Saturday, January 16, 2010 [ sunstar.com.ph ]
MAYOR Tomas Osmeña admitted SM Prime Holdings Inc.’s hotels and condominium projects will compete with the Cebu City-Filinvest Land Inc. (FLI) joint venture, but said he is optimistic there will be a strong market for it in five years.
Even with the direct competition, FLI welcomed the entry of SM Prime in the South Road Properties (SRP).
Osmeña has previously said he does not want investors to have the same development concepts to avoid competition.
Yesterday, though, he said the City’s joint venture with FLI to develop residential buildings will not be affected so much, because SM Prime will begin construction in 2015 yet.
FLI, on the other hand, will start the construction of residential buildings at the 40-hectare joint venture area this year. FLI will break ground in April. The mayor approved their building plans last Thursday.
Validates its potentials
“The entry of SM in SRP is a welcome development. It further validates SRP’s very exciting potentials. We in Filinvest can only be so glad that we invested in it ahead. SM’s entry also reaffirms the validity of Cebu City’s process of (disposing of) SRP lots,” said FLI vice president Tristan las Marias.
Despite the competition, Osmeña said he accepted the offer of SM Prime to buy a 30-hectare portion so the City can pay its annual loan obligations.
As the owner of the land, the City stands to get at least 10 percent of the gross sales of FLI of all condominium units in the joint development area. That is why the mayor earlier said he does not want another condominium project to compete with the joint venture.
In his news conference yesterday, Osmeña said SM Prime’s development is expected to compete with the Cebu City-FLI project.
No choice
“There will be a problem with that but what choice do we have?
We need to raise the cash. Without the SM sale, magkaproblema gyud ta because Filinvest is not enough (we’ll have a problem because the Filinvest proceeds won’t be enough),” the mayor said.
But he said that even without the sale to FLI and SM Prime, the City can still afford to pay its annual loan obligations to the Japan Bank for International Cooperation for the SRP.
“What is important here is that one of the plans of SM, the condominium buildings, will be after five years so maybe by that time the market is good already, we can absorb both (FLI and SM),” Osmeña continued.
City Administrator Francisco Fernandez earlier said that the City informed FLI on the development of SM Prime and did not hear any objection from them.
The mayor signed the deed of conditional sale with SM Prime President Hans Sy for a 30-hectare property worth P2.7 billion.
The mixed-use development will include a shopping mall with a gross floor area of 25 hectares, hotels, high-rise residential buildings, a hospital and a school.
SM Prime paid a P677-million down payment and will pay an additional P433.9 million by the end of this year.
Now that the SRP has a shopping mall, Osmeña said he does not want another mall to rise in the area to keep SM store owners from closing shop.
He said he will advise against it, but the City Council may do otherwise after the end of his term in July.
After the sale of lots to SM Prime, the mayor said he will not be selling any more properties since the income from SM and FLI will be enough to cover the remaining loan obligations.
“It’s not advisable to sell lots for another mall for the simple reason that I don’t like store owners in the SM mall to complain that there’s no business, and then they will close shop and there will be a lot of empty spaces. The next City Council can open up another mall but I will not advise it,” he said.
Osmeña stressed there was no restriction from the Sy family not to allow another mall to operate in the area.
With the P2.7-billion deal with SM Prime, he said he can now laugh at his political opponents and critics. He said this is one of the reasons he wanted to close the sale before his term ends.
“I wanted to see to it that this will provide cash flow to take care of our debt service for the next few years and also, it’s to make fun of my opponents who keep insulting me. I want to have the last laugh,” Osmeña said.
He reminded the Cebuanos of the position of opposition figures on the SRP.
Lahug Barangay Captain Mary Ann de los Santos has said she wanted to return the SRP to the National Government to rid the City of the debts, while Tinago Barangay Captain Joel Garganera has said the City’s sale of the SRP is illegal.
Former mayor Alvin Garcia and businessman Jonathan Guardo also criticized City Hall for the absence of a master plan for the SRP.
“If you listen to what they say, there should be a master plan.
Let’s use their argument and you know what’s going to happen? SM will pull out... We should count our blessings that they lost in the last elections,” the mayor said. (LCR)
Published in the Sun.Star Cebu newspaper on January 16, 2010.
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