Do You Need a Real Estate Consultant Philippines?
I was looking at the terms people were using to find our real estate services company, Havitas Developments, words like “real estate consultant Philippines”, when I realized not much is known about real estate consulting firms in the Philippines.
There are a number of international and Philippine real estate consultancy firms operating in the country. A few provide project development management and advisory but majority are focused on transactions, specifically brokerage and leasing. To my knowledge there are only a few companies in the Philippines solely providing real estate development services.
Why Would You Need Real Estate Consultant Services?
There are many definitions about real estate consulting from a foreign perspective. I’d like to use some of the terminologies under the Philippine experience for real estate services.
The Philippines is one of the few countries in the world that require a licensure exam for Real Estate Consultants. What are Real Estate Consultants?
A licensed Real Estate Consultant should not be confused with the generic rank or title some Philippine developers use for their in-house sales agents: some are called Property Consultants. A Real Estate Consultant Philippines is one of 3 licensed real estate professions covered by Republic Act 9646, or The Real Estate Service Act of the Philippines (RESA).
The RESA Law governs the practices of Real Estate Salespersons working under Real Estate Brokers, Real Estate Brokers, Real Estate Appraisers and Real Estate Consultants.
At its simplest, a Real Estate Broker functions as the intermediary between a seller and a buyer or a lessor and a lessee, whereas a Real Estate Appraiser provides a professional opinion on property values.
What then does a Real Estate Consultant do? RA 9646 defines it as follows:
Real estate consultant – a duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.
Let’s take it one by one. To make it easier to visualize, I’ll use sample engagements based on the RA 9646 definition.
Acquisition
Acquisition could be as simple as buying a property. Some will ask if that isn’t more of a real estate brokerage task? The licensed real estate broker, as defined in RA 9646: acts as an agent of a party in a real estate transaction to offer, advertise, solicit, list, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein.
The key phrase, from a brokerage standpoint, is the “meeting of the minds”. One party has something to sell and another party wants to buy it. The activities, actions and resulting negotiation lead to the meeting of the minds between the parties and the conclusion of the transaction.
The acquisition, and later on disposition, contemplated here under Real Estate Consultants is a different animal and is more in line with real estate projects. It answers questions like:
- What should be the acquisition price for a piece of land when developing a 25 hectare property in Laguna into an affordable (open market under PD 957) house and lot development with 45% open space, offering houses at P5 Million to P6M?
- How do we handle the acquisition when half of the property is titled and the other half only covered by tax declarations?
- A quarter of the property is occupied with informal settlers, how do we handle that?
Enhancement
Under “Enhancement”, issues that a Real Estate Consultant will answer may be the following:
Situation: Our 10-year old neighbourhood shopping mall is at full occupancy. We own an adjacent property of 3,000 sqm.
- How can we expand our mall footprint without disrupting our operations?
- How are other malls doing in our city?
- Can the market absorb the additional space? What should be our tenant mix?
- What should be the sizes of the units in our mall?
- What should the lease arrangements be: fixed or percentage of sales?
- How can we attract a more upscale tenant mix?
Preservation
Situation: Our family owns a landmark 1.1 hectare property in the heart of Metro Manila. We want to ensure that our well-preserved ancestral house is preserved and incorporated into the design of a new real estate development.
- What can we do to develop our property?
- What would be the cost and returns if we develop the property ourselves?
- What market should we tap?
- What would be the returns if we go into a joint-venture with a real estate developer instead?
Utilization
Situation: We own 12 hectares in Pampanga that is right beside a major highway connecting 2 cities. There are upcoming industrial parks around us.
- What can we do with our property?
- What is the highest and best use for our land?
Disposition
Situation: We own a parcel of land in Metro Manila right beside one of our facilities that are currently occupied by informal settlers. The pandemic has placed additional pressure on our finances and the sale of the property sans informal settlers is needed.
Conception, Planning, Management and Development of Real Estate Projects
Situation: We have several prime properties in Metro Manila and Cebu.
- Which should we prioritize and develop?
- What should we place there?
- What market should we tap?
Conception – What’s our development concept? What type of real estate product?
Planning – Should we phase the project? What’s the phasing plan? Which component goes first?
Management – How do we start? What talents do I need in-house? Which tasks can I outsource?
Development – Do I need a masterplan? How do I launch? What brand do we use? Should I co-market with a different brand? How do we sell the project? Which architectural firms are great with this kind of development? Which general contractors have experience with my kind of development? How do I secure the License to Sell? How do I market and sell the project?
Real Estate Development
At the heart of it, I think the Real Estate Consultant, as contemplated by Philippine law is really geared towards real estate development. It requires a very good grasp of development finance (which you can study), applicable laws and statues that govern real estate development in the Philippines (which you can also study), as well as a masterful grasp of the Philippine real estate market as a whole.
What would be difficult to acquire without going through it is actual real estate development experience.
When Do You Need the Services of a Real Estate Consultancy?
Like all business ventures, there are major risks involved when you go into real estate development. You need to manage those risks with expert knowledge and actual experience.
I always imagined that our primary clients for our real estate development services would be landowners or new players in property development. They do form a huge portion of our portfolio but we’ve also worked with some of biggest players in the Philippine real estate industry as well as major international real estate developers.
The international developer tapping local talents prior to entering a market is a no-brainer. It’s a must. For the established names in Philippine real estate you would expect they would have no need for our real estate consulting firm, but it turns out they do.
Real Estate Consultant Philippines
Our project development and management company:
- Provides the client with new development concepts coming from the blank slate of a market, highest-and-best-use, and project feasibility study; or
- Our service either validates or expands on an earlier idea that they have come up with.
Either way, a Havitas Developments’ study will bring confirmation or repudiation of the soundness of a planned business decision. Take note that the study is led by experienced senior executives from the major real estate developers in the Philippines.
So when do you need the services of a real estate advisor firm in the Philippines – before you place a billion peso bet on that real estate idea.
Note that the study is just the first step in the whole real estate development process. There’s a whole gamut of activities that take place between the birth of an idea to actually seeing the property come to light. Havitas Developments is highly experienced in the end-to-end process: from concept to actual execution. If you’re planning to go into some form of real estate development, please get in touch with us.
ERWIN M. DE PEDRO
Co-Founder | Chief Marketing Officer
Havitas Developments Corporation
Erwin has almost 3 decades of Marketing experience with more than 20 years dedicated to real estate marketing. He previously headed marketing for Eton Properties Philippines and Suntrust Properties. He is a Licensed Real Estate Broker, a Licensed Real Estate Appraiser (Top 8) and a Licensed Real Estate Consultant Philippines (Top 10).