CONSTRUCTION TRENDS AND PRACTICES

AMONG REAL ESTATE DEVELOPERS

IN ANGELES CITY

A Thesis Proposal
Presented to the
Faculty of the Graduate School

In Partial Fulfillment of the

Requirements for the Subject
MBA Research Methodology

by
Wilbert Canchela Venzon
December 13, 2014

APPROVAL SHEET
A Thesis Proposal Entitled
CONSTRUCTION TRENDS AND PRACTICES AMONG REAL ESTATE
DEVELOPERS IN ANGELES CITY
Prepared and Submitted by
WILBERT CANCHELA VENZON
in partial fulfillment of the requirements for the degree MASTER IN BUSINESS
ADMINISTRATION is hereby accepted and recommended for ORAL EXAMINATION

Irene M. Ebal, Ed.D

Adviser

Approved by the Board of Examinees

RENATO P. RUBA, Ph.D

Chairman

MAGDALENA D. BAUTISTA, Ed.D

Member

GUILLERMO ANDRES, MBA

Member

Accepted and Approved in Partial Fulfillment of the Requirements

for the degree MASTER IN BUSINESS ADMINISTRATION

RENATO P. RUBA, Ph.D

Executive Dean
December 13, 2014

ACKNOWLEDGEMENT

The researcher feels immense pleasure in articulating the propounded regards and deep
sense of gratitude to many people who played a substantial role in various forms in the
successful completion of this research. The researchers have now the opportunity to convey the
gratitude for all of them.

The researcher would like to acknowledge the respected member of the faculty for their
eager interest that enables to complete this research. This research would not have been possible
without the support of Dr. Irene M. Ebal for her constructive criticism and being a virtuous guide
who patiently resolved all queries and providing adequate recommendations.

The researcher would also want to express thanks to all real estate brokers and developers
who enhanced the outlook for this research.

The researcher would like to express love and gratitude to its beloved wife, Mary Eresa
C. Venzon and son Raven Fredric C. Venzon, to its parents Robert Charles and Marceliana F.
Rankin for their constant support and endless love, and thankful for them for giving the
researcher the life that is always demanded.

Lastly, the researcher would like to express its gratefulness to the omnipresent Almighty
for giving them inner strength and guidance.
WCV

DEDICATION

To my wife and son who have been there for me......

To my parents and friends who shares happiness and love......

And to the God Almighty who saves and cleanse my sins away.........

WCV

Chapter I
The Problem and its Background
INTRODUCTION
When looking at the numerous real-estate projects being implemented now horizontally
and vertically residential communities, office towers, hotels, shopping malls, supermarkets and
other commercial developments generally, however, demand for real estate remain robust. The
concerns in real-estate going bust only come up because people view the developments from a
local perspective. But viewed from the perspective that takes into account the stage of real-estate
development in our regional neighbors, like Malaysia and Thailand, the Philippines is actually
still catching up. Were still far behind them, considering Singapore, Hong Kong, Beijing or
Shanghai, which are way ahead of the Philippines. It is to feel apprehensive that this real-estate
boom in the Philippines, which is so far, the longest in the property sectors history, has already
reached its peak and is about to go bust.
Even monetary authorities appeared to have the same apprehension. They have adopted
stricter regulations that are apparently aimed at reducing banks loans to real-estate companies.
Their concern may be justified when it comes to small segments of the property market.
So, it may be disappointed that continuing to lag behind neighbors in real-estate
development, theres still a lot of room for the real-estate industry to grow.
Instead of maintaining a narrow, local perspective, it should look at real-estate
development from an Asian perspective, so we can begin to catch up with our neighbors.
Attaining a level of real-estate development that is on par with our neighbors also means

attaining a comparable degree of economic progress. With a huge backlog in housing units that
continue to outstrip supply, and considering that housing is a basic necessity for Filipinos, expect
the robust growth in the real-estate industry to continue, at least in the foreseeable future.
At this point, the only stumbling block to this robust growth is a dramatic drop in the
Philippines economic growth. Despite economic growth slowing down to 5.7 percent in the
second quarter of 2014, local and foreign economists, as well as multilateral institutions, expect
the Philippines to emerge as the fastest-growing economy in Southeast Asia and second only to
China this year.
This is because our economic fundamentals remain strong. Remittances from overseas
Filipino workers (OFWs) and foreign-exchange receipts from the business-process outsourcing
(BPO) industry continue to grow, interest rates and inflation remain manageable, and the
Philippines continue to attract foreign investors.
The BPO industry, in particular, drives demand for office buildings, while the increasing
number of tourist arrivals encourages the construction of more hotel rooms. OFWs and BPO
employees account for a major share of the residential market. Also, rising wages in local
companies, as well as successful entrepreneurs, add to the growing middle-class population,
which, in turn, boost demand for housing.
Recent studies by private groups also rank the Philippines as the most favored destination
of foreign investments in Asia. These investments will also boost demand for office space, as
well as for residential units.

This is not to say, however, that the real-estate industry will stay on a straight, upward
line of growth. There will be ups and downs within years or between years, but the general trend
will still be upward.
It should also consider that the real-estate industry drives the growth of the construction
industry, which generates a lot of employment and stimulates other businesses. Together, these
activities contribute to economic growth.

CONCEPTUAL FRAMEWORK

In the first step investigated in this paper the different developer types have different
preferences in terms of location. They started examining the location choice since it can argue
that any developer must have made their location choice before they can start constructing since
a piece of land is the principle resource for real estate construction. Also, location is very
important because it cannot be corrected at a later stage. However, the models presented here
have to be seen as a first step towards a more general model which would ideally not only
determine the location of a development project but also its size and characteristics.
They investigated different location choice behavior by estimating discrete choice models. The
group observation on development projects according to developer types and the differences in
the effect of explanatory variables.

STATEMENT OF THE PROBLEM

GENERAL PROBLEM
Real estate development in the country in general needs major reform and rehabilitation
aside from those that were affected by calamities like Eastern Visayas that was devastated by
Super Typhoon Yolanda, and Bohol that was struck by a 7.2-magnitude earthquake.
The real estate recovery will gain momentum in 2015. This should be good news to an
industry that has experienced a recovery of fundamentals that has been much slower than it is
used to after recession. In fact, the pace of the recovery can make it difficult to spot the signs of
improvement until they are in full swing. At first glance, many of the trends identified for 2015
are similar to those identified in previous years. The trends were relevant when originally
identified, but the slower pace of this recovery prevented them from coming to fruition in the

expected time frame. The difference for 2015 is that the market has progressed further through
the economic and real estate cycles and we are now seeing real evidence that the trends have the
momentum to finally make an impact on the real estate market.
The real estate market continuous to move through the recovery phase of this cycle. The
trends identified for 2014 portend both opportunities and challenges for investors in 2014.
Economic and demographic changes will drive demands for real estate that are familiar and some
that will require to be attracted to the asset class, and the deployment of this capital will include
more investment strategies that will involve a wider set of markets and property types. The
economic projected to continue this year, and with its rising interest rates. The expected impact
of rising interest rates ranges from little to potentially leading capital to flow into alternative
asset classes.

SPECIFIC PROBLEM
In order to achieve the purpose of the study, the following research questions where develop:
1. What is the profile of the respondents?
1.1.

Real Estate broker

1.2.

Real Estate developer

2. What are the trends and practices in real estate developments described in terms of:
2.1.

Sources of Finance

2.2.

Rates of the property

2.3.

Land acquisition

2.4.

Location of the property

2.5.

Types of construction developments

3. Is there a significant difference in the trends and practices of real estate developers and
brokers with regards to real estate development?
4. Is there a significant difference in the perceived trends and practices when respondents
are grouped according to profile?

HYPHOTHESIS

Another year and another look at the trends and practices among real estate brokers and
developers are expected to affect real estate in the coming year and beyond. Its a healthy
discipline for the industry, taking a period look ahead to evaluate the contenders and pretenders
among the forces shaping the real estate business. By the survey, by a review of data, and by a
thoughtful sitting through of fact and opinion to arrive at considered judgments, nothing is taken
for granted. Each prospective trend has to prove itself to a cross section of the industry if it is to
make the list. Since real estates value is a function of how it serves its users workers, consumers,
businesses, travelers, homeowners, and apartment renters, they look to human elements for signs
of trends. Demographics, labor force characteristics, location preferences, and motivations
discerned by observed behaviors and the interpretation of real estate professionals are among the
most reliable indicators of trends and practices. The physical attributes of the build environment
also count. The researcher also consider how properties either enhance or detract from
productivity. None of those issues has emerged overnight. None of them will go away soon.
Tackling them effectively can enhance the property markets. Ignoring such issues threatens the
economy generally and the property markets in particular.

SIGNIFICANCE OR IMPORTANCE OF THE STUDY

It is requisite to recognize the reason of the study on how the real estate brokers and
developers practice the construction trends in acquiring the land, financing materials, the
demography, and types of building in construction. Therefore, demonstrating its effects due to
government policies, unjustified market rates, financing agency condition which will help in
analyzing the factors affecting the build in environment in Angeles City Territory
DEFINITION OF TERMS
1. Real Estate A property consisting of land or buildings.
2. Real Estate developer A person who buys and develops houses, buildings and land in
order to sell them and make a profit of them.
3. Land The part of the earths surface that is not covered by water, as opposed to the sea
or the air.
4. Building A structure with a roof and walls, such as a house, a school, store, or factory.
5. House A building for human habitation, especially one that is lived in by a family or
small group of people.
6. Demography The study of statistics such as births, deaths, income, or the incidence of
disease, which illustrate the changing structure of human populations.
7. Trend A general direction in which something is developing or changing.
8. Practice The actual application or use of an idea, belief, or methods as opposed to
theories about such application or use.
9. Acquisition The learning or developing of a skill, habit, or quality.

10. Property - A thing or things belongings to someone; possessions collectively.

11. Broker A person who buy and sells goods or assets for others.
12. Economy The wealth and resources of a country or region, especially in terms of the
production and consumption of goods and services.
13. Market A regular gathering of people for the purchase and sale of provisions, livestock,
and other commodities.
14. Industry Economic activity concerned with the processing of raw materials and
manufacture of good.
15. Community A group of people living in the same place or having particular
characteristics in common.
16. Hotel An establishment providing accommodations, meals and other services for
travelers and tourist.
17. Apartment A suite of rooms forming one residence, typically in a building containing a
number of these.
18. Raw House One of a series of houses, often similar or identical design, situated side by
side and joined by common walls.
19. Condominium A building or complex of buildings containing a number of individually
owned apartments or houses.
20. Construction The building of something, typically large structures.

SCOPE AND LIMITATION OF THE STUDY

This study will not address the history of standard practices among real estate developer nor
will it cover the PCAB certification process in detail. Neither will this study address the
appropriateness of using sustainable practices or the benefits of such practices. While these are
valuable topics, they have been covered in other recent research and are not within the scope of
this paper. Instead, this study will focus on the visible trends that are documented within the
practices of real estate developer in the construction industry and will seek to interpret how these
trends are changing the construction industry.

CHAPTER II
REVIEW OF RELATED LITERATURE AND STUDIES

CONSTRUCTION TRENDS AND PRACTICE IN REAL ESTATE DEVELOPMENT:

A LITERATURE REVIEW OF RESEARCH IN CONSTRUCTION MANAGEMENT

Isilay Akkoyun1 and Attila Dikbas2

Project Management Centre, Istanbul Technical University, Ayazaga Kampusu, Istanbul, 34469,
Turkey

Increased competition, customer demands, and higher quality requirements in the global
environment have all forced the construction industry to pay much more attention to the concept
of trends and practices over the last two decades. As a result, there has been a substantial body of
literature on trends and practices in the discipline of construction management. This paper
analyses the most recent literature on trends and practices published in top-ranked construction
management journals to identify the aspects and features of trends and practices studied in
different context. Peer-reviewed articles published in major construction management journals
are included while grey literature has been excluded. The objective of this research was to
examine and classify systematically the literature dealing with different facets of the construction
trends and practices research domain by using a meta-analysis instrument as methodology. Based
on this literature reviews findings, the paper maps research trends and identifies gaps in current
knowledge for future research.

akkoyunis@itu.edu.tr
dikbas@itu.edu.tr
Akkoyun, I and Dikbas, A (2008) Performance in construction: a literature review of research in
construction management journals. In: Dainty, A (Ed) Procs 24th Annual ARCOM Conference, 1-3
September 2008, Cardiff, UK, Assocition of Researchers in Construction Management, 717-726.
2

Trends and practices in construction management has been the subject of considerable
research, especially over the last two decades with the development of a wide variety of
innovative management philosophies, approaches, and techniques such as continuous
improvement, just-in-time; improvements in total quality management concept, and quality
assurance standards; and automation that has resulted in marginal improvements in construction.
There can be little dispute that trends and practices is the area of importance in the field of
construction management research. This can be partly explained by the growing trends as
mentioned above. In any discipline, academic journals play a vital role because they are the
primary context for communicating and exchanging research experience, shaping educational
programs and assessing academic careers (Pietroforte and Stefani 2004). Scholarship is a
cumulative concept; no matter what is studied or written, researchers are standing on someone
else's shoulders and scholars must say something new while connecting it to what has already
been said by others. A literature along salient conceptual and research methodological
dimensions as part of a doctoral study. The historical analysis of mainstream academic journals'
content can show patterns of evolution within a discipline, thus enabling assessment of the
impact of contributions, setting more rigorous research efforts, mapping existing areas of
research and changes in a discipline, detecting emerging research topics and patterns of
collaboration, and controlling research policies at a national and institutional level (Pietroforte
and Stefani 2004;Betts and Lansley 1993). Within all fields of study there is a need for
knowledge of the ways in which an academic discipline develops and for strategic overview of
main dimensions representing the subject matter and classifications of relevant research methods
and tools. In many disciplines, studies that address these concerns are termed meta-analysis
(Betts and Lansley 1993). In each academic discipline, there are major journals that have high

impact scores resulting in them receiving the largest number of submissions and which therefore
can be selective in choosing their content. An established refereed academic journal is a
repository of good and novel insights gained from data-based research, scholarly enquiry,
rigorous analysis of experience and careful logical debate about an issue or phenomenon (Betts
and Lansley 1993). As Betts and Lansley (1993) indicated, the analysis of large numbers of
papers can reflect important patterns and biases in a discipline. Also, studies of research patterns
can be important indicators for understanding researchers' preferences and mainstream themes
related with the subject. Performance related research is looming large in the field of
construction management discipline, yet there have been few traditional literature reviews only
partially addressing performance related issues and which do not address aspects and features of
performance studied in different contexts. Lin and Shen (2007) analyzed construction
management journals between 1998 and 2004 with a specific focus on performance
measurement. This investigation considered patterns of published output from peer-reviewed
articles in mainstream construction management journals. In this regard, this paper addresses the
following three objectives; a) To assess recent performance research in construction management
journals. b) To map patterns in the articles that concerned performance against proposed metaanalysis framework constructs. c) To look at some major issues in trends and practices
measurement research literature and present a structured framework for classification and
analysis. This paper sets out not to review the trends and practices measurement literature at
length per se, but rather to contribute to a systematic classification through the presentation and
use of a framework for the categorization of literature linked to the subject of trends and
practices.

METHODOLOGY
There has been a substantial body of literature on the subject of trends and practices
measurement in the discipline of construction management. In view of the large literature on the
subject of trends, this study includes the most recent literature on the subject published in topranked construction management journals to identify the aspects and features trends and
practices studied in different contexts. In order to obtain the most recent research in the field, the
review time frame was limited to a ten year period (1999-2008) of publication. To ensure higher
academic standards, peer-reviewed articles published in six major construction management
journals are included while grey literature has been excluded. They are analyzed and classified
through structured meta-analysis framework constructs.
META-ANALYSIS
One of the most-used approaches to integrating the findings of quantitative studies is that
of meta-analysis, described by Glass (1976). Glass (1976) uses the term meta-analysis to refer to
the statistical analysis of a large collection of analysis results from individual studies for the
purpose of integrating the findings. The meta-analysis which was carried out in this paper is
different from Glass (1976)s definition and can be defined as a disciplined analysis of published
research, in order to identify commonalities and differences in method and/or content, to classify
papers within a pre-determined taxonomy, or to abstract a new taxonomy. (Clark, 2000).
Advantages of meta-analysis procedures for reviewing literature include enabling to see the
"landscape" of a research domain, and identifying focused research questions while considering
statistical significance in perspective. The traditional approach to literature review is to collect
together all that can be reached and to summarize, in narrative style, the researches and the key
points arising from them. Literature reviews can be more helpful and serve their purpose better if

certain procedures are used for minimizing subjectivity in the process of selecting and reporting
findings. In this regard, as emphasized by Betts and Lansley (1993), an important
methodological issue is in constructing a classification framework for the content and style of
papers.
LAND DEVELOPMENT MODELS
Land Use Models (LUMs) have been developed since von Thunen (1826) to have a better
understanding of how land use evolves in a given area. In this context use means activities of
economic actors, which use space for their purpose. In the beginning it was aggregate s patiotemporal modeling (Hotelling, 1929, Christaller, 1933, Lsch, 1962). Alonso (1964) developed
bid-rent theory which sees prices and locations as the outcome of auction or bidding processes of
urban actors. A convincing feature of this model is endogenous price determination within
market clearing. Equilibria are assumed in these models. The next generation of models is based
on microeconomics and thus is disaggregate. Further development of the bid-rent theory resulted
in bid-choice theory (Martnez, 1992). This bid-choice theory is based on the assumption of
consumer surplus maximizing behavior, which is shown to be the same as applying the utility
maximization approach of McFadden to location choice (McFadden, 1978).
These models assume equilibrium to determine the prices. Martnez and Donoso (2010)
extended their model to include a supply model. The model is still base on static market
equilibrium assumption. Another category of models operates as well on the basis of
microeconomics and discrete choice theory but does not assume equilibria to solve for the prices.
These models determine the prices not via equilibrium search. In the case of UrbanSim the prices
are determined with hedonic regressions (Waddell, 2002b). Economic actors like firms and
households react to price changes with their location choice. The location choices made then

have again an influence on price in the next iteration. Recent work by Wang and Waddell (2013)
suggest a price formation model reflecting competition with heterogeneous households. Before
households and firms can choose their facility for activity performance the facilities have to be
built. This process of built space provision is captured with Land Use Development Model
(LUDM). Thus the purpose of this model with the modelling system is to provide facilities for
the economic actors to locate.
This process has been simplified in most previous models representing the supply side
with a single representative agent who reacts to demand. Few previous studies attempted to
capture heterogeneity within real estate developers (Dong and Gliebe, 2010, Haider and Miller,
2004).

A DEVELOPER BASED LAND USE DEVELOPMENT MODEL

In this section we describe a first model of developer location choice discriminating three
different developer types. In the following subsection the method is briefly described. Data and
data preparation are discussed afterwards. The last subsection contains the description of the
model.
The method used in this study is discrete choice modelling (Train, 2009). The first step
was a qualitative study (Zllig and Axhausen, 2012b) to inform the modelling step presented
here. Ten (10) developers were interviewed to get insights into the variety of developers in
Angeles City and their decision making. The qualitative part followed the methodology of Glser
and Laudel (2004) and suggested behavioral differences of developers according to purpose and
professionalism. In this next step presented here we try to confirm the qualitative findings by
estimating MNL choice models using UrbanSim (Waddell, 2002a, UrbanSimProject, 2007) made

operational in Angeles City. In a first approach we estimate separate models for three developer
types and compare the effect and impact of considered variables.
DATA AND PREPARATION
We have a dataset at hand which holds information on development projects and their
developers. The dataset was borrowed from the construction and real estate firm, Rowena Minoo
Samurai, Inc. We decide to use the Rowena Minoo Samurai, Inc., data to relate qualitative and
quantitative analysis since it included contact details as well as an extensive number of projects
from 2000 until 2014. However, there is no guarantee that the dataset contains all development
projects carried out in that period.
In addition to the dataset which relates development projects and developers we used a
lot of other data. The following list contains the most important data sources for study:
1. Rowena Minoo Samurai, Inc.
2. Land Registration Authority
3. National Statistics Office 2010
4. Employment Census, NSO 2014
5. MATSim road network
Most important for this study are the datasets of Rowena Minoo Samurai, Inc. and LRA
since they contain the information on developers and buildings. In the Rowena Minoo Samurai,
Inc. data we have information on purpose and contract details regarding the developers. From the
contact details we can infer the frequency of developers doing a project. We use this here as
proxy for professionalism.
The LRA data contains more detail on the buildings constructed. Therefore we match the
Rowena Minoo Samurai, Inc. and LRA datasets via a spatio temporal join. We use an address

matching that parcel to the project. Here we only use projects in which new buildings are
constructed.
The rest of the data is used to enrich the development of projects with location variables.
These types of variables are supposed to be highly relevant for developers location choices. The
qualitative study confirmed this assumption while showing as well other determinants of real
estate development decisions like financial aspect, information used for decision making,
evaluation methods. Business strategy and search space. Unfortunately, we find only few of these
potential explanatory variables in the data at hand. Thus, we focus on how location attributes are
evaluated differently.

Figure 1. Developer type definition

Developer type code

Developer type name

Attribute purpose

Number of projects

O1

Self-owning without Own use or letting

portfolio strategy

Om

Self-owning
with Own use and or letting Several
portfolio strategy

Smc

Commercial developer Sale

(promoter)

Several or 1

For each parcel we also calculate its accessibility using Multi-Agent Transport
Simulation (MATSim). The usage of highly detailed transport simulation allows us to calculate
individual accessibilities for each parcel for different modes. Here we use car and Public
Transport (PT). Following Geurs and Van Wee (2004) we use a location-based potential
accessibility measure.

MODEL FORMULATION
The prepared data is imported into UrbanSim where the modelling and model estimation
is performed. We specify three sub-models within an agent location choice model according to
three categories of developers. The categories and their definition according to the data used is
shown in Figure 8. In this study we only use observations of projects residential. These can be of
different type such as single family homes, multi -family homes or residential buildings with
mixed use. The overall choice set are all parcels in Angeles City project which are zoned for
housing and have still capacity for new built space. Figure 9 shows the definition of the
variables used. Most of these variables were used in the previous model which discriminates
development types (Zllig and Axhausen, 2012a). The variable of newcomers counts only
persons younger than 30, a variable measuring the share of recreation areas, within the travel
analysis zone is introduced. The accessibilities are calculated with formula 1 in MATSim. The
general travel costs include only travel time here. MATSim is able to include other cost
components such as toll costs.

The expectations in terms of positive or negative effect on utility and differences in

impact according to developer type are shown in table 3. The hypotheses are discussed in the
following results section 4.

ESTIMATION RESULTS AND DISCUSSION

This section presents and discusses the model estimation. The results are very preliminary
and have to be interpreted with care. Figure 2 shows the signs and significance levels of the
estimated parameters. We only show the signs due to unstandardized estimation. In the following
we discuss these preliminary results on the basis of the hypothesis in Figure 8. We discuss first
the signs of the variables and the occurring or not occurring differences.
Car accessibility has a negative sign which is unexpected. The negative sign might capture that
new development often are at the fringe of the settlement where lots are cheaper. This is an
endogeneigty problem Guevarra and Ben-Akiva (2006) which demands for integrating an
appropriate control variable. In case of Public Transport accessibility the sign are as expected.

Figure 2. Variable Definitions

Variable Name

Description

Unit

Accessibility Car

Accessibility of jobs and inhabitants by car

according to formula (1). Travel times are
calculated with MATSim.

[-]

Accessibility public transport

Accessibility of jobs and inhabitants by public

transport according to formula (1). The
calculations of travel times are based on the
cantonal transport model.

[-]

Fit of development to parcel Step function

differentiating between permitted and planned
constraints
volumes as follows: Ln
of the

[m2]

difference between permitted floor-space of

considered parcel and floor-space
of development project, if the
difference is larger than zero. Four times the
difference
between permitted floor-space of considered parcel
and floor-space of development
project, if the difference is smaller than zero.

New neighboring buildings

Young
newcomers
neighborhood

Number of buildings with year built later than 1995 [-]

within 150 m.
in Number of residents younger than 30 which
reported a di
erent address five years ago
within a radius of 300 m.

[-]

Price per permitted floor space Price per permitted square meter floor space

[CHF/m2]

Slope

[%]

Slope of parcel in percent

Share of recreation are in zone Share of land area dedicated to recreational use
[-]
within the traffic analysis zone of the development.
This comprises parks, commons, camping and
sport grounds.

Figure 3. Expectation of variables effects

Variable

Hypothesis

Accessibility to car

Positive sign.
developers

More

impact

for

selling

Accessibility public transport

Positive sign.
developers

More

impact

for

selling

Fit of development to parcel constraints

Positive sign. We expect stronger impact for

optimal fit for developers with purpose sale.

New neighboring buildings

Positive sign

Price per permitted floor space

Positive sign for type Smc, negative for type

O1 and tpye Om.

Immigration of young households

Positive sign for type Smc and Om since they

produce

for the market. Type O1 might have negative

preference due to noise concerns
Slope

Negative sign since it is more complicated to

build
on. We expect stronger preference for types
Smc
and Om assuming more cost sensitivity.

Share of recreation are in zone

Positive sign, while less impact on developers

of type Smc and Om since they are not
personally affected.

For the variable describing the fit of a development project to the allowed volume on
parcel has the expected sign and is of high significance. This suggests that further interaction
variables could improve the model. However, it would be preferable to control as well the type
of development to see if in cases of single family houses less dense development occurs.
All developer types have preferences for new buildings in the neighborhood. The recent
development decisions of others seem to give confidence rather than fear of too much
competition. The positive sign of land price is irritating for developers which develop for their
own use. For developers which sell or let the estate later on higher priced land might be an
indicator for good sales. The hypothesis regarding this variable is thus only confirmed for selling
developers. Again it would be advisable to control for the type of use of the development. There
could also be a correlation issue with the accessibility variables. The positive sign for the
endowment of a location with recreation areas cannot be found for O1- developers where we
would have expected the strongest preference due to personal attachment and interest. The only
developer type with a significant effect is Smc. For the developer types O1 and Smc we find
counter intuitive signs for slope. Maybe the slope variable captures the positive effect of view.

Under the assumption that people move to attractive areas it is surprising that the sign for a
newcomers is negative. We expected that developers would see that as a signal for increasing
demand. The variables are not discriminating according to income which might be necessary for
a consistent result. Another interpretation is that the negative sign indicates disliking of unsettled
neighborhoods. The adjusted likelihood ratio index of all three models is on the same level.
However, the developer based models have less modal fit then those with segments according to
development type. (Zllig and Axhausen, 2012a).

Figure 4. Signs and significance of estimates parameters

We also want to discuss the impact of the variables in respect of developers types. The
estimated impact I is calculated with the following formula:

Where

i= alternative index
j= variable index
J= number of variables
= estimated parameter
x= characteristic

The impacts of the developer models in Figure 12 show that car accessibility is the
dominant variable for all three developer types. The hypotheses that car accessibility is more
relevant for selling developers is not confirmed. This is only supported by the results in case of
PT accessibility.
We expect selling developers to exploit allowed density more rigorously than other
developer types. This is only confirmed in respect of O1 developers. The impact on Om is more
than twice as large.
The hypothesis that more professional developers types Om and Smc are more sensitive
and thus react stronger to steeper slope as a proxy of construction cost cannot be confirmed.

Figure 5. Impact of variables

O1

Om

Smc

Accessibility car

0.878

0.628

0.796

Accessibility PT

0.020

0.040

0.088

parcel 0.025

0.180

0.072

New neighboring buildings

0.010

0.008

0.006

Price per permitted floor space

0.002

0.088

0.012

Share of recreation are in zone

0.004

0.013

0.007

Slope

0.010

0.007

0.008

Young newcomers in neighborhood

0.051

0.035

0.010

Fit of development
constraints

to

CONCLUSION AND OUTLOOK

In this study we include some characteristics of developers to explain better their
development decisions in terms of location choice. Therefore, we combined a dataset of Rowena
Minoo Samurai, Inc. including development projects and developer information with the Land
Registration Authority. The preliminary model estimates show unexpected signs and only little
difference regarding the used explanatory variables. The fit of the models is not increased in
comparison to development based models. Further work has to be done to find better explanatory
variable according to developer types. Special attention should be paid to endogeneity issues.
With the specification investigated here it is not recommended to use a developer based land
development model. The reason for these unsatisfying results can be seen in the following points:

Data preparation includes some uncertainties and lacks a rigorous representation of the
point in time a development took place.

The development type is not controlled for even through one would assume that the same
developer type has also different preferences for different project types.

Reconstruction is not considered

The price variable is not adjusted to the time of the observation.

The next steps will be to estimate models which interact information about developer type
and type of development. Also we have to explore the correlation among the explanatory
variables with factor analysis. Further we want to investigate the role of the ownership structure.
If the model estimation reveals the importance of the ownership structure it will be a next task to
synthesize it for simulation.
REFERENCES
Betts, M and Lansley, P (1993) Construction Management and Economics: a review of the first
ten years. Construction Management and Economics, 11(4), 221-45.
Bjrk B C and Brchner J (2007) The Value of Construction Management Journals to Submitting
Authors. Construction Management and Economics 25th Anniversary Conference. 16-18 July,
2007 University of Reading. Reading, UK.
Chau, K W (1997) The ranking of construction management journals. Construction Management
and Economics, 15(4), 387-98.
Clark, R (2000) http://www.anu.edu.au/people/Roger.Clarke/SOS/DLR.html.
Costa D B, Formoso C T, Kagioglu M, Alarcn F, Caldas C H (2006) Benchmarking
Initiatives in the Construction Industry: Lessons Learned and Improvement Opportunities.
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Quality Guide, Journals Classified by Field and Rank.

Jeeninga H and Kets A (2004) Evolution of energy policy in the Netherlands: past, present and
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logic. Construction Management and Economics, 18(4), 491-500.

CHAPTER III
RESEARCH METHODOLOGY

METHODOLOGY
The purpose of this study is to examine the perceptions of selected brokers and
developers regarding the construction trends and practices among real estate developers in
Angeles City.
The purpose of this chapter are (1) describe the research methodology of this study, (2)
explain the sample selection, (3) describe the procedure used in designing the instrument and
collecting the data, and (4) provide an explanation of the statistical procedures used to analyze
the data.

RESEARCH METHODOLOGY
A descriptive research methodology was used for this study. A survey was administered
to a selected sample from a real estate broker and developers in Angeles City. The term survey
is commonly applied to a research methodology designed to collect data from a broker and
developer, or a sample from that group, and typically utilizes a questionnaire or an interview as
they survey instrument (Robson, 1993).
Survey is used to obtain data from individuals or group. Sample surveys are important
tools for collecting and analyzing information from selected individuals. They are widely
accepted as a key tool for conducting and applying basic social science research methodology
(Rossi, Wright, and Anderson, 1983).
CREBA (Chamber of Real Estate and Builders Associations, Inc.) is familiar with the
use of surveys to assess issues or project trends: marketing researchers use surveys to study

consumer preferences patterns (Leary, 1995) Results of the annual survey are published each
year in Real Living Magazine. Selected Philippine television viewers participate in the Real
Estate surveys, designed to estimate the size of various television program audiences for the
purpose of establishing advertising rates. Such sample surveys are comprised of standardized
methodologies designed to gather information by examining systematically identified brokers
and developers sample.
According to Leary (1995), there are distinct advantages in using a questionnaire vs. an
interview methodology: questionnaires are less expensive and easier to administer than personal
interviews; they lend themselves to group administration; and, they allow confidentiality to be
assured. Robson (1993) indicates that mailed surveys are extremely efficient at providing
information in a relatively brief time period at low cost to the researcher.
For these reasons, the researcher chose a descriptive research methodology and designed
a questionnaire survey instrument to assess the perception of selected broker and developer
regarding the construction trends and practices among the real estate developers in Angeles City.

Sample
For this study, 10 members of Chamber of Real Estate and Builders Associations, Inc.,
were interviewed. The methodology for this study was a stratified random sample of real estate
broker and developer in Angeles City. Gay (1987) reports:
Random sampling is the best single way to obtain a representative sample. No technique,
not even random sampling, and guarantees a representative sample, but the probability is higher
for this procedure than for any other. (p.104)

Gay also agrees that stratified random sampling is an appropriate methodology in order to
make proportionate, and therefore meaningful, comparisons between sub-groups in the
association. Robson(1993) tells us that sampling theory supports stratified random sampling as
an efficient choice because the means of the stratified samples are likely to be closer to the mean
of the population overall. Finally, Leary (1995) indicates that a stratified random sample will
typically reflect the characteristics of the association as a whole. Consequently, the sample in this
study was disaggregated by region to address the fact that there is wide variance in the number of
brokers and developers within each association.

OVERVIEW OF ANGELES CITY, PAMPANGA

I. LOCATION AND PHYSICAL CHARACTERISTICS

Figure 6. Map of Pampanga

Angeles City is bounded by the Municipality of Mabalacat in the North, Mexico in the
East, San Fernando in the Southeast, and Porac in the Southwest. It has a total land area of about
6,217.37 of which about 619.80 hectares from part of the Clark Freeport Zone (CFZ).
The remaining 5,597.57 hectares are classified as alienable and disposable lands devoted
to urban and agricultural uses. A highly urbanized city, Angeles City has been at the threshold of
full social and economic development since the American airbase pullout in 1991 following the
eruption of Mt. Pinatubo. Today, the citys economic progress has been driven primarily by the
presence of Clark Freeport and the Clark International Airport.

Advancement in communication technology coupled with modern highway has

tremendously improved trade and commerce in this part of the province. Both the industrial and
tourism sectors have become major contributors to the citys growth and development. Call
centers and other back office IT industries are major employers while hotels and other tourismrelated establishments are driving more tourists to the city for leisure and entertainment.
II. ECONOMY
a. Tourism-Related Services
The tourism-related services such as hotels, restaurants and retail complex are located on
the Balibago area including the Clark Freeport Zone. The international airport is the major factor
on the sustained tourist arrivals in Angeles.
b. Commerce and Industry
A lot of manufacturers that are into export of furniture, handicrafts, woodcrafts, garments
and food can also be found in Angeles City. Based on the City Socio-Economic Profile, in 2008,
there were 161 establishments registered in this sector. These were able to create 28,000 jobs and
a total capital investment of about PHP 835 million.
c. Clark Locators
More than 900 local and foreign business projects have chosen to locate inside Clark
Freeport Zone since 1993. A good number of American, Japanese, Taiwanese, Korean, and other
foreign firm locators including United Parcel Service, Sumidenso, Rolls-Royce, Yokohama, L&T
Intl. Group Philippines Inc., Cyber City Teleservices are finding the advantage of Clarks
strategic location.

III. Demographics
Figure 7. Angeles City Population

On the other hand, Agapito del Rosario and Barangay Virgen Delos Remedios had the smallest
population with 0.71% and 0.50%, respectively. Angeles Citys population is about 13.94% of
the population of the whole province of Pampanga and is approximately 3.22% of that of Central
Luzon.

IV. OFW Remittance

The continued strength of cash inflows through remittances is primarily due to the higher
deployment of workers abroad and the improved delivery of services of financial institutions.
Discussion with developers revealed that overseas Filipinos remittances have a significant
impact on the residential segment. In fact, the Bangko Sentral ng Pilipinas (BSP) estimates that
approximately 30% of all remittances go towards housing expenses.

Figure 8. OFW Remittance

Source: Bangko Sentral ng Pilipinas

End-2011 remittances amount to US $ 20.12 billion which grew by 7.2% as compared to

2010. This is despite the external shocks for the year such as the Middle East crisis, disasters in
Japan and the saudization policy of Saudi Arabia in which the government encourages
employment of Saudi nationals in the private sector which is currently dominated by expatriate

workers from Southeast Asia

Figure 9. Percentage Distribution of OFW

Source: National Statistics Office

Based on the 2007 to 2010 Survey on Overseas Filipinos conducted by the National
Statistics Office, the majority of Filipino workers deployed came from CALABARZON which
comprised 17.7%, 18.4%, 16.4% and 16.0% of the total number for 2007, 2008, 2009 and 2010,
respectively. Central Luzon (14.4%) followed next and the NCR (13.8%) is in 3rd place. OFW
remittances are usually sent to relatives in the workers respective place of origin.

V. Infrastructure Developments
d. Transportation
Figure 10. Angeles City's Major Road Networks

Access
There are three (3) major entry and exit points in Angeles City:

1. MacArthur Highway
2. North Luzon Expressway
3. Subic-Clark-Tarlac Expressway

Road Network
It was estimated that Angeles City has a total of 240.20 kilometers road length, which is
classified as follows:
National roads 10.20 km (4%)
City roads 216.43 km (90%)
Barangay roads 13.57 km (6%)
Airport
Clark International Airport (CRK) is the main airport serving the immediate vicinity of
the Clark Special Economic Zone and the general area of Angeles City in the Philippines. It also
serves the northern and central regions of Luzon, as well as Metro Manila and its immediate
vicinity. The airport serves both passenger and cargo planes which routes are most to-and-from
Asian countries. It has an average of 16 flights per day from/to different Asian countries.

Figure 11. CRKs Performance Highlights in 2011

e. Communications
Telecommunications company and internet service providers include: Datelcom, Digitel, Globe
Telecom, PLDT, Smart Communication, PT&T and Sun Cellular.
f. Power
The electrical power is being supplied by Angeles Electric Corporation (AEC). It has a
capacity of 84.4 MW; of which 50 MW was provided by National Power Corp.; 27.5 MW
generated by the Angeles Power Inc.; and 6.9 MW generated by its own power plant.
g. Water Supply
Angeles City Water District (ACWD) provides approximately 60% of the water requirement of
the city and the remaining 40% is being provided by privately owned water companies.