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Saturday, November 23, 2013

Information : The Growing World Retiree Market - Conclusion (Part V)

Marketing Challenges & Opportunities
By Mario G. Zavalla 

International retirement migration will assume greater importance to the economies of the host countries for the duration of the 2000’s as more and more retirees migrate to other countries in search of a higher quality of life at the same cost than what they could otherwise obtain in their home countries. On the other hand, those with relatively high proportion of aging persons to total population like Japan, and to a lesser degree, the United States and other highly-developed nations will continue to feel the pressure brought about by a burgeoning elderly population.

For countries like the Philippines which is seriously attempting to attract foreign retirees, it is imperative for the concerned sectors, especially real estate developers,  to comprehend deeply the retirees’ physical needs and wants as well as their aspirations for a higher quality of life. They should not treat this segment simply as another market to sell condominium projects  but rather retirement services where real estate is just a component albeit a large one.

The Philippine Retirement Authority (PRA)

PRA Special Resident Retiree Visa

The late President Ferdinand E. Marcos, realizing the tremendous economic benefits that a retirement industry can bring to the country, signed into law Executive Order No. 1037 on July 4, 1985 creating the Philippine Retirement Authority (PRA). It is mandated to attract foreign nationals and former Filipino citizens to invest, reside and retire in the Philippines. With a Special Resident Retiree’s Visa (SRRV) issued by the Bureau of Immigration, a retiree enrolled in the program  is given multiple-entry privileges, exemption of household furnitures from customs duties and import taxes, permanent residency at his/her option and others. Complete details and information about the Philippine Retirement Program can be obtained by communicating directly with the author of this article or by visiting PRA’s website at 

As of September 2013, the PRA has enrolled more than 31,000 participants into its program consisting of many nationalities. The top 3 countries of origin are Mainland China, then Korea followed by Japan. For the consumption of real estate developers and other investors who want to venture into the development and marketing of retirement services, we are showing  a rough study of a  one-hectare prototype retirement project in a resort setting  located in or near Tagaytay City targeting active seniors coming from either Mainland China, Korea and/or Japan belonging to the 55 to 65-year old bracket.

Assumptions :

Retirement Services & Facilities :
•  Shared living accommodations for 2 couples per bungalow with a floor area of 170 square meters, excluding a 2-car garage
•   Free breakfast
•   Emergency clinic with nurse on duty from 6:00 A.M. to 6:00 P.M. and van
•   Free use of gym
•   Massage
•   Spa
•   Salon
•   Dining/Coffee Shop
•   Utilities for the account of the Resident Retirees
•   Free housecleaning once a day
•   Laundry area
•   Free Wi-Fi
•   Free minor repairs of appliances
•   Free grounds  & building maintenance
•   Cable TV
•   Tour of Metro Manila & other places of interest (Optional)
•   Transportation to medical appointments


1.   Each bedroom will be leased for a period of 20 years for US $250,000 (P10,750,000) payable as follows: Down payment of US $50,000 per couple, the balance in 240 months at 6% p.a., or US $1,432 (P61,576) per month

2.  Each couple will pay monthly dues of US $400 (P17,200)

3.   Development Features:
    •   40% open space
    •   A 600-square meter clubhouse containing the following:  clinic, gym, spa, massage room,
salon, social hall, dining/coffee shop, 5 guest rooms, laundry area with washing machines, veranda,  living quarters for stay-in and emergency staff
    •   Landscaped surroundings
    •   Concrete roadways, curbs & gutters
    •   Back-up genset for the clubhouse

4.  Standard Housing Features:
    •   300-square meter lot
    •   2-BR bungalow with a floor area of 170 sq.m., excluding a 1-car semi-covered garage
    •   Spacious bedrooms which can comfortably accommodate 2 couples. Each bedroom will be     furnished with a king-size bed, mattress, pillows & night table, toilet & bath with shower enclosure & water heater, TV set, air conditioner, refrigerator & cabinet
    •   Common study/reading area, sala, dining & kitchen
    •   Garden

5.  No pre-selling

Estimated Investment Requirement:

Cost of land – 10,000 sq.m. x P1,200…………………..P12,000,000
Land development……10,000 sq.m. x P1,500…………P15,000,000
Cost of housing units, incl. furnishings & appliances
     170 sq.m. x P28,000 x 20 units……………….........P95,200,000
Cost of Clubhouse
     600 sq.m. x P30,000…………....…........................P18,000,000
Van……………………………………………….....….......P 1,750,000
Architectural & engineering fees, deposits,
licenses and fees equivalent to 10% of land
development & cost of construction of
housing units & clubhouse……………………………....P12,820,000………P154,770,000

Projected Yearly Cash Flows At 100% Occupancy


Downpayments :
US $50,000 x P43 x 40 bedrooms…………………P86,000,000

Installment Payments :
US $1,432 x P43 x 40 bedrooms x 12 months…….P29,556,480

Dues :
US $400 x P43 x 40 bedrooms x 12 months ………P 8,256,000……………….P123,812,480


Salaries and Wages :
15 workers x P10,000 x 14 months………………......P 2,100,000
Food supplies, toiletries & cleaning supplies…….....P 4,400,000
Utilities in common areas, incl. clubhouse……….....P 410,000
Real estate tax (2% of cost of land, land
development & buildings………………………..........P 2,804,000…… P 9,714,000

Miscellaneous (10% of P9,714,000)………..…….....P 971,400
Total Outflows……………………………...……........P 10,685,400

NET INFLOWS………………………..……....……...P 114,098,480

To conclude our report, we are narrating  the different lifestyle experiences reported in local periodicals by two retirees residing in the Philippines.

In the case of a 70+-year old retired elementary school teacher from Japan, she said, “This is paradise. Who wants to go back to Japan? Everything (in Japan) is so expensive. If you don’t have a fortune, your final days are just miserable.” Instead of squeezing by financially in Japan, she stays in a 3-bedroom townhouse located in Manila along with 10 other Japanese families, studies English, practices Flamenco dancing and goes diving. She added, …..about Y250,000 in monthly pension payments isn’t enough for a dignified life in Japan, but here, I can even afford two maids and a driver….”.


I will tell why I particularly enjoy living at Citylights Gardens Condos. First, a physical description of the place. Citylights is high in the hills of Lahug, Cebu, overlooking the city on one side, and very high-end housing with three ranges of mountains behind, on the other. You can see the blue-green domes atop the towers from many places in the city. Two of the towers were built in 2000, and the two larger towers are being finished now. If you know where the Marco Polo Plaza Hotel is, you have only to go up the road a bit to find the entrance to Citylights. Because they occupy a large level spur on top of a hilly ridge, with a drop-off on three sides, every condo has wonderful views. The large size of the parcel allows for many garden areas, a social hall, gym, playground, tennis courts, golf putting area, basketball court and a large pool. Each of the first towers have 15 floors, with six condos per floor.  The new towers have 18 floors, still only six to each floor. This plan maximizes views and minimizes hallways. When towers three and four are complete, there will not be any further construction. All the buildings are painted in pastel shades of peach and white. In looking for a new home, I had seven main objectives,  based on my earlier experiences in this country: location, security, privacy, quiet, climate, affordability and access to a large swimming pool.

Living at Citylights, I have been able to meet most of my objectives. The location is ideal; far enough from the congestion of the city, yet only a few minutes to several malls, where modern Filipino life is centered. It is just 20 minutes away from most parts of the city, double that to the wonderfully uncongested Cebu/Mactan airport. I can lock my door and be at the airport, with peace of mind, in about forty minutes. Citylights is on the national road to Toledo, which goes further up, should you want to buy some orchids or explore the mountains. Security is excellent, with a gated guard post, roving guards and a concierge at the entry to each tower. These guys are almost always awake to guard us. The underground parking is lit and safe. Driving up the hill, I turn in the drive, go by the guard post, giving a wave to the guard, who recognizes my car. I can then either go by the porte-cochere to pick up or drop off, or park underground, taking one of two elevators to my floor; walking a short distance to my door. I feel quite well taken care of here. Giving those tee shirts to the staff at Christmas was a good idea, but answering their smiles with a smile is a better one! When a delivery or service person arrives, the concierge calls. No one can enter the compound without my permission. When I leave my air mattress at the pool, they remind me. Our own maintenance staff is on call. Privacy is relatively assured by the height and location. No one looks into my main view windows.

It is a romantic idea to want to live by the sea, but experience has taught me that the seashore in this land can be one of the hottest places. The climate up here is a lot cooler than other parts of Cebu. Downtown is about three degrees hotter, Mactan is about four. This is because we almost always have a breeze blowing by our balconies and airing nicely through the gardens. And, the only mosquitoes above fourth floor are the ones which came in the elevator! Ants, well, that is another topic. I don’t know how high they can go! Those of us who have lived here awhile know that finding quiet places in this land can be very challenging. Even in remote locations, there may be roosters and dogs going off at all hours. Many Filipinos seem to be able to afford monster speakers for home or truck and love to share boom-boom music. While it is not completely quiet at Citylights, most of this is too far away. Citylights rises above most of the noise and other pollution of the city. And, when the windows are closed and the air con is on, a heavenly peace is ours. Except during the annual barangay fiesta, of course! They rent some humongous speakers! Condos here are between seven and ten million pesos, which is in the luxury range for Cebu. You could get a small house for less, but not with the advantages of quality construction, location, security, and service that we enjoy here. Of course you know that we SRRV members can buy a condo outright. As a matter of fact, we can buy as many condos as we want, all without marrying into the country and acquiring two hundred new relatives! Monthly dues are in the range of $150.-200., about one fourth what they would be for a condo in Hawaii, where the staff would probably also be Filipino.

Did I mention the swimming pool? I had to do a little experimenting to find a 25 meter straight place where I could do laps, because it a “free form” pool, meant more to look good than do laps in. But I found the perfect push-off places, and the pool is handsome. The bottom is light blue tile, the temperature is always just right. The water flows over the sides, and the staff tries to keep the leaves out of the sparkling water. My favorite routine is to sprawl on my air mattress to recharge my solar batteries, ten minutes on a side, watching the finishing touches being applied on the new towers, before doing my laps. After that experience, and a Cerveza Negra beer, I feel that I know the true meaning of retirement!


Picture Source:   Philippine Retirement Authority

Related Link :

Growing World Retiree Series :  (Part IV) (Part III) (Part II) (Part I)

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