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How Cheap Homes Made a Filipino Rich

"GOD PROBABLY MEANT ME to build houses for others." Manuel Villar is reflecting on the phenomenal success of his business: developing low-cost homes in the Philippines. On July 31 the listing of his flagship Camella & Palmera Homes made the 45-year-old tycoon and congressman Asia's newest billionaire. At last week's price of 17 pesos a share, the 80% stake in C&P that Villar and his wife Cynthia own is worth about $1.5 billion. If that is part of some divine plan, God didn't give Villar much to start with. For the Philippines' biggest home builder began life in a tiny rented apartment in Manila's gang-infested Tondo slums.

The C&P listing has now confirmed Villar's place among the seriously rich. He also owns 450 hectares of prime land near Manila's international airport - mostly bought during the dismal final years of the Marcos regime. Today the real estate, boosted by the country's return to democracy and economic rebound, is conservatively valued at $2.6 billion. Recently, Villar was voted the nation's best-dressed congressman for his fastidious taste and fashionable suits - just one more mark of how far he has risen from his beginnings as the eldest son among eight children of a civil servant and a fish and shrimp vendor.

His climb reflects the Philippines' own resurgence, which is fueling the property boom that has made Villar a $4-billion man. After three decades of distracting, if not disruptive, politics, the nation has over the past year refocused on the march toward prosperity - as Villar once did. "I just wanted to be very rich," Villar says of the ambition of his younger days delivering shrimp for his mother in the Divisoria market district.

Few Filipinos share such an intense drive more deeply than the hundreds of thousands who have left family and homeland for higher-paying jobs abroad. These overseas contract workers (OCWs) have sent home billions of dollars through the years. And that cresting tide of money is precisely what Villar tapped for his housing developments, even in the midst of the Philippines' mid-1980s depression.

While other developers reeled from the economic and property meltdown, Villar honed in on the one segment of society unaffected by the downturn. OCWs saw their dollar earnings swelled by the peso's dive from nine to $1 in early 1983 to 20 by the time Marcos fled three years later. "For them the dream of owning a home was paramount - nobody else saw that business opportunity," recounts the legislator representing suburban Las Pi–as, where his family lives in a four-hectare spread near his first housing project. Since that 160-unit development in 1977, he has built 100,000 homes, most of them sold before or during construction - and a third to overseas workers.

Today, C&P can build up to 1,750 houses a month and Villar aims to double its sales in 1995 and average 25% annual growth over the next four years. The company owns or has options to buy more than 2,500 hectares of land, enough for some 217,000 homes. Using economies of scale to lower costs, Villar claims C&P can build a house in ten days. Now, even developers of upper and middle-class housing, such as Ayala Land, have begun courting the lower-middle bracket that Villar has made his own. And his winning way has rubbed off on his political fortunes as well. In 1992 he won his seat on his first try, and in May this year he was re-elected with the most votes in the nationwide polls. Villar has, says one constituent, "vision and the ability to make things happen."

In his youth, though, things weren't happening fast enough. "I was very impatient," he admits. "I thought formal schooling was a waste of time. I just wanted to work and go into business." Besides his poor origins, Villar was prodded along the road to riches by the example of hard-working, astute Filipino Chinese traders in Divisoria. His yen for making money in the real world dulled his enthusiasm for study through high school and college. He did get an accounting degree from the state University of the Philippines, where he also met and wooed Cynthia. But even as a student, Villar continued his childhood trade, delivering fish to restaurants - until a defaulting client wiped him out.

That led him to study for an MBA and take a nine-to-five job in the early 1970s, first at leading accounting firm SGV and then at investment bank PDCP. But the entrepreneurial bug did not stop biting and Villar was soon trying out various ventures. One of them, delivering gravel and sand to housing construction sites, made him wonder whether he could build homes for profit. So at age 26, when his friends were just starting to dream of owning their own home, Villar borrowed to build one - and sold it soon after it was finished at a $700 profit. At the time, he vowed to an employee: "One day I'll be the biggest homebuilder in the country."

A year later in 1977, Villar made his first million pesos on the 160-house development near his present home. He then decided to focus on low-cost housing, which established developers shunned. "I went below the [middle-class] BF Homes market," says the entrepreneur. His strategy: buy up small and irregular-shaped spaces that big developers couldn't sell, subdivide them into smaller plots, and offer buyers not just the land - as is common in the Philippines - but also the house to be built on it.

By building on lots within major projects - "pocket development," in Villar's words - he saved on the cost of constructing long access roads, power and water lines and other infrastructure. Since he was building homes by the dozen, he realized further economies, which made his prices irresistible to buyers of limited means. And his firm handled all the paperwork for clients. In 1987 the new Unified Home Lending Program, which simplified the financing procedure, further boosted Villar's sales. He also came up with a few innovations of his own, including loans covering mortgage downpayments.

But the biggest boost to Villar's fortunes came a year before: the 1986 People Power revolution that ousted Ferdinand Marcos and restored confidence and growth to the Philippines. Property values skyrocketed - including hundreds of hectares that Villar had bought amid the panic that followed the 1983 murder of dissident Benigno Aquino. While most people were getting out of property, Villar poured his assets into raw land going for giveaway prices. "That land is now worth at least 30 times what I paid," he says.

Despite their billions, the Villars still live in their two-decade-old home. But the sprawling bungalow with expansive gardens inside a high fence does have tighter security now, and Villar has sent his two sons abroad to study. Wealth has also led him to dabble in politics. As Villar tells it, his father-in-law, a former town mayor, had persistently urged him to run for office. "I said no as many times as he asked me, and I even went to Hong Kong with my wife just to get away from his pleas," the congressman recalls. "But in Hong Kong where I thought I'd be safe, my wife whispered to me in bed, 'I think it's a good idea.' I knew I was beaten."

A popular legislator, Villar has taken up environmental and economic issues. He has pushed measures for mass housing, including the infusion of new capital into the National Home Mortgage Finance Corp. In 1992 he was part of the Philippine delegation to economic and debt talks with the IMF in Washington. In his backyard he established a $400,000 seedling nursery to spearhead a tree planting drive around the country. He also sponsored legislation that required tree-planting in the open spaces of subdivisions and industrial and commercial estates.

Clearly, Villar has a knack for addressing national and business interests together. He brings that ability to do two things at the same time to his everyday affairs, having meetings on his morning jog or over lunch (a favorite dish: wonton mami, or dumplings in noodle soup). He does set aside one month in a year for a holiday with the family. But the business isn't really a chore he feels he has to get away from to relax. "To me, it's not work but fun," he says. "I'm always excited about creating something new."

At present, the country has a shortage of 3 million houses for low-income families. Villar says C&P can build them faster now, since houses are smaller than in his first project. Current models range between 21 and 74 sq meters, costing $6,000 to $82,000. But Villar balks at using prefabricated materials to speed construction. "Building houses is a socially intensive business," he says. "If we go assembly-line, many people will lose their jobs," two-thirds of those working for C&P. For the ex-slumdweller in Villar, that would be cruel. And for the developer, it's better to give more people jobs - and move them closer to buying their own home.

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