ROCKWELL

LAND CORPORATION

Group 5
STRATEGIC MANAGEMENT
BSBA Marketing Management & Operations Management
Bejasa, Janna Zarina S.
Evangelista, Isabelle
Gallardo, Monica
Geronda, Roselyn
Tambalque, John Henrick

Mr. John Jherold San Miguel

(Professor)
II. INTRODUCTION
A. Company Profile
About the company
Rockwell Land Corporation is a property developer for residential and commercial
projects that cater to the high-end and upper-mid markets in Metro Manila. It is
primarily engaged in the residential development of high-rise condominiums as well as
in retail and office leasing. It operates through two segments: residential development,
and commercial development. Its residential development segment is engaged in the
development, selling, and property management of all residential projects. It also
includes the operations of the Rockwell Club. Commercial development is engaged in
the sale, leasing and other related operations during the management of commercial
buildings or spaces used for retail and office leasing, including cinema operations and
hotel segment. Commercial buildings in its portfolio include the Power Plant Mall, 8
Rockwell and Edades Serviced Apartments in Makati City, Santolan Town Plaza in San
Juan, Metro Manila, Rockwell Business Center in Ortigas, among others.
Background
The Rockwell Land story began in 1995, when an unused thermal power plant was
transformed into a thriving, self-sustaining community. This flagship development, now
known as the Rockwell Center, was the first of several exceptional communities that
serve as the benchmark for living, leisure, and business.
Rockwell Land, a member of the Lopez Group of Companies, continues to raise the bar
for living spaces by developing a community that seamlessly integrates residences,
work spaces, and lifestyle hubs. All of these are created with the Rockwell hallmarks of
innovation, exclusivity, and unrivalled quality.
Rockwell Primaries was founded in 2012 with the goal of providing an affordable
premium experience through its living spaces and communities. It will provide
developments with innovative property concepts and customer-centric solutions, such
as facilities that exceed industry standards and provide full-cycle customer services,
resulting in long-term property values. It develops projects with the same expertise,
management team, and project consultants as Rockwell Land, but with more flexible
payment terms.
Rockwell Primaries is the developer of two pre-sale projects in New Manila: 53 Benitez
and The Vantage at Kapitolyo in Pasig City.
Mission
To deliver delightful, memorable experiences every day.
Vision
To create admired communities beyond ordinary.
Manpower
B. Product/s
Business Segments
Rockwell Land’s operations are divided into two (2) segments: residential development
and commercial development.
RESIDENTIAL DEVELOPMENT
The residential development segment involves the development, sales and property
management of all residential units under the Rockwell and Primaries brands. This
segment currently accounts for 60% of the Company’s EBITDA. Its portfolio of
completed projects comprises of the following:

 West Block Residential Towers (2000)

 The Manansala (2005)
 Joya Lofts and Towers (2008)
 One Rockwell (2011)
 The Grove by Rockwell – Towers A & B (2012)
 Edades Tower and Garden Villas (2015)
 205 Santolan by Rockwell (2015)
 The Alvendia (2015)
 The Grove by Rockwell – Towers C & D (2016)
 53 Benitez (2016)
 The Grove by Rockwell – Towers E & F (2017)
  32 Sanson Phase1 – Raffia & Gmelina (2017)
 32 Sanson Phase 2 – Buri (2019)
 Proscenium Phase 1 – Kirov, Sakura, Lincoln, Lorraine (2019 and 2020)
 Stonewell Acacia Homes (2020)
 Edades Suites (2021)
 Terreno South Ph1 & Ph2 (2021)
 Stonewell Mahogany Homes and Royal Palm Homes (completion by 2022)
 32 Sanson Phase3 - Solihiya (completion by 2022)
 The Proscenium Residences (completion by 2022)
 The Vantage at Kapitolyo (completion by 2022)
 East Bay Residences (Phased completion starting 2022)
 The Arton by Rockwell (Phased completion from 2022-2025)
 Terreno South (Phased completion from 2024-2027)
 Aruga Resort and Residences Mactan-Cebu by Rockwell (Phased completion
from 2023)
 Rockwell South at Carmelray (completion starting 2022)
 Nara Residences (completion starting 2023)
 The Balmori Suites (completion by 2023)
 8 Benitez Suites (completion by 2024)
 32 Sanson Phase 4 - Sillion (completion by 2024)
 The Manansala (completion by 2024)

COMMERCIAL DEVELOPMENT

 Power Plant Mall (PPM)

 Other Retail Spaces
 Rockwell Business Center- Ortigas (RBC Ortigas)
 8 Rockwell
 Rockwell Business Center – Sheridan (RBC Sheridan)
 Santolan Town Plaza
 Arton Strip
 1 Proscenium (for completion in 2022)
 Aruga by Rockwell
 Aruga Resort Mactan
Local Presence - Properties ( Existing and Ongoing )
C. Market
Target Market
Rockwell Land Corporation is a property developer in Metro Manila that specializes in
residential and commercial projects for the high-end and upper-mid markets. Its primary
business is the development of high-rise condominiums, as well as retail and office leasing.
D. Industry
Based on the Philippines Standard Industrial Classification (PSIC), Rockwell Land
Corporation lands in the Section L of their coding, which is the Real Estate Activities. In
the 1994 PSIC, Major Division K (Real estate, renting and business activities) was split up
into three (3) sections. Real estate is now represented as a stand-alone section (Section L).
The remaining activities were separated into Section M (Professional, scientific and
technical activities) and Section N (Administrative and support service activities).
Computer and related activities previously classified in Division 72 in the 1994 PSIC are no
longer included in this section. Computer repair activities were grouped with repair of
household goods in Section § (Other service activities) while software publishing and IT
activities have been grouped in the new Section J (Information and communication).
This section covers serving as lessors, agents, and/or brokers in one or more of the
following situations: selling, purchasing, renting, providing other real estate services like
real estate appraisals, or working as real estate escrow agents. On either owned or leased
land, the activities described in this section may be completed for payment or under a
contract. The construction of structures and the ownership or leasing of those structures
are also addressed. Real estate property managers are included in this section.
E. Financial
ANNUAL REPORT
The combined net income after tax (NIAT) for Rockwell Land Corporation in 2021 was P2.2
billion, up 75% from P1.3 billion the previous year. For 2021, 2020, and 2019, respectively,
net income was 17%, 11%, and 18% of revenues. In the consolidated net income, P1.6
billion, or 52% more than P1.1 billion in 2020, is attributable to equity holders of the
parent firm. Overall revenue climbed to P12.7 billion in 2021, up 14% from P11.2 billion in
revenues in 2020. In 2021, residential development brought in 81% of total income,
compared to 79% in 2020 and 2019.
EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization,
totaled P4.4 billion in 2021, or 34% of total revenues. Due to the community quarantine
that will be in effect starting on March 16, 2020, project completion and sales bookings
decreased by 17% compounded annually from 2019 to 2020. Due to the rental discounts
provided to retail companies beginning with the enforcement of the community
quarantine, commercial development fell by 12%, from P2.3 billion to P1.7 billion in two
years.
Except for the impact on the financial statements of the full adoption of PFRS 15, which
began in January 2018, and PFRS 16, which began in January 2019, the Company is not
aware of any event that could materially affect the consolidated statement of
comprehensive income reported in this Annual Report. The debt level was P26.8 billion by
the end of 2021, and the net debt-to-equity ratio was 0.92x. The outstanding balances of
term and CTS loans drawn between 2018 and 2021 make up the debt. 15% of the total
debt, or about P3.9 billion, has a floating interest rate.
Below is a table showing the key performance indicators of the Company for 2019-2021.
KPI 2021 2020 2019

EBITDA (P) 4.4 billion 3.8 billion 6.0 billion

Current Ratio (x) 3.29 2.37 2.47

Net DE Ratio (x) 0.92 0.87 0.82

Asset to Equity Ratio (x) 2.50 2.49 2.61

Interest coverage ratio (x) 4.00 2.96 4.17

ROA 3.48% 2.01% 5.00%

ROE 8.69% 5.12% 13.85%

EPS (P) 0.27 0.18 0.48

Notes: (1) EBITDA [Net Income + (Interest Expense, Provision for Income Tax, Depreciation
& Amortization)] (2) Current ratio [Current assets/Current liabilities] (3) Net debt to equity
ratio [(Total Interest bearing debt)-(Cash and cash equivalents) / Total Equity] (4) Assets to
Equity Ratio [Total Assets/Total Equity] (5) Interest coverage ratio [EBITDA/ Total interest
payments] (6) ROA [Net Income/Average Total Assets] (7) ROE [Net Income/ Average Total
Equity] (8) EPS [Net Income/number of common shares outstanding]
Current ratio improved to 3.29x in 2021 due to payment of current portion of loans in
2021 and higher current assets particularly real estate inventory and trade receivables.
Net DE stood at 0.92x, higher than the 0.87 last year due to additional loan drawdown for
the year.

EBITDA increased to 4.4B, 16% higher than 2020. As a result, interest coverage ratio
improved to 4.0x from 2.96x in 2020. ROA, ROE improved in 2021 at 3.48%, 8.69% and
0.27 mainly from 75% increase in consolidated net income in 2021.
Review of 2021 versus 2020
The following section provides information on the results of operations and financial
condition for the periods 2019-2021. The following table shows the breakdown of the
revenues by business segment for the periods 2019-2021.
2021 % to 2020 % to 2019 % to
Total Total Total
(restated (restated
) )

Residential Development (1) 10,300 81% 8,816 79% 12,938 79%

 Commercial Development 2,424 19% 2,343 21% 3,388 21%

(2)

Total Consolidated 12,724 100% 11,159 100% 16,326 100

Revenues %

Share in Net Income 368 339 323

(Losses) in JV and

associate (3)

Notes:
1. Revenues from this segment consist of the following projects in the years indicated: The
Grove (2019 to 2021), The Proscenium Towers (2019 to 2021), 53 Benitez (2019),32
Sanson (2019 to 2021), Vantage (2019-2021), Edades Suites (2019- 2020), Stonewell
(2019-2021), Terreno South (2019-2021), The Arton West (2019- 2021), The Arton North
(2019-2021), Arton East (2021) Aruga Resort and Residences -Mactan (2019-2021),
Fordham (2019-2021), Nara (2020-2021), Rockwell South (2020-2021), 8 Benitez (2021),
The Balmori Suites (2021).
2. Revenues from this segment include leasing income, room revenues from operations of
Aruga Serviced Apartments, cinema revenues and revenue from sale of office units from 8
Rockwell and Proscenium projects. The amounts exclude revenues from RBC. Under the
Accounting policy for a jointly controlled entity, results of operations of RBC are not
consolidated line by line.
3. These amounts represent the Company’s share in the net income after tax of RBC (2019-
2021), RCDC (2019) and RNDC (2021).
Below is another table showing the breakdown of revenues by type of revenue for the
periods 2019-2021.
2021 % to 2020 % to 2019 % to
Total Total Total
(restated) (restated)

Residential Sales(1) 9,874 78% 8,550 77% 12,504 77%

Office Sales(2) 490 4% 370 3% 2 0%

Commercial Leasing 1,229 10% 1,150 10% 1,845 11%

Others(3) 1,131 8% 1,089 10% 1,975 12%

Total Consolidated 12,724 100% 11,159 100% 16,326 100%

Revenues

Notes:
1. Pertains only to sales of residential units (at present value) and related interest income.
2. Pertains to sale of office units (at present value) and related interest income.
3. Includes income from Aruga Serviced Apartments, Cinema, parking and other income.

2021 2020 2019

Revenue 12,723,703 11,158,907 16,326,187

EXPENSES 9,496,753 8,473,558 11,515,248

INCOME BEFORE OTHER INCOME (EXPENSES) AND 3,226,950 2,685,349 4,810,939

INCOME TAX

OTHER INCOME (EXPENSES) (760,867) (1,011,868) (785,148)

NET INCOME 2,208,633 1,260,977 3,006,849

OTHER COMPREHENSIVE INCOME (LOSS) 38,933 (58,490) (100,986)

TOTAL COMPREHENSIVE INCOME P2,247,566 1,202,487 2,905,863

Net Income Attributable To 2,208,633 1,260,977 3,006,849

Equity holders of the Parent Company
Non-controlling interests

Total Comprehensive Income Attributable To 2,247,566 1,202,487 2,905,863

Equity holders of the Parent Company
Non-controlling interests

ROCKWELL LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF

CASH FLOWS
(Amounts in Thousands)

2021 2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES 2,538,096 1,851,283 3,958,842
Operating income before working capital changes

Net cash generated from operations 1,191,249 3,111,725 7,411,237

Net cash provided by operating activities (1,066,746) (1,423,411) (2,583,050)

Net cash used in financing activities (426,324) (3,561,639) (675,567)

2021 2020 2019

NET INCREASE (DECREASE) IN CASH 2,784,864 3,205,022 5,705,862

-CASH AND CASH EQUIVALENTS AT END OF YEAR 

 ANNUAL FINANCIAL STATEMENTS (AFS)
ROCKWELL LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands, Except Earnings Per Share Value)
Years Ended December 31
2021 2020 2019
(As restated (As restated
– Note 3) – Note 3)
REVENUE
Revenue from sale of real estate (Note 21) =P8,925,994 P=7,213,096 P=10,825,267
Interest income (Notes 7, 8 and 22) 1,482,381 1,740,785 1,720,776
Lease income (Note 11) 1,227,788 1,149,868 1,845,204
Others (Notes 3, 13 and 21) 1,087,540 1,055,158 1,934,940
12,723,703 11,158,907 16,326,187
EXPENSES
Cost of real estate (Notes 3, 9, 11 and 23) 6,896,070 5,869,359 8,339,419
General and administrative expenses (Notes 11, 12, 13, 23, 24 and 25) 1,668,777 2,016,268 2,112,637
Selling expenses (Notes 23 and 24) 931,906 587,931 1,063,192
9,496,753 8,473,558 11,515,248
INCOME BEFORE OTHER INCOME (EXPENSES)
AND INCOME TAX 3,226,950 2,685,349 4,810,939
OTHER INCOME (EXPENSES)
Interest expense (Notes 16, 23 and 29) (1,141,452) (1,267,976) (1,357,301)
Share in net income of joint venture and associate (Note 13) 368,273 338,811 322,737
Loss on:
Prepayment of loan (Note 16) – (35,579) –
Loan modification (Note 16) – (19,596) –
Bond redemption (Note 16) – (18,528) –
Foreign exchange gain (loss) – net 12,312 (9,000) (162)
Gain on:
Bargain purchase (Note 6) – – 191,069
Remeasurement of previously held interest (Note 6) – – 58,509
(760,867) (1,011,868) (785,148)
INCOME BEFORE INCOME TAX 2,466,083 1,673,481 4,025,791
PROVISION FOR INCOME TAX (Note 26) 257,450 412,504 1,018,942
NET INCOME 2,208,633 1,260,977 3,006,849
OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) not to be reclassified
to profit or loss in subsequent periods:
Remeasurement gain (loss) on employee benefits (Note 25) 75,358 (79,986) (147,877)
Net gain (loss) on equity instruments designated at FVOCI (Note 14) – (2,500) 6,211
Income tax effect (36,425) 23,996 40,680
38,933 (58,490) (100,986)
TOTAL COMPREHENSIVE INCOME =P2,247,566 P=1,202,487 P=2,905,863

Net Income Attributable To

Equity holders of the Parent Company =P1,640,936 P=1,078,756 P=2,956,553
Non-controlling interests 567,697 182,221 50,296
=P2,208,633 P=1,260,977 P=3,006,849

Total Comprehensive Income Attributable To

Equity holders of the Parent Company =P1,679,869 P=1,020,266 P=2,855,900
Non-controlling interests 567,697 182,221 49,963
=P2,247,566 P=1,202,487 P=2,905,863

Earnings Per Share Attributable to Equity Holders

 of the Parent Company (Note 32)
Basic =P0.2680 P=0.1761 P=0.4831
Diluted =P0.2679 P=0.1760 P=0.4819

See accompanying Notes to Consolidated Financial Statements.

ROCKWELL LAND CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS

OF CASH FLOWS
(Amounts in Thousands)
Years Ended December 31
2021 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax P=2,466,083 P=1,673,481 P=4,025,791
Adjustments for:
Interest income (Notes 7, 8 and 22) (1,482,381) (1,740,785) (1,720,776)
Interest expense (Notes 3, 16, 18, 23 and 29) 1,141,452 1,267,976 1,357,301
Depreciation and amortization (Notes 11, 12 and 23) 762,755 807,639 902,091
Share in net income of joint venture and associate (Note 14) (368,272) (338,811) (322,737)
Provision for disallowance of claim for refund (Note 23) 8,500 95,600 –
Loss on:
Prepayments of loan (Note 16) – 35,579 –
Loan modification (Note 16) – 19,596 –
Bond redemption (Note 16) – 18,528 –
Unrealized foreign exchange loss (gain) – net (12,312) 9,000 162
Pension expense, net of contributions (Note 25) 22,271 3,480 (33,412)
Gain on:
Bargain purchase (Note 6) – – (191,069)
Remeasurement of previously held interest (Note 6) – – (58,509)
Operating income before working capital changes 2,538,096 1,851,283 3,958,842
Decrease (increase) in:
Trade and other receivables (455,008) 2,396,957 1,505,950
Contract assets 1,628,360 (1,047,512) 3,042,187
Real estate inventories (1,683,020) 156,055 638,493
Advances to contractors (146,464) (5,564) 175,713
Other current assets (574,223) (53,570) (716,527)
Increase (decrease) in:
Trade and other payables (323,204) 737,351 (1,727,315)
Deposits and other liabilities 206,712 (923,275) 533,894
Net cash generated from operations 1,191,249 3,111,725 7,411,237
Income taxes paid (183,491) (674,385) (571,287)
Interest received 52,842 55,870 69,211
Net cash provided by operating activities 1,060,600 2,493,210 6,909,161
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Investment properties (Note 11) (531,115) (541,689) (1,775,871)
Property and equipment (Note 12) (466,084) (1,292,422) (1,257,713)
Investment in associate (Note 13) (634,446) (72,000) –
Subsidiary, net of cash received (Note 6) – – 478,384
Non-controlling interests in a subsidiary (Note 6) – – (208,000)
Dividends received (Note 13) 304,220 333,850 271,661
Decrease (increase) in other noncurrent assets 260,679 148,850 (91,511)
Net cash used in investing activities (1,066,746) (1,423,411) (2,583,050)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from availments of loans and borrowings (Note 16) 11,596,000 9,910,000 6,071,382
Payments of:
Interest-bearing loans and borrowings (Note 16) (9,504,580) (10,864,188) (4,558,725)
Installment payable (Note 17) – (655,799) –
Dividends (Note 20) (217,572) (292,522) (499,367)
Debt issue cost (Note 16) (61,470) (68,425) (40,546)
Lease liabilities (Notes 15 and 29) (36,401) (35,472) (33,520)
Interest paid (1,091,712) (1,162,810) (1,448,315)
Subsidiary’s redemption of preferred shares from non-controlling
interests (Note 6) (676,332) (258,322) –
Subsidiary’s payment of dividends to non-controlling interests (Note 6) (234,257) (134,101) –
Payment of subscription payable (200,000) – –
Advances to non-controlling interest holder (Note 28) – – (400,000)
Subsidiary’s issuance of shares to non-controlling interest – – 233,524
Net cash used in financing activities (426,324) (3,561,639) (675,567)

(Forward)
 Years Ended December 31

2021 2020
2019
EFFECT OF EXCHANGE RATE CHANGES

ON CASH AND CASH EQUIVALENTS 12,312 (9,000)

(162)

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS (420,158) (2,500,840) 3,650,382
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 3,205,022 5,705,862 2,055,480
CASH AND CASH EQUIVALENTS
AT END OF YEAR (Note 7) P=2,784,864 P=3,205,022 P=5,705,862

See accompanying Notes to Consolidated Financial Statements.

III. INDUSTRY ANALYSIS
A. Scope and Limitations
This paper is only limited aligned with the Rockwell Land Corporation. This
strategic management paper focuses of company’s profile, as well as how it competes
with others in the market. The core real estate offering of Rockwell Land Corporation,
such as high-rise residential structures, was also a focus of the study. Its additional
goods and services include due to its resort project's and property management's lack of
attention given its meager revenue contribution. Also, this paper will focus on
analyzations of the company and will suggest possible strategic plans that can further
help the company.

B. Industry/Sector Characteristics
According to Rockwell Land Corporation, it has been expanding its properties for
sale and rent in Makati and other cities in the Philippines, resulting in a diverse range of
communities. They carefully select prime locations in and around Metro Manila to
provide residents with easy access to city amenities. Rockwell Land's community
developments combine residences, workspaces, and lifestyle hubs, setting a high
standard for real estate in and outside of Metro Manila. Each condominium for sale is
designed and built with innovation, exclusivity, and exceptional quality, reflecting the
Rockwell signature. They offer pre-selling or ready-for-occupancy condos for sale in
Makati and other areas, as well as exclusive retail and office spaces for lease in the
Philippines, providing luxurious and world-class designs that meet the expectations of
discerning buyers and residents. In addition, Rockwell Land achieved yet another record
high net income after tax (NIAT) in 2019. They reached Php 3.0 billion NIAT, a 17%
increase over 2018. Revenues reached Php 15.7 billion, with EBITDA at Php 6.0 billion,
representing a 13% increase over the previous year. With the launch of new pioneer
Rockwell developments in 2019, they received an overwhelming response from the
market, resulting in reservation sales totaling a record Php 16.7 billion, a 12% year on
year growth according to 2019 annual report of Rockwell land Corporation. Moreover,
the joint venture and associate's share of net income reached Php 368.3 million in 2021,
9% higher than the previous year. This primarily refers to Rockwell's stake in RBC
Ortigas' operations as part of the Rockwell-Meralco BPO joint venture. General and
administrative expenses (GAE) were Php 1.7 billion in 2021, a 17% decrease from Php
2.0 billion the previous year due to various cost-cutting initiatives. Consolidated EBITDA
was Php 4.4 billion, up 14% from 2020. Residential development accounted for 60% of
the total, while commercial development accounted for 40% said by the author of
Rockwell land Corporation 2021.
C. Key Success Factors
A BRAND THAT WILL PERSIST
 Future planned towns in Bacolod, Cebu, Southern Quezon City, North of Metro
Manila, and Iloilo remain distinct in our future and are prepared to keep their
commitment to offering secure living conditions. The Rockwell touch continued
to expand, eventually being within closer reach for the modern Filipino family
with the birth of Rockwell Primaries.
 From transforming an old power plant to a thriving community we now know as
Rockwell Center, Rockwell Land now develops exceptionally designed
communities.
 One of Rockwell's keys to success is its perceptive understanding of the
individual. As life is not restricted to the four-walled structure of a home, the
property maverick recognized the need to extend its breadth so that the
Rockwell signature of exclusivity and luxury is felt even outside the comforts of
your residence. Going beyond just residences, Rockwell provides a holistic
experience of lifestyle and luxury. Spaces for retail, wellness, and leisure
provides residents and patrons a complete environment and space that sustains
their day to day living.
NATURAL COURSE
 The move to put up offices was said to be a natural course for Rockwell Land,
which is now bringing its signature expertise in this segment of real estate
development.
 In terms of market conditions, there was a high demand for office spaces in
Makati. These factors triggered the idea that it was the perfect time for us to
further strengthen the Rockwell portfolio by bringing the distinguished taste
seen in our residential towers to a premium office development. A world-class
corporate tower perfectly ties up the Rockwell story in the heart of Rockwell
Center.
 The amount of leasable space in Rockwell Land's office portfolio is now over
150,000 sqm. The 8 Rockwell is 90% full, whereas Rockwell Business Center
Ortigas is 100% full, with a mix of well-known local businesses like ANC News
Studio and multinational businesses in the pharmaceutical, cosmetics, and
advertising sectors.
 The North Tower of the Rockwell Business Center Sheridan was recently
completed in December 2016, and office space turnover is anticipated to begin
in the second quarter of this year.
IV. EXTERNAL ENVIRONMENT ANALYSIS
A. PESTLE Analysis
Political
Politics in Real Estate refers to the chance that the actual return on an investment will
differ from what investors expect owing to political changes in a country. This study,
which evaluates government policy, also includes political parties and bureaucracy.

There are numerous indicators used to quantify political risk, and some of these
indicators perform exceptionally well. Some of the most important aspects include the
cost of living, the size of the economy, government policies, and the legal framework.

Because labor is a major source of income, the cost of living is greatly influenced by
income and purchasing power. As a result, the necessity for political change decreases,
and purchasing power increases as income increases.

It is critical to have a solid legal and policy framework. This is due to the possibility that
government policies and actions will lead to conflict, civil disobedience, or even
terrorism. Assets will be seized, expropriated, and nationalized as a result. In Kenya, this
includes the adoption of interest limitations. Financial policy and the legislative
environment have undergone major changes.

Environmental
Because labor is a major source of income, the cost of living is greatly influenced by
income and purchasing power. As a result, the necessity for political change decreases,
and purchasing power increases as income increases.

It is critical to have a solid legal and policy framework. This is due to the possibility that
government policies and actions will lead to conflict, civil disobedience, or even
terrorism. Assets will be seized, expropriated, and nationalized as a result. In Kenya, this
includes the adoption of interest limitations. Financial policy and the legislative
environment have undergone major changes.

Because development affects the natural relationship between land, water, and wildlife,
each piece of real estate development has an effect on the ecosystem. Extensive market
research is required to assess the projects' viability, profitability, and overall influence
on the natural environment.

The net environmental impact is typically proportional to the size of the development,
though there may be extra considerations relating to the property's location or intended
space utilization. Before investing in any real estate property, it is critical to understand
the impact of environmental factors on real estate and how they influence demand and
value.

When investing in residential real estate, many purchasers look for the following
features.

Sociological
Impact measuring and management can considerably improve social impact real estate.
This entails monitoring and assessing the positive benefits of a property or development
on the community and the environment. It is feasible to optimize the good effects and
raise the overall efficacy of the investment by measuring and managing the impact.

Here are some particular ways that impact assessment and management might improve
social impact real estate:

Transparency: Measuring and controlling the impact of a social impact real estate
investment provides a clear and complete picture of the positive consequences on the
community and the environment. This improved transparency can be beneficial to
investors, stakeholders, and the larger community by demonstrating the impact of the
investment and increasing responsibility.

Improved decision-making: It is feasible to find areas for improvement by tracking and

measuring the impact of a social impact real estate investment. This data can be utilized
to make better judgments on how to optimize the investment and maximize its
beneficial impact.

Increased return on investment: It is feasible to boost the return on investment by

optimizing the beneficial impact of a social impact real estate investment. This is due to
the fact that the investment has a greater positive influence on the neighborhood and
the environment, which can lead to increased demand for the property and better
rental income.

Better value alignment: Impact assessment and management help to ensure that social
impact real estate investments are aligned with the investor's values. This is due to the
fact that the impact is assessed and analyzed on a regular basis, and any areas where
the investment is not having the desired impact may be corrected.

Overall, impact measurement and management are critical tools for optimizing the
value of social impact real estate investments. It is possible to guarantee that the
investment is having the anticipated good effect on the community and the
environment by tracking and assessing the impact, and to make informed decisions
about maximizing the investment by tracking and analyzing the impact.

Technology
Property management is a very specialized industry. Most management firms are run by
mom and pop businesses that have been doing business for decades. Management
organizations have just lately begun to use real estate technology into their operations.
Manual entry of repair and maintenance requests, hand-written work orders, and
photocopies lease applications have all been reduced as a result. Management firms are
increasingly shifting all of these activities to the digital sphere. And not without reason.

Those who use technology can more effectively manage their assets. An owner may
quickly obtain reports from the system and share that data with others, such as lenders,
investors, and contractors, as needed. Owners can monitor communication between
property managers and tenants to identify areas for improvement, such as how quickly
the property manager responds to maintenance requests or any concerns tenants have
about things like property amenities or potential rent payments. Owners have always
had to rely on property managers to supply this information. Owners can now have this
information at their fingertips, updated in real time.

Law
Real estate law, often known as real property law, refers to the rules that govern the
ownership and use of land in the United States. Real estate law is a field of civil law that
deals with the right to own, own, utilize, and enjoy land as well as any permanent man-
made modifications to it. Most of us are affected by real estate law on a daily basis,
whether directly or indirectly, as homeowners, renters, landlords, home purchasers, and
home sellers.

While realtors (or real estate agents) can assist you with the process, you should speak
with a real estate attorney for assistance with real property law issues.

Every state in the United States has sole jurisdiction over the territory inside its borders.
Each state has the authority to decide the form and impact of a real property transfer
within its borders. As a result, state law requirements, local government ordinances,
and municipal rules differ greatly from one another.

Economics

The Philippine economy is showing signs of improvement. In fact, the Philippine

Statistics Authority (PSA) reported an 8.3% increase in the country's GDP during the first
 quarter of this year. This continues the upward trend that began in the third and fourth
quarters of 2021, when it was 7.0% and 7.8%, respectively.

But what is causing this increase? The Asian Development Bank (ADB) attributes this
economic growth to rising domestic spending. Manufacturing, wholesale and retail
trade, motor vehicle and motorcycle repair, and transportation and storage were
particularly active in the fourth quarter.

Furthermore, ADB believes that economic growth in the Philippines would continue if
pandemic limitations are eased further. As a result, previously suspended industrial and
construction operations can now restart. Furthermore, in its publication 'Asian
Development Outlook (ADO) 2022,' the Asian Development Bank forecasts 6% and 6.3%
economic growth for the Philippines in 2022 and 2013, respectively.

B. Porter’s Analysis
Switching the cost
 The competitive environment Porter created is impacted by the threat of new
entrants, which also impacts the capacity of current businesses to become
profitable. For instance, a high threat of entrance indicates that new competitors
are likely to be drawn to the industry's earnings and can easily enter the market.
Existing competitors' market share and profitability may be threatened or
reduced by new competitors, and this could lead to adjustments in product
quality or pricing. There are virtually little entry barriers in the graphic design
profession, which is an illustration of Porter's threat of new entrants.
Increasing supply cost
 Rockwell Workspaces' leasing revenue increased by 1% versus previous year,
mainly due to increased rental rates from renewed. The report attributes this
rise to an increased supply in locations with planned construction and
infrastructure projects. Prices that are higher encourage producers to produce
more of the good or commodity, given that their costs aren't rising as quickly. A
cost squeeze brought on by lower pricing restricts supply.
New land quality
 The degree to which a piece of land is uncontaminated and thus appropriate for
a certain use is referred to as its quality. Many of the contaminated sites that are
still present in the UK today are a result of historical industrial operations that
frequently had negative effects on the quality of the soil. Assessing the dangers
to human health and the environment from historical contamination has grown
more crucial since there is increased pressure to rehabilitate previous industrial
areas (such as landfill sites and industries).
Buyers ability to choose
  In retrospect, it seems clear that the traditional media fulfillment and
distribution economy was doomed to failure, even without taking the rise of
streaming into account. The industry was under pressure from online fulfillment
and distribution platforms that were constantly innovating and from shifting
consumer expectations regarding media consumption. Players in the industry
were suffering, watching helplessly as revenues and earnings decreased while
the declining market further heightened competition. As a general rule,
commercial consumers prefer to buy in larger quantities and with better
certainty, as was the case with respect, giving them more negotiating power
than retail consumers.
 Buyers in our industry have greater bargaining power in comparison to our
industry players since big volume clients let firms to spread expenses across
more units, and unused stopped fixed assets can be costly to industry players.
The cost of switching, or the price paid by customers to switch between
competitors in an industry, is the component that intuitively has the biggest
impact on bargaining leverage. People typically think of switching costs as being
one-dimensional, but "costs" in this context must be defined broadly, coming to
include elements that any buyer would consider during procurement, including
but not limited to financial costs, operational costs, reputational costs, quality
costs, setup costs, and costs associated with finding new suppliers, to name a
few.

C. External Factors Evaluation Matrix

OPPORTUNITIES
O1. Land
 According to research, the global real estate industry would reach $3741.06
billion in 2022. In addition, the majority of Overseas Filipino Workers (OFWs)
desire tranquility when they retire or return to the Philippines. Investing in
Philippine real estate is a wonderful approach to do this. Because property
values are rising swiftly in the Philippines, real estate is quite popular.
Additionally, a few real estate firms provide flexible financing at cheap interest
rates. But real estate has its risks, just like any other type of investment. You
require a lot of money to buy, but you can make money right away when you sell
it.
 Apart from ROI and liquidity, growing your financial capacity is the main reason
you’re starting investments. You will have a multi-income potential once you
invest in Philippines real estate. Another significant advantage of investing in real
estate in the Philippines is the low entry cost. While all high-price items
depreciate fast, real estate will increase in value. Demand will play a part, like
when you buy a house in a city with supply restrictions but high demand. But,
 the rate of appreciation will vary per market. Once there is subdivision
development in an area, other developers will have an opportunity. Bases of
property appraisal are commercial, residential, and industrial growth.
Developments and improvements in various areas increase property values in
the Philippines.

O2. Investors
 The real estate sector is putting aside what it views as cyclical obstacles, such as
rising interest rates, a shrinking GDP, and declining transaction flow, and is
instead adopting a long-term perspective on real estate assets. The real estate
professionals we spoke with for this year's Emerging Trends are in a cautiously
optimistic frame of mind. Their strategy was to weather the current downturn
while repositioning their businesses for another time of steady growth and high
returns.
 Rental income, appreciation, and earnings from businesses that rely on the
property are how real estate owners’ profit from their investments. Passive
income, consistent cash flow, tax advantages, diversification, and leverage are all
advantages of real estate investing. Once operational costs and mortgage
payments have been made, a real estate investment's cash flow is its remaining
net income. Cash flow generation is a fundamental advantage of real estate
investing. In many circumstances, as you pay down your mortgage and increase
your equity, your cash flow will only get stronger over time. Numerous tax
benefits and deductions are available to real estate investors, which can result in
financial savings during tax season. The reasonable expenses associated with
owning, running, and managing a property are often deductible.
O3. Buyers
 Prices, supply, and investment possibilities for real estate are influenced by a
number of factors. Demographics reveal the age, income, and preferred regions
of actual or future purchasers, as well as the proportion of retirees and those
who could purchase a second home or vacation property. Interest rates have an
effect on both the price and demand of real estate; lower rates attract more
purchasers since obtaining a mortgage is less expensive, but they also increase
the demand for real estate, which can lead to an increase in prices. Real estate
values frequently fluctuate with the status of the economy, but buyers of REITs
or other diversified holdings who are either immune to economic cycles or
resilient to downturns can reduce this risk. Laws and regulations enacted by the
government, including tax breaks.