“The viability of mixed-use projects in the reclaimed Manila Bay Area is strengthened by the mix of completed and proposed public infrastructure projects nearby including the NAIA Expressway, Light Rail Transit (LRT) 1 Cavite Extension, Southwest Integrated Terminal, Sangley Airport, and Metro Manila subway,” it added.

According to Colliers, there are currently five active reclamation projects in the area

The 407-hectare New Manila Bay City of Pearl project that will be developed by a consortium led by UAA Kinming Group Development Corp. and its foreign partners.

Aside from typical township features such as office, residential, educational, retail, and medical projects, the integrated community will also house a driverless monorail, an 8,000-seat multi-purpose stadium, and an 18-hole golf course.

The Manila Solar City Project will reclaim 148 hectares of the waterfront, stretching from the Cultural Center of the Philippines to the United States embassy. The P23.6 billion project is envisioned as an entertainment hub that will have the first international cruise ship terminal in the country.

The 360-hectare Pasay City Reclamation Project covers the foreshore and onshore Manila Bay area within the city’s jurisdiction. The P57.5 billion project is near the existing Mall of Asia Complex, just across the Libertad Channel.

The 650-hectare Navotas City Coastal Bay Development Project—or the Navotas North Bay Business Park Project—will be developed around the proposed floating expressway that will connect the province of Bataan to Manila. It is estimated to cost P103.8 billion.

The Las Piñas-Parañaque Coastal Bay Reclamation Project involves the reclamation of 635 hectares of shallow coastal area from Asia World Properties to the municipality of Bacoor in Cavite. The P101-billion project is near the Las Piñas-Parañaque Critical Habitat and Ecotourism Area and will be developed as a mixed use project with spaces for commercial, residential, industrial, institutional, and educational zones.

 

July 11, 2017

Delfin J. Wenceslao: The construction man as a nationalist and problem solver

WHEN Delfin J. Wenceslao, the chairman of DM Wenceslao, one of the leading construction companies in the Philippines walked into the room, the first thing I noticed was the stark contrast between his platinum hair and his sunbaked skin betraying years of exposure to construction outdoors.

He has overseen multiple infrastructure projects under many regimes and agrees with the author that a true sign of a country’s greatness is in its state of infrastructure.

Born into ‘Interesting Times’, thriving in special situations

He was born a few months after the war broke in Bulakan, Bulacan, and he speaks nostalgically about the great difficulty through the war, the nationalist fervor of his father, then a civil engineer and a guerilla fighter devoted to the family. Reluctantly, due to reasons of safety, the family had to move to Manila and founded the construction company, which is now one of the largest in the Philippines.

He continues to closely monitor Bulacan and his roots, waxing optimistically as I do that Bulacan, Malolos, will soon be the emerging gateway to a Northern Development Corridor that links to both  Pampanga and Bataan(more on this in another column).

Like any Bulakenyo, you can feel his nationalistic fervor as he spoke of sharing provenance with national heroes, as Del Pilar, and even guerilla fighters as Jesus Lava, founder of the New People’s Army

These are great men who had to thrive under what I refer to in my practice as “special situations” and Wenceslao is not different from them. After a few moments of chatting about our shared provenance (this author is from Malolos), I easily understood where the revolutionary thinking to create what is today one of the biggest and most successful reclamation projects in the country has come from.

1989, reclaiming the impossible, crazy dream

In 1989 the consortium led by Wenceslao signed a contract with the Aquino government to “create assets out of water”, which is now ASEANA City and its immediate environs.

The word “reclamation”, which is the process of creating sustainable and high value land out of bodies of water. Usually hounded by issues, the reclamation project undertaken by Wenceslao was virtually unassailable because they entered an arrangement that delivered maximum returns at no cost to the government.

The Aquino government at that time was fraught with uncertainty, but thrive they did. No one wanted to respond to the bid as the government was virtually bankrupt.

“The primary reason why we got it, was because no one wanted to take it. Everyone said it was an impossible dream. Kalokohan daw yung ginagawa namin. The project was just initially to start the road…the government had no money…so we devised a way of generating value.”

Anyone who is standing at the bay city area,  from what is now called “City of Dreams” part of the area reclaimed by Wenceslao, will be smiling at the irony.

The construction man, the nation builder in a time of Duterte’s ‘Build Build Build’

“Construction is but a series of solving problems for the country,” said the former president of the Philippine Constructors Association (PCA).

As he focuses more on “solving the problems of the country” through infrastructure, and less on business, he is heartened to see the “Golden Age of Philippine Infrastructure” come about possibly under the Duterte administration. In an earlier speech he delivered as former president of the PCA, he decried the fact that the infrastructure sector was lagging behind its neighbors in Asia and that the government should do something to make the country more attractive to investors.

The industry he so very much loves and has been instrumental in building, is considered the “mother of all industries” and creates various linkages in its value chain from the GDP to investments, foreign exchange to job generation.

Nearly 72 The “Build, Build, Build” Program projects are to be bid out in what is an attempt to usher in the Golden Age of Philippine infrastructure.

“Build it and they’ll come’ is the common-sense solution to our problems,” Wenceslao said. In terms of infrastructure, we are easily behind by 10 years compared to our Asean neighbors, including communist Vietnam that’s currently also experiencing their Infra Golden Age.

He has been privileged to see the “Infrastructure Strategy” of all presidents post Marcos.

Corazon C. Aquino’s regime was defined by “new beginnings”, considering the lack of experience and lack of resources. Aseana was signed during her time but implemented during Fidel V. Ramos (FVE) and Gloria Macapagal Arroyo’s time. “FVR  is very decisive.”

For him, Arroyo set the right economic fundamentals by lowering interest rates to as low as 6 percent and set up the conducive environment related to infrastructure. Former President Benigno S. Aquino III was extremely cautious about infrastructure, which is a stark contrast into the almost bullish behavior of the current administration.

Looking into the future

The excellent networks and partnerships that have been forged by Wenceslao from the Ayala to the SM Group speaks of the excellent fundamentals and planning foresight that has gone into Aseana, the crown jewel of the DM Wenceslao Group.

Of the many construction companies in the Philippines, few have survived. Fewer still are those with a continuity and succession plan. For Wenceslao, their succession is in place with son Buds Wenceslao at the helm and the pillars of sustainability and mobility being at the forefront of what is to be the most walkable city in the future. DM Wenceslao prides himself in being a very patientman, but it doesn’t seem like he has to wait very long to see the Golden Age of Philippine Infrastructure come about.

February 17, 2017

OBG talks to Delfin J. Wenceslao Jr., Chairman, D.M. Wenceslao & Associates Inc.

What types of construction business might sustain demand for engineering, procurement and construction contractors in the near term?

DELFIN J. WENCESLAO JR: There are 2 general sources of construction business, the government and the private sector. On the government side, construction business is governed by national budget and disbursed through process payments. Currently, out of a 3 trillion pesos budget, 25% has been allotted to infrastructure and is generally awarded under the procurement law to contractors licensed locally. These qualified Philippine contractors are categorized on different levels according to technical qualifications and financial capability. On the other hand, private sector construction is open for real estate developers as they can privately finance the infrastructure work, with many developers actively engaged in the construction of roads or bridges.

This scheme, however, is complicated when government asks private sector participation in infrastructure in which they do not have a budget through a public-private partnership (PPP), which comes in solicited or unsolicited forms. Under a solicited PPP, a project is bided out by the government to a number of qualified proponents and it undergoes standard project financing, design and construction. On the other hand, unsolicited PPPs are open and carry zero risk or cost to government as it is purely privately funded. Generally a proponent would submit a proposal and a viability study to the government for approval, and this proponent would be one with deeper pockets as these projects require large financing requirements. A classic example of this type of the project is the over 20 billion NAIA Expressway, which was an unsolicited project by San Miguel Corporation.

During the past government administration, there was not enough receptiveness to unsolicited bids, which is why the 12 major PPP projects awarded were all solicited bids. This was because it was assumed that unsolicited proposals are subject to potential graft given that they it do not undergo the usual procurement process. However, these projects would still be subject to challenge by competing bidders and the risk factor would belong to the private sector. In an unsolicited proposal, a private company would develop the studies for the project, shoulder the risk and invest the money; therefore, it will not put the government under any risk of failure. Additionally, a private company would need to be experienced in the type of project to be developed or else it would not subject itself to that level of risk. This shorter learning curve would enable a faster development process for the project from concept to implementation. Local governments units (LGUs) have been more willing to accept unsolicited proposals for PPP projects as it is the private sector that shoulders the cost, however, the problem with dealing with LGUs is that they have a short term tenure and there is a high degree of unpredictability on whether a new leadership would stop a project.

The incumbent administration has opened the possibility to entertain unsolicited projects to fast-track much needed infrastructure development throughout the country, unlocking the potential for the private sector to be more active and significantly increase the pipeline of projects that can be completed in the medium term. The private sector will look for financing and technical capability to materialize these projects, however, they will be better equipped to take the risk. To achieve long-term development of infrastructure, the government should be more consultative with the private sector given the latter’s experience factor is bigger.

What advantages do unsolicited proposals pose for infrastructure development? In what ways can players mitigate risks involved in project development?

WENCESLAO: A major difference between solicited and unsolicited proposals is the amount of consultant work involved. For solicited projects you have to make sure that the proposal is covered by extensive studies and consultant work, whereas the unsolicited proposal rests on the responsibility and funding of the proponent. A major attractiveness of unsolicited projects is that it allows for a private company to manage its own risk and protects its in-house knowledge whereas in a solicited proposal it would have to expose its experience as part of the process.

To undertake an infrastructure development project is ultimately a question of the expectation of risk. While some projects would not get into a project because of lack of previous experience, another would be more inclined to make an unsolicited proposal to government to tap into new opportunities. If a player has no previous experience in land reclamation or highway construction, then participation in certain types of projects that include those components would not be viable. In the same way, if a player is not comfortable with the lengthy structure of a build-operate-transfer (BOT) project where it would need to put its own funding and collect after completion of the projects from tolls or other fees for a 25 year period, then it will not be inclined to participate in those types of projects and prefer progress payments from the government. Business models will depend on risk assessments, for instance, if a private firm is not prepared to assess the risk in a manner it is comfortable with, it will not do it. Additional factors that add to a project’s risk profile is the lack of coordination between LGUs and other government agencies that may interfere or compete with awarded projects.

November 7, 2016

Expressways boon to tourism

SAN JOSE CITY, Nueva Ecija—Cousins Priscilla Ida and Karenina Anne used to have more than 15 hours bus travel along the Maharlika Highway from Manila to their hometown of Gonzaga in the far northeast of Cagayan Valley.

But thanks to the new 66.4-km Central Luzon Expressway, which connects it to the Subic-Clark-Tarlac Exchange and the Tarlac-Pangasinan-La Union Exchange, travel in these areas has heftily cut travel time.

They will no longer have to take the road that snakes through Plaridel in Bulacan and Gapan in Nueva Ecija, but will instead go through the Central Luzon Expressway and pass through the towns of Victoria, Guimba and Cabanatuan after the Tarlac City junction on the present Subic-Clark-Tarlac Exchange north end.

Specifically, travel hours have also been shortened from Olongapo, Bataan, Pampanga, Tarlac, Pangasinan, the Ilocos provinces, Baguio and the Cordillera region and Cabanatuan City in Nueva Ecija to the Cagayan Valley all the way to the coastal towns facing the Babuyan Channel.

Wilma and her cousins Ceferina and Loida have also experienced faster travel time from Metro Manila to their hometown in Paoay, 470 kms north of the capital.

This is the same experience for Cresta and her brother, who went home to this Science City, the seat of the Carabao Center and the Central Luzon State University in the heart of Central Luzon’s rice granary Nueva Ecija.

Public Works and Highways officials have said a loan agreement for the 30.7-km Tarlac-Cabanatuan section southwest of here had been signed by Manila and Tokyo.

Officials said the construction of the four-lane project would be financed through the Official Development Assistance while the operation and maintenance would be under Public-Private-Partnership.

As public works activities buzz round the clock, residents said businesses are getting their proverbial slice of the pie by slowly expanding to the Central Luzon region because of new infrastructure projects.

These projects are slowly transforming the rice-rich region into what can be the country’s next major investment destination, according to sources close to the projects.

Official sources said procurement for consultancy services for detailed engineering designs on these projects are in high gear.Phase 1 of the Central Luzon Link Expresway was estimated to cost around P15.344 billion.

This is interconnected with the Luisita interchange of Subic-Clark-Tarlac Expressway, running all the way to the northern countryside as well as Baguio, the country’s summer capital, Nueva Ecija and Cagayan Valley in the northeast.

Exact figures on motorists and commuters who are driving through the Expressway between the North Luzon Expressway, which cuts through Bulacan and Pampanga, and the vast fields of Nueva Ecija are not known.

But property and business analysts are agreed construction of these expressways are certain to contribute to the development of the regional growth centers in Central and Northern Luzon, decreasing in the process over-concentration in Metro Manila for socio-economic activities.

Glistening in the summer sun are the two major arteries, according to officials, identifying these as the 89-km Tarlac-Pangasinan-La Union Expressway and the 66.4-km Central Luzon Link Expressway Phase I and II, which cost P12.469 billion and P14.2 billion respectively.

These are under the Public-Private-Partnership scheme, according to officials of the Dept. of Public Works and Highways.

The same officials said TPLEX, expected to benefit 13,000 travellers each day, has started providing unhampered and direct access from Tarlac interconnecting SCTEX up to barangay Carmen in Rosales town in Pangasinan Section 1 which, officials said, has reduced the travel time from two hours to 30 minutes.

Section 1, which runs 48.6 kns, has been completed. Construction of the other two sections — Carmen-Urdaneta, Pangasinan section, and Pangasinan-Rosario, La Union section – is still going on.

TPLEX is done by an all-Filipino consortium composed of R.D. Policarpio and Co. Inc., C.M. Pancho Construction Inc., New Kanlaon Construction Inc., D.M. Wenceslao and Associates Inc., J.E. Manalo and Co. Inc., and D.M. Consunji Inc.

By July 2014, the expressway has provided easy access to Cordillera and Central Luzon regions since it has linked it to the North Luzon and Subic-Clark-Tarlac expressways.

DPWH officials said Phase 1 of the Central Luzon Link Expressway runs from Tarlac to Cabanatuan, the latter 43 kms from here, and Phase II, from Cabanatuan to San Jose.

In the meanwhile, Priscilla Ida, Karenina Anne, Cresta and her brother share the line of tourism officials the construction of the expressways and the slowly moving dispersal of industries to the Central Luzon area are a big boost to tourism in the country’s flatlands.

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