Globalization and the Urban Property Boom in Metro

Cebu, Philippines

Edsel E. Sajor

ABSTRACT

The hyper mobility of capital and the associated growth of international

investment in real estate which occurred across the world in the late twentieth
century, led to bursts of property development and market booms. This
article examines how this global trend interfaced with local processes in the
setting of a secondary metropolis of a developing country, in Metro Cebu,
Philippines, and resulted in a property-led development dominated by pro-
duction of high-end residential real estate commodities, the rise of a specu-
lative land market, and a highly regressive spatial allocation. It is argued that
this regressive outcome was mediated by a weak state, controlled and
dominated by predatory and rent-seeking bosses who, in Cebu in particular,
are not simply representatives of the local oligarchy but are big real estate
developers and brokers themselves. During the boom period, neither the
middle classes, whose members were also attracted to speculative property
buying, nor the low-income and urban poor groups, who were largely hood-
winked by official rhetoric of social housing reform and by token participa-
tion, provided any significant social force to constrain the opportunism and
rent-seeking of these bosses or to challenge the pro-growth governing agenda.

INTRODUCTION

In a path-breaking article in the context of world city formation two

decades ago, authors Friedman and Wolff argued that enhanced integration
of cities into the world economy creates kaleidoscopic spatial forms under-
pinned by an ‘ever-shifting topography of land values which quickly and
efficiently excludes all potential users who are unable to meet the price of a
given parcel of land [that] of course . . . does not correspond to any social
need’ (Friedman and Wolff, 1982: 324). This interrelationship between
global economic restructuring, shifting land values and social equity
becomes an even more important issue today in the context of international
free flow of capital in land property investment not only in cities of devel-
oped countries but in those of developing countries as well. Dealing with
such a wide range of heterogeneous cities compels us to look seriously
at local specificities in examining the equity impact — enhanced global

Development and Change 34(4): 713–741 (2003). # Institute of Social Studies 2003. Published
by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St.,
Malden, MA 02148, USA
714 Edsel E. Sajor

property investment will not automatically have a regressive impact.

Endogenous institutional and policy factors, and the actions and powers
of local actors in given urban localities intersect with globalizing forces
in constituting particular characteristics of the property market and in
reordering existing spatial patterns in a way that creates redistributive
shifts affecting certain groups of residents.
One of the most important dimensions in understanding the local equity
outcomes of globally-linked property development is the mediation of the
state and associated politics. The state, especially at the local level (influ-
enced by and interacting with the national level), sets the city’s development
agenda, its strategies and programmatic tools. But the fact that it sets a
certain agenda as imperative and chooses certain strategies and tools and
not others should not be seen in the functionalist sense that it has to
undertake ‘must’ activities to favour capital (Mollenkopf, 1996: 224). Why
the state is responsive to certain stakeholder groups and not to others in
policy-setting and decision-making is related to questions of who governs
and to what ends. These questions highlight the essentiality of the medium
of politics in decisions and non-decisions, and the intervention and non-
intervention of the state in property development processes. In pursuing
these questions it is necessary to examine certain historical characteristics of
the state and dominant politics (vis-à-vis societal forces and particularistic
interests) in a given country and locality. For instance, there is a gulf of
difference between mature liberal democracies in developed countries, and
the characteristics of states and politics in developing countries, a difference
that bears heavily on the nature and prospects of overall governance
(Leftwich, 1993).
This article presents the case of a secondary urban metropolis in a devel-
oping country, which became the site of a globally-linked real estate boom
from the late 1980s to the mid-1990s. It first describes the boom itself,
tracing its origins and key players. It then goes on to examine the redis-
tributive implications of this property boom, showing how this was shaped
by the mediation of the state and local powerful actors, phenomena that
have often failed to get the attention they deserve in the literature on
globalized property development.

THE PROPERTY BOOM, EQUITY AND THE STATE IN DEVELOPING

COUNTRIES

Internationally, the 1980s and 1990s witnessed an unprecedented flow of

international portfolio investment in real estate (Forbes and Thrift, 1987;
Knight, 1998; Sassen, 1998). This flow of capital included speculative prop-
erty investment, facilitating ‘boom and bust’ property cycles (Dehesh and
Pugh, 1999; Pugh, 1997: 157). These property investments and projects
contributed to the rise in importance of global cities (Fanstein, 1994; Sassen,
Globalization and the Property Boom, Metro Cebu 715

1991). At the same time, new growth centres emerged in the urban areas of
countries of the Asia-Pacific Rim, a region considered to be the most
dynamic property investment area of international capital (Berry and
McGreal, 1999; Olds, 1995; Thrift, 1985).
The reach of the property boom was wide. For Southeast Asia, studies
have shown how the fast pace of internationally-linked property develop-
ments since the late 1980s have radically altered existing spatial patterns to
serve metropolitan expansion and have caused massive land conversions from
rural to urban use (Douglas, 1989; Firman, 1997; Kelly, 1998, 1999). They also
created new physical structures and complexes requiring large tracts of land
that cater primarily to middle and upper classes (Dick and Rimmer, 1998).
Most of the studies on Southeast Asian property development and urbanizing
trends have been confined to mega-cities or the primary metropolitan areas of
the country, such as Bangkok (Parnwell and Wongsuphasawat, 1997; Setchell,
1995; Yap, 1989, 1992), Jakarta (Douglas, 1989; Firman, 1997; Goldblum and
Wong, 2000; Jellineck, 2000) and Manila (Magno-Ballesteros, 2000). To date,
with the exception of Firman (1996, 2000) there is a dearth of material on
secondary or tertiary cities or intermediate urban areas of developing countries
in Southeast Asia.
There is an equally significant silence in the literature on the equity
implications of these bursts of real estate development in Southeast Asian
cities, particularly on how aggressive property development and market-
driven shifts in land prices have affected access to land to meet the basic
housing needs of low-income groups and the urban poor. A few recent
studies have touched on this theme, but again they are limited to the
mega-urban centres of Bangkok (Setchell, 1995; Yap, 1992) and Jakarta
(Goldblum and Wong, 2000).
Where the theme of equity in land development in developing countries
has emerged is not in recent literature on property development and global-
ization, but in the conventional urban housing literature on Third World
cities. In the latter, rising urban land values have always been an important
concern since access to land and tenurial security — largely determined by,
but not limited to, conditions of the market — are important not only to
housing but to urban subsistence (Berner, 2000: 555–6; Evers, 1984; Moser,
1998). But in the literature on urban housing in developing countries, rising
land prices in cities have conventionally been correlated with the impact of
the combined factors of dramatic population growth, and expansion and
concentration of the most productive activities in the cities, notably by
multinational manufacturing firms. It is commonly argued that constantly
high rural to urban migration and urban growth have shaped a high con-
sumption for urban land for housing (see Gilbert and Gulgler, 1992; Hardoy
and Satterthwaite, 1989; Kasarda and Parnell, 1993). Speculative land
buying and real estate development in the face of rapid urban growth have
also been touched upon, less prominently, as factors jacking up land prices
and exacerbating the problem of urban poor shelter. These phenomena,
716 Edsel E. Sajor

however, are often seen as a mainly endogenous trend of increasing

commercialization of land in the cities of the Third World (cf. Brennan,
1993; Kothari, 1994; Yeung, 1991) and have not been examined in the
context of interrelated global and domestic rapid flows of capital investments
in the property sector.
As outcomes of mainly endogenous processes of urban population
growth and land commercialization in the post-World War II period,
the problems of availability and affordability of urban housing land
tend to be viewed as gradual phenomena, building up over decades, with
a predictable incremental increase. Dramatic and volatile shifts of land
prices and supply over short periods, influenced by the spurts and bursts
of internationally-linked property investment flows and development,
are rarely addressed.
In studies of property development and urban land markets in developed
country city settings, the actions and policies of the state at the city and/or
national level are recognized as important mediating factors. The state is a
critical actor in the ‘development process’, and in its equity outcome (Dieleman
and Hamnett, 1994; Edwards, 2000; Healey and Barrett, 1990). Direct and
indirect regulations, such as zoning, make urban land cheaper or more
expensive for specific development uses. City governments can subsidize
growth — and capital accumulation in real estate — through a variety of
interventions, including tax relief, public service provisions and infrastruc-
ture projects (Gottdiener, 1985: 247; Gottdiener and Feagin, 1988; Logan
and Molotch, 1987). In urban property development, different outcomes are
determined by variations in the public policy context: an existing city plan-
ning and legal framework may, for example, be pro-active, facilitatory or
rigid (D’Arcy and Keogh, 1997), which will have consequences for the task
of meeting local social needs in land development. Even in developed
countries, where states have a stronger professional tradition and more
administrative capacity for land regulation and urban planning, serious
regard for social equity in urban property development projects has been
problematic (Fanstein, 1991, 1994; Feagin, 1990). For developing country
cities, the literature suggests that, historically, local governments have little
to show in terms of providing public land for housing or regulating land use
to secure adequate space for urban poor housing development (Brennan,
1993; Hardoy and Satterthwaite, 1989; Pugh, 1997: 153; for Southeast Asian
capital cities, see Linn, 1987; Ruland, 1996).
The critical role of the state as a mediating factor in determining out-
comes in property development processes is further underscored in more
recent studies in developed country cities that point out the aggressive role
of local (urban) governments in attracting inward investments, desirable
residents, and major sporting events, in the face of rising inter-city competi-
tion (Gordon, 1999; Gottlieb, 1995). But such a stance is also increasingly
true for developing country cities, which in recent years have joined the
competition for mobile global capital (Berry et al., 1999). An important
Globalization and the Property Boom, Metro Cebu 717

question arises: can Third World states and their city governments handle
the equity challenge as they compete for global capital (often in the form
of partnerships with, or through foreign portfolio investments in,
domestic property companies) and allow rapid property development?
Third World urban areas still face the problem of meeting the high demand
for land for housing, as a result of rising urban populations: at the same
time their urban spaces are being transformed into ‘open fields’ of inter-
national real estate investment and into global property commodities
triggering dramatic shifts in local land values and distribution. These
processes might translate as the ‘social costs of breaking into the world
market’ (Schmidt, 1998: 130).
Devising equitable and efficient land development policies has long been
a major challenge facing developing country cities. Various forms of effect-
ive state interventions — physical, legislative, and administrative — are
needed to increase efficiency and to distribute benefits in land development
equitably across income groups. Market mechanisms alone are unlikely to
achieve this, yet many of these cities’ governments have been plagued by
major institutional constraints and lack of managerial expertise, limiting
their potential to effectively intervene for socially desirable urban develop-
ment goals. Several authors have drawn attention to these institutional and
managerial capacity deficiencies in Southeast Asian cities.1
Yet, however significant these constraints may be, they do not exist in a
vacuum; they cannot be isolated from the characteristics and dynamics of
particular states and the dominant politics at work in the cities and coun-
tries of the region. In this context, it is important to identify the most
relevant characteristics of the state and to assess how these influence cap-
acity and performance in the land management of a city. What are the social
forces within and outside the state that prolong institutional and managerial
capacity deficiencies? Who profits from such a situation, and who displays
the most resistance to finding effective and long-term solutions?
Several scholars have broadly hinted at these issues, arguing that it
becomes harder to solve these management problems because there are
powerful vested interest groups working against solutions (Douglas, 1992;
Drakakis-Smith, 1995: 667; Hardoy et al., 2001: 311–12). It is claimed, for
instance, that in Thailand, Indonesia and the Philippines, national-level
officials in charge of major land development decisions and policies are
influenced and manipulated by powerful real estate interest groups and

1. For example, Douglas (1989) and Yeung (1989) discuss the administrative fragmentation
and lack of resources at the local level for implementing programmes in Southeast Asian
cities. Krongkaew (1996: 322) argues that Bangkok had neither effective control of land
use nor an official city plan in operation until 1992. Brennan (1993: 77) cites Metro
Manila as having virtually no effective measures to influence or control land
development. Goldblum and Wong (2000) note that metropolitan Jakarta is plagued by
weak government regulations and planning.
718 Edsel E. Sajor

often pursue a goal of rapid economic growth regardless of its adverse social
and environmental impacts (David, 2001; Firman, 1997; Setchell, 1995). At
the local city level, similar claims have been made for Bangkok, Metro
Manila and Jakarta.2 In most studies, however, discussion of these issues
is peripheral, and does not bring in the state and related politics as central to
urban management and land development.

GLOBAL AND LOCAL INTERFACE IN THE PROPERTY BOOM OF

METRO CEBU

Metro Cebu is a conglomeration of three adjacent cities (Cebu City, Mandaue

City and Lapu-Lapu City) and seven municipalities (Compostela, Liloan,
Consolacion, Cordoba, Talisay, Minglanilla and Naga) located in the
eastern side of the island province of Cebu in central Philippines. The
central area of Metro Cebu is Cebu City, comprising nearly half of its
total land area and the most densely populated of its cities and towns.
Metro Cebu, especially Cebu City, is considered the most important
industrial and commercial centre in central and southern Philippines. In
the last three decades, the area has been transformed from a regional
entrepot and agricultural processing centre, into one of the major tourism
and manufacturing locations of the country. Metro Cebu, especially Cebu
City, is seen as the secondary metropolitan area of the country after Metro
Manila. At the Population Census of 2000 Metro Cebu’s population was
1.6 million (see NCSO, 2000).
From 1988 to 2000, Metro Cebu was the site of an unprecedented spate of
development projects. In this thirteen-year period, a total of 251 projects
were launched and offered for sale in the market. The number peaked in
1997, with 48 projects in that year alone (see Table 1). The number of
projects fell precipitously in 1998, primarily due to the impact of the
Asian financial crisis, when developers faced the double whammy of peso
devaluation and high interest rates.3

2. For instance, Ruland and Ladavalya (1996: 62) note that in Bangkok, the
professionalization of the administration and the continuity of programmes and policies
are eroded by political in-fighting dominated by powerful politicians in the country.
Likewise, in the urban management of Metro Manila, deterioration has been said to
mirror dominant political and economic interests, depending much on old-style
patronage politics which prejudices the urban poor (Naerssen et al., 1996). In
metropolitan Jakarta, land-use decisions have largely taken place outside the planning
and legal process, with powerful private interests always managing to circumvent land use
regulations (Douglas, 1989: 233).
3. The exchange value of the Philippine peso fell from US$1 ¼ P36 in 1997, to US$1 ¼ P48
the following year. Local interest rates soared from between 13 and 14 per cent before the
financial crisis, to 32 per cent in 1998.
Globalization and the Property Boom, Metro Cebu 719

Table 1. Number of Land Development Projects in Metro Cebu per year,

1988–2000
Year Number of Projects Year Number of Projects

1988 5 1995 35
1989 9 1996 34
1990 9 1997 48
1991 13 1998 14
1992 23 1999 18
1993 16 2000 2
1994 25
N ¼ 251 projects

Source: HLRUB (1999, 2000).

The land property projects in Metro Cebu in this period involved the
development or conversion of a total of 1030 hectares of mostly unused
lands. The great majority of the land was taken for residential projects,
some of which accounted for more than 100 ha each. According to the
government housing agency’s list of projects (HLRUB, 2000), the break-
down of land area per project class is as follows: a) residential subdivision:
864.6 ha (84 per cent of the total); b) industrial park: 63.0 ha (6 per cent);
commercial park: 37.3 ha (4 per cent); memorial park: 34.7 ha (3 per cent);
and condominiums: 30.6 ha (3 per cent).
This real estate boom in Metro Cebu occurred in an environment of
unprecedented mobility of capital across national borders and regions of
the globe as the economies of most countries were liberalized and invest-
ments deregulated. In the Philippines, the downfall of the authoritarian
Marcos regime in 1986 restored democracy and created the political environ-
ment necessary for restoring foreign business confidence in the country.
In the years that immediately followed, Metro Cebu became the country’s
major recipient of new foreign private investments in manufacturing and
foreign government assistance for infrastructure development. The value of
investments approved by or registered with the Board of Investment aver-
aged an annual growth of 156 per cent from 1987 to 1992. The number of
(mostly) transnational firms operating in the Mactan Export Processing
Zone (MEPZ) also increased, from ten in 1987 to thirty-four in 1990, and
from thirty-nine in 1991 and 120 in 1998 (PPDO, 2000). To accommodate
new firms, MEPZ II was set up in 1997, a 40 ha expansion of the original
119 ha land area of MEPZ (subsequently renamed MEPZ I). Since Metro
Cebu’s exports largely comprised goods produced by foreign-owned firms in
the export processing zone, exports also grew rapidly, increasing by 76 per
cent from 1987 to 1990 (from US$ 344.3 m to US$ 607.1 m), and by 217 per
cent from 1991 to 1998 (US$ 661.7 m to US$ 2,100.1 m) (ibid.).
Rapid expansion of the export manufacturing sector had an immediate
positive effect on real estate development in the area. It buoyed confidence
720 Edsel E. Sajor

in property investment by conjuring up the image of a sustainable high

growth rate in the local economy that could support an ever-increasing
demand in the local real estate market. Such an expectation was further
bolstered by a rise in the expatriate population in Metro Cebu, including the
high-level personnel of foreign owned firms in MEPZ, who could be future
renters of high-end residential units.
While expansion of the foreign-dominated manufacturing sector in Metro
Cebu raised expectations of real estate demand, the surge of investments in
property in the late 1980s and 1990s had its own dynamic rooted in devel-
opments on the supply side. The internationalization of investments in real
estate in the 1980s was tied in with the accumulation in northern countries,
such as Japan and Western Europe, of large pools of capital savings, as a
result of the growth of personal savings and the increased number of people
in occupational pension schemes in the post-War period (Sassen, 1991;
Short, 1996: 161). The financial institutions of these countries, including
insurance companies and pension funds, increasingly turned to real estate
investments as a way to convert this accumulated capital into long-term
investments, helped by financial deregulation policies widely adopted in the
1980s. This brought a surge of net capital inflows to the developing and
transition economies of Asia in the 1980s and 1990s, not only in foreign
direct investment but also in portfolio investment (Knight, 1998: 1186–7). A
large portion of the latter went into property development. This period also
marked the evolution of sophisticated financial instruments as conduits of
new capital infusions.
In the Philippines, the magnitude of capital flows leapt dramatically
between 1986 and 1997. In the 1970s, they amounted to 1 per cent of
GNP; in 1986, this had doubled to 2 per cent, and by 1996, the figure
peaked at more than 20 per cent of GNP (Magno-Ballesteros, 2000: 117).
An increasing proportion of these inflows consisted of private direct and
portfolio investments that were channelled into top real estate companies in
the country (generally in Manila) as loans, equities, and project ventures. At
the same time there was a sharp rise in the composite indices of real
property stocks in the Philippines, from 3,305 to 18,457 (ibid.).
Although the spate of big development projects in Metro Cebu from 1988
to 2000 was bankrolled by these capital flows — jointly financed by foreign
investors and major domestic development companies — it would not have
occurred without a strong market potential for property commodities which
already existed prior to the boom. That Manila-based property developers
had sensed this market potential is clear from the following extract of an
interview with an official of Santa Lucia Realty & Development Corpora-
tion, one of the biggest property developers operating in Metro Cebu:
When the company made a decision to come and operate in Cebu in 1989, we knew that
there was a potential market for developed properties in the business community here —
especially among the local Filipino-Chinese merchants and the local manufacturers.
(interview with the author, 27 February 2001)
Globalization and the Property Boom, Metro Cebu 721

This market potential was the result of substantial surplus which had
accumulated in the local economy, thanks to robust commercial and manu-
facturing activities, and which had the potential to be switched into real
estate investment. Two industry sectors formed the basis of this local
accumulation. The first was merchandise trading, founded on Cebu City’s
long mercantile history dating back to the nineteenth century. This trading
business has thrived on the city’s port-centred commerce; it was dominated
by the local Filipino-Chinese elite who ‘search the Visayas and Mindanao
for raw materials to be processed in Cebu or Manila, or who warehouse
Manila-made goods for southern distribution’ (Churchill, 1993: 6–7; see
also Mojares, 1997: 42). These families have accumulated large surpluses
through their long-term domination of copra trading, coconut oil process-
ing, wholesale/retail general merchandising, and in more recent decades,
construction and hardware.
The second local industry sector that became a major source of accumu-
lation was furniture manufacturing,4 which has sustained high growth
rates since the 1970s. According to official government statistics, Cebu’s
furniture industry represented an average export value of US$ 196 m
annually from 1988 to 1997 (PPDO, 2000), ranking second only to the
electronics industry sector dominated by transnational firms in the Mactan
Export Processing Zone.

Major Developers and For-Profit Land-Use

The development of residential real estate in Metro Cebu was dominated by

national property firms whose central headquarters are based in Manila.
Four of the biggest firms that operated in Cebu are Ayala Land Incorpor-
ation, Fil-Estate Land Incorporation, Fil-Invest Land Incorporation, and
Santa-Lucia Realty & Development Corporation. Another firm that
became a big developer in Cebu is the Aboitiz Group of Companies,
which has its origin and main base in Cebu, but is considered a corporate
entity of national prominence. The biggest local company involved in
property construction was the MRO Development Corporation, owned by
siblings Lito Osmeña and Annie Osmeña, members of the prominent
Osmeña clan that has accumulated vast tracts of land in Cebu since the
first half of the twentieth century. From the late 1980s to the mid-1990s,
when land was selling most briskly and commanding the highest profits, all
these companies had complete or ongoing projects.

4. As a major industry, Cebu’s furniture manufacturing dates back to the early 1960s, when
the national government provided capital support for this fledgling industry. Soon the
Cebuano producers took advantage of Cebu City’s traditional access to world markets
and produced for export. By 1980, rattan furniture ranked third in Cebu’s major export
products, behind the traditionally dominant exports of copper concentrates and coconut
oil (Bernaldez, 1997: 70–71).
722 Edsel E. Sajor

Five of these firms are highly ranked among the top 1000 corporations of
the Philippines (PBPPI, 1998) — the MRO Development Corporation is not
in this list. Three of them, Ayala Land Incorporation, Fil-Invest, and
Aboitiz Group, are also involved with banking and finance.5 Ownership
and control of banking and financing institutions have allowed them to use
domestic and international finance capital — through various loan instru-
ments, syndication, and networks — to generate funds for mega property
projects.
These big property corporations also have significant ties with inter-
national sources of capital and technology. Ayala Land Incorporation has
partnerships with Hongkong Land (PPI) BV, Rodamco Asia Management
Limited (a Dutch Investment company), Gammon Contruction Limited of
the Jardine Group (the largest construction company in Hong Kong) and
the Maison Individuelles SA (the largest housing supplier in France and
Europe) (see Ayala Land Incorporation, 1993). Similarly, Santa-Lucia
Realty & Development Corporation has various joint ventures with foreign
investors, although the company is entirely Filipino-owned;6 while the
Aboitiz Group of Companies is said to have substantial partnerships with
Japanese corporations.7 Another major source of foreign financing of all
five companies is through the Philippine stock exchange, where they are
listed and where foreign investors buy shares of their stocks as portfolio
investments.
Although the residential property development that occurred in Metro
Cebu between 1988 and 2000 included land for both the socialized housing
sector and the open-market sector,8 the socialized housing sector was
severely marginalized. Official data suggest that of the total of 864.6 ha
developed for residential purposes, 694.34 ha (or 80 per cent) was allocated
to the open-market — ranging from economic (low-cost housing) to presti-

5. Ayala Land Incorporation is controlled by the family of Zobel de Ayalas who is also the
principal owner of the Bank of Philippine Islands, the second largest bank in the
Philippines. The Ayala group of companies also has major interests in the insurance
business. Fil-Invest controls the East West Bank, while the Aboitiz Group of
Companies is the dominant shareholder of Union Bank.
6. Interview by the author with a top-ranking official of the company.
7. Interview by the author with an informant close to the inner circle of the Aboitiz family.
8. In the Philippines, regulations and standards for the socialized housing sector had been
established in 1982 by the legislature through Batasan Pambansa (BP) 220. This legislative
provision defined the concept of socialized housing as a project intended for the
underprivileged and homeless. The price of a housing package should be within the
lowest interest rate under the unified home lending programme and the value of the
combined house and lot package should not exceed P150,000 (roughly US$ 2,900 at
current exchange rates). Packages in which the lot value combined with the house cost
exceeds P150,000 are categorized as falling in the open-market sector. This sector’s house
and lot prices are not administratively controlled, but are determined by market
mechanisms.
Globalization and the Property Boom, Metro Cebu 723

gious or high-end projects — while only 170.25 ha (20 per cent) went into
socialized housing projects (HLURB, 2000).
Such a pattern of land use is hardly surprising, when the market is given a
free hand as the allocator of land for housing. The main players in Metro
Cebu’s property development boom were big private corporations and
medium and small construction companies, whose driving motivation is to
optimize returns to their investments and whose calculations are based on
signals of effective demand in the housing market. The latter, in turn, is a
function of the purchasing power of different groups in society, and not of
the basic need for shelter of low-income groups and the poor.9
A close examination of the official listings of the residential subdivision
projects from 1988 to 2000 of the Housing Land Use and Regulatory Board
(HLURUB), Region VII, covering the open-market housing sector, reveals
a highly regressive pattern. The major property developers operating in
Metro Cebu focused on developing prestigious and high-end housing pro-
jects. Almost half (49 per cent) of the total area used for open-market
residential projects in Metro Cebu fell under the category ‘prestigious
housing project’ (see Table 2). The typical cost of lots in this project class
is US$ 60,000 or higher (at 2001 rates). The next class of upper-end housing
projects, with lots typically costing US$ 20,000 to US$ 59,000 (at 2001 prices)
accounted for 18 per cent of the total land area. Together, these two
categories therefore ate up 67 per cent of the land developed in the resi-
dential, open-market sector during the property boom in Metro Cebu.10
These two categories represent low-density housing, usually no more than
twenty lots per hectare, due to the spacious lot sizes. The dominance of
these categories effectively limits the area available for lower class housing,
where far smaller standard lot size enables more families to construct
dwellings per hectare of land.
Natural land scarcity in Metro Cebu further aggravates the problem.
Metro Cebu is one of the least land-endowed cities in the archipelago. It
is situated in narrow Cebu island, which is approximately 215 km long and
only 35 km wide at the widest point. Cebu is mountainous, with more than
half of its territory covered by slopes steeper than 18 per cent. A major

9. Developers in Metro Cebu have been averse to investing in socialized housing projects
unless the government raised the ceiling for the selling price of social housing units. A
leading architect-developer in Cebu City was unabashed in saying: ‘There’s not much
money in low-cost housing. . .leaving real estate developers little choice but to opt for high-
end housing’ (Sun Star Daily, 5 March 1997; see also Sun Star Daily, 7 August 1997).
10. In constructing the four project class types in Table 2, I correlated mean lot sizes of each
subdivision with other important criteria including: residential subdivision amenities (e.g.
covered or uncovered tennis or basketball courts, swimming pools for communal use,
etc.); income-level of typical buyers; typical price per square metre in each subdivision;
and social symbolic elements that contribute to a hierarchical ranking of residential
subdivisions in Metro Cebu (for example, the degree of a subdivision’s attraction as the
traditional residence of recognized elite families of Cebu).
724 Edsel E. Sajor

Table 2. Residential Land Distribution, by Class of Projects in Open-Market

Sector (1988–2000)*
Lot-size groups Number of lots Aggregate size Percent of total Cumulative
(Project class) (in m2) land area (for all percentage
projects)

>450 m2 (High- 2963 3,409,300 49.1 49.1

end/‘prestigious
housing’ projects)
281–450 m2 2111 1,236,700 17.8 66.9
(Upper-end
housing projects)
111–280 m2 8850 1,934,300 27.9 94.8
(Low-end housing
projects)
39–100 m2 3192 363,100 5.2 100
(Low-cost
housing projects)

*Based on a total of 139 residential subdivision development projects.

Source: HLRUB (1999, 2000).

mountain range runs parallel to the island’s north-north-east to south-

south-west axis (see Fleiger and Cusi, 1998: 16–19 for more on Cebu’s
topography). Metro Cebu’s land area of 36,240 ha is situated on the eastern
coast, bordered to the interior by the central and north-central portions of
the island’s mountain range. Metro Cebu’s growth pattern, therefore, is
basically bi-directional, north and south, along the eastern half of Cebu —
unlike, for instance, Metro Manila which has a tri-directional growth
pattern (Econtec Inc., 1993: 1). Thus land in the immediate periphery of
the flatland urban core of Cebu City was rapidly bought up by big property
developers and converted to high-end subdivisions. These areas were
quickly exhausted, and by 1990, developers were turning to the rural areas
for their land acquisitions.

Big Speculator Buyers and Affordability of Housing Land

Changes in the price of housing land obviously affect the affordability of

housing for certain social groups. In Metro Cebu, it is generally acknow-
ledged that land prices have risen dramatically since the boom in develop-
ment projects of the late 1980s and the 1990s. An official of a local realty
and appraisal company in Cebu, for example, observed that as early as
1990, with the arrival of high-end housing and shopping malls created by
the big Manila-based property companies, there was an unprecedented
escalation of land values, making it difficult for even lower middle-income
earners to own their home in the city (Manila Times, 17 March 1990). This
is borne out by evidence in the comparative prices of real estate lots in the
National Capital Region and Metro Cebu during the take-off period of the
Globalization and the Property Boom, Metro Cebu 725

property boom, between 1988 and 1992. While prices of residential lots
declined in the National Capital Region at this time, dropping an average
of 0.4 per cent annually, they rose in Metro Cebu at an annual average of
52.1 per cent (Econtec Inc., 1993: 3–4).
This dramatic price rise in Metro Cebu was closely linked to widespread
speculative buying of residential lots. Although the conventional literature
treats speculation as a positive bridging force, a brokerage operation
between the owner of the land and the builder, it may have, as in the case
of Metro Cebu, two closely related negative effects: (1) real estate specula-
tion activities actually alter the nature of the land commodity primarily by
restricting the supply of available land; and (2) speculation forces land
prices (far) above what they would have been without speculative activity.11
When a number of these high-end projects by Manila-based developers
were offered for sale in the early 1990s, there was clearly a strong market
demand in Metro Cebu. Lots in prestigious housing and in upper-end
subdivisions sold briskly. In the Royal Cebu Estates — Santa Lucia’s
Class A residential subdivision project in Metro Cebu, launched in
September 1990 — 70 per cent of lots were sold within 12 months.12 Sales
of high-end properties flourished from 1990 to 1996. Large, Manila-based
property companies launched new projects in quick succession and tried to
outdo each other in aggressive advertising and sophisticated marketing
of these prime properties. But it also became clear that the market for
high-end and upper-end residential developed lots was largely comprised
of speculative buyers: several real estate agent informants confirmed in
interviews that it was not uncommon for them to have clients who bought
five to ten high-end residential lots between 1990 and 1995, during the
dizzying appreciation of property values in Metro Cebu.
This pattern of speculative buying was also noted by a leading property
agent in Cebu. While lower cost lots, averaging 120 m2 to 200 m2, attracted
90 per cent end-user buyers, high-end subdivisions drew largely speculative
buyers (Sun Star Daily, 1 November 1996). The most concrete evidence of
the extent of this speculative buying is the unmistakable landscape of Metro
Cebu today, in which empty lots far outnumber those with built structures
in almost all the high-end and upper-end residential subdivisions that were
sold during the property boom. In the case of Royal Cebu Estate, mentioned

11. These ‘higher-than-necessary prices come in part from the expensive, usually highly
leveraged, financial arrangements that speculators get into, as well as from the
speculative pricing process itself. Both costs are passed on in the form of higher prices
for actual land users’ (Feagin, 1998: 152). Moreover, prices are driven up by competitive
bidding by investors who assume that future prices will be higher than present prices
(Haila, 1991: 352; Logan and Molotch, 1987: 26–7).
12. Interview with a real estate agent of the marketing agency of Santa Lucia Realty &
Development Corporation (25 January 2000).
726 Edsel E. Sajor

above, only twenty-five lots have visible housing structures out of the
1,000 lots that sold out so quickly, ten years ago.
The Manila-based property developers had been correct in identifying the
potential demand for high-end residential subdivision lots on the part of the
rich Chinese-Filipino merchants and the furniture exporter manufacturers
of Cebu. Members of these two groups turned out to be the major specu-
lative buyers. In my survey of thirty licensed real estate agents in Metro
Cebu in 2001,13 individuals belonging to these two groups clearly stood out
as the main clients in their sales transactions during the boom years for
high-end and upper-end subdivisions.
Distinct circumstances in Metro Cebu influence the propensity of individ-
uals in these two groups to be speculative buyers of urban land. A number
of rich Filipino-Chinese families prominent in merchandise trading have
traditionally engaged in long-term land speculation, utilizing surplus accu-
mulated in their commercial activities. Some of those who sold large tracts
of land at an enormous gain to developers in the 1990s had accumulated
these lands through speculative buying in the 1950s and the 1960s. Some of
these same families were attracted to the idea of making another round of
profit by becoming speculative buyers of developed residential lands in the
1990s. The furniture exporters of Cebu had special reasons for engaging in
speculative lot buying during the property boom. Beside the expectation of
high future returns, two specific reasons for speculative land buying were
mentioned during interviews: as a hedge against the uncertainties of a
volatile furniture export market;14 and as highly dependable bank collateral
for acquiring quick loans to finance manufacturing and exporting oper-
ations during unexpected financial gaps in their operations. In the case of
the Metro Cebu property boom of the 1990s, these two groups of investors
thus became the main agents of the process of switching capital from
commercial or industrial sources into landholdings (Feagin, 1998: 141;
Haila, 1991: 346; see also Evers, 1984: 491–2).

The Burgeoning Mass Housing Problem

The property boom in Metro Cebu occurred in the context of local eco-
nomic growth shaped primarily by the spurt in the export manufacturing

13. From April to July 2001, the author conducted a direct survey of thirty licensed real estate
brokers operating primarily in Metro Cebu. In the survey, respondents were asked to rank
sets of buyers in various categories or class of residential subdivision lots (that is, what
they judged to be the biggest buyers of a certain class of subdivision property got the
highest mark).
14. With stiffer competition in the last decade from expanding furniture exports of countries
with richer raw materials and lower labour costs, such as Vietnam, Indonesia and China,
Cebuano furniture entrepreneurs are increasingly threatened with possible loss of foreign
buyers and eventual closure of their shops.
Globalization and the Property Boom, Metro Cebu 727

sector in the late 1980s, and a partly related population rise due largely to
high immigration. This distinct combination of urbanizing forces has cre-
ated a critical problem of local mass housing while, at the same time,
spiralling urban land prices have seriously constrained its solution.
In the 1950s and 1960s, Cebu province was characterized by large-scale
out-migration into the frontier areas of Mindanao.15 Since the mid-1970s,
however, this trend has reversed, with the province’s average annual popu-
lation growth rate surpassing the national average in the periods 1975–80
and 1980–90, as the result of heavy in-migration to the Metro Cebu area
(Fleiger, 1994: 7; Fleiger and Cusi, 1998: 28–9). Metro Cebu has developed
into the demographic growth centre of the province. From 1980 to 1990 it
experienced a population growth rate of 34.5 per cent, while the rest of the
province grew by only 19.9 per cent (Fleiger, 1994: 13).16
The implications of these demographic trends for local housing demand
are of course tremendous. Shelter needs and housing backlog have grown as
the poor resettle in the city. They have mostly occupied hazardous places
(for example, by creek banks) and privately owned lots (without the consent
of the landowners). The numbers of these ‘displaced informal settlers’ grew
during the property boom as landowners became more intolerant and with-
held consent to existing occupants of their idle lots in the city, in order to
make the lots more saleable as land prices kept rising.
New housing needs due to continuous in-migration and natural popula-
tion growth have also expanded Metro Cebu’s housing backlog. According
to the National Statistics Office, the housing backlog grew from 37.2 per
cent in 1980–90, to 44.8 per cent for 1990–2000. In absolute terms this
means an additional 39,500 housing units required. Estimates made in
1994 calculated the category of subsidized housing units or social housing
as constituting 73 per cent of future housing needs (Econtec Inc., 1994).17

15. During the 1950s, the population growth rate of Cebu province fell behind that of the rest
of the country by some 50 per cent mainly due to high out-migration (Fleiger and Cusi,
1998: 28).
16. This population expansion is evident in the visible growth of Cebu’s informal sector where
most of the in-migrants are employed. Although by its nature it is hard to reach an
accurate estimate of the informal sector, much less to statistically track its growth trends
in the last ten years, many accounts, observations and demographic indicators suggest
rapid growth. For 1995, one author puts the figure employed in the informal sector in
Cebu City alone at 73,000 self-employed and 12,000 unpaid family workers (Etimadi,
2000: 6).
17. A number of recent government and private research studies have further estimated that
figures for Cebu City, which constitutes the bulk of the housing backlog for the whole of
Metro Cebu, will remain high for the next nine years. In its Shelter Plan document for
2001, the Division for the Welfare of the Urban Poor (DWUP, 2001) concludes that there
will be a backlog of at least 75,250 units of socialized housing in the next nine years. A
study commissioned by the city government of Cebu arrived at an even higher estimate,
suggesting that 102,536 new housing units will need to be built in the next nine years, the
bulk of which will be defined as socialized housing (Schema Konsult Inc., 2000: 25).
728 Edsel E. Sajor

Moreover, urban land tenurial security — either through ownership or

leasehold arrangements — remains a major problem in the housing situ-
ation of Metro Cebu.18
Because the price of land in Metro Cebu urban areas is currently in the
range of P1000 to P50,000 (US$ 19 to US$ 943) per m2, private developers
find investment in socialized housing a losing proposition, and have been
lobbying for the raising of the current P150,000 cap on socialized housing
units because of the price of land. Such a proposition would obviously
defeat the main purpose of socialized housing legislation which is to provide
affordable housing to low-income groups and the urban poor. Local gov-
ernment officials have also cited the price of land as the biggest factor
constraining mass shelter provisioning. The Cebu City mayor himself pub-
licly admitted in 1999 that high land prices in the city have prevented the
city government from acquiring lots for its urban poor housing projects
(Cebu Daily News, 8 August 1999).
This problem was also highlighted in a study of five informal
settlements in Cebu City conducted in 1991–92, during the take-off years
of the property boom. Its major conclusion was the unexpected increase
in the number of middle-income groups occupying informal plots in Cebu
City. These groups have been forced to enter informal land markets, devel-
oping housing on private or government-owned lands for which they
have no legal titles, because of the dramatic rise in land costs in the formal
land market. Crowding out by these wealthier households has adversely
affected the access to housing land of lower-income and urban poor
households that have traditionally dominated these informal settlements
(Thirkell, 1996).
The regressive outcome of interlinked global and domestic property
development investment in Metro Cebu in 1980s and 1990s can only
be understood in the crucial context of the mediating role of state
and politics. I therefore turn now to a discussion of these particular
characteristics of state and politics and how they have influenced and
shaped the real estate boom, land development, and skewed pattern of
spatial redistribution.

18. A 1995 survey study of poor communities in Cebu City noted that while six out of ten
urban poor respondents owned the house they occupy, only 1 per cent owned the lot
(Etemadi, 1995: 4). Recent studies on the housing sector in Metro Cebu are also
unanimous on the point that the extremely high price of urban land in Metro Cebu has
become the single biggest obstacle in the construction of adequate socialized housing units
to meet burgeoning shelter needs (see for example Etimadi, 2000; Schema Konsult Inc.,
2000).
Globalization and the Property Boom, Metro Cebu 729

WEAK STATE AND LOCAL BOSSES

Since 1991, decentralization in the Philippines has devolved major respon-

sibilities and powers to local government units (LGUs) such as municipal,
city and provincial governments. They can now define their own governing
agenda and urban development goals, but they are responsible for the
delivery of basic government services, including meeting the housing needs
of the urban poor and low-income groups through socialized housing. The
LGUs’ allocation of national revenues has been substantially raised, and
they have also been empowered to create their own tax measures. They
have been given the mandate to reclassify lands for agricultural, commer-
cial, industrial and residential uses, which means that they are able to
control and influence types of development and the property taxes
imposed on lands within their administrative jurisdiction, and to influence
land prices to favour certain uses and social groups. The LGUs in Metro
Cebu, especially Cebu City, thus have the fiscal power and legal instruments
to set and plan their own priorities in economic development and social
reforms.
Starting in 1988, the newly elected executives and councils of the cities in
Cebu and the province adopted a strong pro-growth agenda, using the
programmatic tools of loosening government regulation of businesses, redu-
cing taxes, and providing public subsidies and necessary services and infra-
structure. Initially, leading elected officials of Cebu, along with officials of
regional line agencies for trade and investment of the national government,
adhered to a model of fast growth for the local economy, to be led by a
labour-intensive export manufacturing sector. However, as we have seen,
once foreign manufacturers started to invest in Metro Cebu, Manila-based
property developers with foreign partners also arrived on the scene, to
jump-start property development.19 Leading local officials of Metro Cebu
immediately rolled out the red carpet for these property developers
and began to market the region as an area of high profitability for real
estate development projects and investments. Infrastructure building such as
highway and power projects were geared not only at attracting manufactur-
ing investments but also at raising the value of real estate ventures. Devel-
opment in Metro Cebu quickly became property-led. Curiously, local
officials turned a blind eye to the major equity dimension of this type of
development, a factor which was also muted in local government policy
discourse.

19. One leading official of the government department for trade and investment for Central
Visayas region recounted that in 1988 and 1989 ‘major property developers immediately
jumped into the investment bandwagon of Metro Cebu started by the foreign investors in
export manufacturing and rode on this sector’s push-start of the local economy’
(interview, 9 April 2001).
730 Edsel E. Sajor

The leading role of the real estate sector, and the generation of a specu-
lative property market in the state-initiated development process in Metro
Cebu, can be understood through the prism of what scholars of Philippine
politics have described as the dominating and predatory role of powerful
provincial elite families and Manila-based oligarchs in a historically weak
state.20 These families have — to put it simply — privatized the state, in the
process strengthening themselves and further weakening the state’s resources
and bureaucratic apparatus (Anderson, 1998a; McCoy, 1994; Wurfel, 1988).
As a result of weak institutionalization, public administration is often
treated as a personal affair, and ‘the conceptual separation of the
state from all personal authority of individuals is often remote from the
Philippine ‘‘structures of authority’’’ (Hutchcroft, 1998: 14).21
The nature of this control and domination of the state by the provincial
elite and oligarchs is well-captured by Sidel (1999), who uses the terms
bosses and bossism in the Philippine context. ‘Bosses’ refer to the ‘predatory
power brokers who achieve monopolistic control over both coercive and
economic resources within given territorial jurisdictions or bailiwicks’: in the
Philippine context, these include small-town mayors, provincial governors,
congressmen, and even presidents (ibid.: 19).22 These bosses perform a
central role in capital accumulation at a local level, relying heavily on
coercive state power, sometimes combined with proprietary wealth, state-
based resources, and brokerage services to local landed and commercial
oligarchies (ibid.: 141–2). American-style electoralism (introduced during the
early American colonial period) has the overall impact of further entrench-
ing the hegemony of these local bosses (see Anderson, 1998b).
The province and city of Cebu have traditionally been dominated by such
bosses. Since the early twentieth century, the top elected executive positions
of the provincial and city government have been held by members of the
Osmeña clan, a political dynasty in the province, whose most prominent
members have also been major players in national government and politics,

20. The dominant position of the oligarchy in Philippine state and politics shares some basic
features of what is characterized as elite governance in several countries in Southeast Asia,
viz., Malaysia, Thailand and Indonesia, in which a narrow set of interlocking elite
interests — business, especially large corporations and conglomerates — work hand-in-
hand with the bureaucracy, in contrast to Western liberal democracies where the interests
of different groups are checked and balanced by a set of competing claims. Insulation
against special elite interests was never established by these states, which have
consequently been prey to nepotism, cronyism and occasional populism (McCargo,
1998; also see Jones 1998).
21. Hutchcroft (1998: 14) parallels the features of modern Philippine polity to Weber’s
description of patrimonial states (in Economy and Society): ‘In general, the notion of an
objectively defined official duty is unknown to the office that is based upon personal
relations of subordination’.
22. ‘‘‘Bossism’’, in turn, refers to the interlocking, multi-tiered directorate of bosses who use
their control over the state apparatus to exploit the archipelago’s human and natural
resources’ (Sidel, 1999: 19).
Globalization and the Property Boom, Metro Cebu 731

and whose economic interests have been urban real estate and commercial
agriculture.23
Third-generation Osmeña bosses were an important force in creating and
managing the property boom of Cebu from 1988 to 1998. The chief eco-
nomic architect of the so-called ‘Ceboom’ was Lito Osmeña, the governor of
Cebu from 1988 to 1992, who subsequently became President Ramos’s
economic adviser for national government flagship projects from 1992 to
1998. The latter position enabled him to attract significant national govern-
ment backing and resources for Cebu-based development projects. His first
cousin, Tomas Osmeña, was the mayor of Cebu City for two terms (1988–92
and 1992–95), while another cousin, John Osmeña, was a senator in the
Philippine Congress during this period. Like the first two generations of
Osmeñas (Sergio Osmeña Sr and Sergio Osmeña Jr), at the time of their
election both Lito and Tomas Osmeña were ‘successful real estate special-
ists’ with projects in the Philippines and on the American West Coast
(Mojares, 1994: 336). Early on in his gubernatorial term, Lito Osmeña
brokered projects for big Manila-based property developers such as Ayala
Land Incorporation, and for the Hongkong-based taipan Robert Kuok
(Sidel, 1999: 136).
Lito and Tomas Osmeña were forceful advocates of contemporary pro-
growth ‘boosterism’, the aggressive promotion of a pro-business agenda for
a particular city against the background of competing cities and alternative
investment opportunities, whose leading players — usually influential polit-
icians and local government leaders, corporate chairpersons, realtors, local
banks and chambers of commerce — all seek to define the city as an
economic growth machine and share a strong consensus on stimulating
investment and economic growth while limiting the redistributional function
of the state (Short, 1996: 210; see also Eichler, 1982; Feagin, 1983; Gordon,
1999; Logan and Molotch, 1987). The two Osmeñas encouraged public
officials and members of the local business community to aggressively
market Cebu’s competitive edge to attract foreign investors and promote
business. Cebu Investment Promotions Center, a partnership project of
government and private business, was set up for this purpose. They also
personally led overseas trade missions of businessmen, represented by the
Cebu Filipino-Chinese Chamber of Commerce and the Cebu Chamber of
Commerce and Industries, to network with chambers of commerce of newly

23. The founder of the political dynasty was Sergio Osmeña Sr who, after serving as
councillor and governor in the early years of the twentieth century, rose to become the
President of the Commonwealth just before the end of World War II. His son, Sergio
Osmeña Jr, became governor in 1951 and subsequently a senator and presidential
candidate in 1969. The Osmeñas who were elected after the restoration of democracy in the
country in 1986 — Lito (governor), Tomas (city mayor) and John (national senator) —
are third generation members of the clan. For an excellent account of the three generation
of Osmeña politicians, see Mojares (1994). For an incisive analysis of their ‘bossism’ see
Sidel (1999).
732 Edsel E. Sajor

industrialized countries in Southeast Asia (see Freeman, 9 July 1992; Manila

Times, 8 August 1991; Newstime, 12 September 1992). Foreign business
organizations such as the West German chambers of commerce were also
tapped for support to set up communication and trade-information facilities.
Governor Lito Osmeña and Mayor Tomas Osmeña lobbied strenuously,
and got generous subsidies and support from the national government in
Manila to upgrade the island’s telephone lines, electric power facilities,
transport terminals, traffic management, garbage collection, police force,
and airport terminal. To build major infrastructure projects, the provincial
government also directly accessed the Japanese Overseas Economic
Co-operation Fund (OECF) with endorsement and guarantees from the
national government in Manila. Under Lito Osmeña’s administration, the
provincial government of Cebu floated bonds, known as the Cebu Bond
Units (CBUs), central government-guaranteed stocks listed in the local bourse,
which enabled it to raise funds specifically for infrastructure developments.
Cebu became known as one of the top investment-friendly cities of Asia.
During the Osmeñas’ time in office, public lands were sold to big foreign
and Manila-based developers under joint-venture schemes,24 fast-tracking
the development of commercial parks and the construction of high-end
market residential subdivisions and condominiums. Various land reclam-
ation projects were launched under the build–operate–transfer scheme,
involving local government together with major private developers. Cebu
City Council25 also rewrote existing land classification ordinances and
earlier central government administrative fiats, and reclassified agricultural
lands or environmentally-protected areas into residential and commercial
areas in order to free private property developers from legal encumbrances.
Cebu officials also increasingly resorted to spot zoning, exempting a lot or
a parcel of land from the traditional land classification of the wider area
as defined by an existing land zoning ordinance.26

24. One major project was the Cebu Business Park, a partnership involving five Manila-based
companies with substantial foreign equity participation. Ayala Group of Companies was
the leading corporation in the partnership. Governor Lito Osmeña is widely known to
have been behind this project, which involved the construction of a shopping mall, five-
star hotels and office towers in a prime lot area, a 49-ha golf course owned by the
provincial government of Cebu. Public confirmation of the project immediately caused
the price of urban lands in the surrounding vicinity to soar.
25. The Cebu City Council has been dominated by Osmeña’s local party: of the sixteen seats,
it held eight in 1988, fourteen in 1992, and all sixteen in 1995, and again in 1998 (Etimadi,
2000: 38).
26. In 1997 it was reported in the local press that some sixty-four low-income homeowners’
organizations, claiming to represent 12,000 families, had launched mass vigils demanding
that remaining provincial government lands be clearly classified as social housing sites, to
protect them against the common practice of spot zoning by the local government, which
usually results in public lands being allocated to property developers for commercial
development (Sun Star Daily, 17 March 1997).
Globalization and the Property Boom, Metro Cebu 733

By providing big private property developers such free access to public

lands for high-end residential and commercial projects through sale, lease-
hold, or reclassification, or by reclassifying or spot zoning private lands in
order to free them from legal encumbrances, the Cebu bosses have cheap-
ened the cost of land for such types of development and in effect caused
the cost of land for other uses to rise, especially for non-class A housing
projects and the construction of socialized dwelling units. At the same time,
the spate of high-end property development projects in a number of pocket
areas in Metro Cebu, following the trail of these land reclassifications,
created positive externalities in surrounding areas, raising land prices
further.
This chain of actions and events fuelled wild speculations in real estate
and a spiral of rising land prices, a market environment benefiting the
Osmeñas themselves, their real estate partners or clients, and Manila-
based domestic and foreign developer companies. While some gained
more than others, in general Cebu’s urban landed elite benefited from the
overall dramatic rise of property values (Sajor, forthcoming). The ‘bossism’
of the Osmeñas ensured that Cebu’s oligarchy — whether commercial or
real estate based — all shared in the windfall. Urban real estate and
merchant elite families such as the Aboitizes, Aznars, Gaisanos, and Lhuillers
were given access to government financing and contracts, and guaranteed
friendly regulation of their business operations; in certain cases, they
were able to acquire plots of prime urban land owned by the provincial
government (Sidel, 1999: 132, 135). Not surprising, then, that Cebu’s oli-
garchy were strong supporters of the pro-growth governing agenda and
property-led development managed by the Osmeñas.

Lack of Social Opposition and the Undeveloped Civil Bureaucracy

In Western liberal democracies, opposition to growth or growth manage-

ment politics which demands the institution of controls and environmental
regulations in cities have commonly been associated with sizeable, well-
educated, affluent middle class communities (DiGaetano and Klemanski,
1999; Short, 1996: 463–87). They are the likely advocates of an alternative
growth management agenda due to negative externalities that rapid growth
imposes on their residential property and on the quality of life in their
communities or cities. However, in the case of Metro Cebu’s rapid growth,
many well-educated people and professionals from the affluent middle
and upper classes themselves became buyers and sometimes speculators of
high-end residential properties. During the height of the property boom,
they saw in their new property acquisitions the prospect of ever-rising
market values. Thus, unlike their counterparts in Western cities, these social
groups became passive supporters of the pro-growth agenda advocated by
the Cebu bosses.
734 Edsel E. Sajor

Moreover, in developed country cities, critical or anti-growth politics

might emerge from a city’s underclasses. In the case of the developing
country city of Cebu, however, its low-income groups and urban poor
were lured into endorsing the mayoral candidacy of Tomas Osmeña in
1988 through his campaign promises on a seven-point Urban Poor agenda.
This agenda reaffirmed the principles of social justice and of people’s
participation in decision-making on ways in which affordable lands and
housing would be made available to the low-income and poor groups of the
city (Etimadi, 2000: 39–40). But this promise of participation turned out to
be no more than tokenism, involving a pro-forma representation in Cebu’s
City Development Council, a body that seldom met and had few powers,
being presented only with final plans and programmes for approval
(Etimadi, 2000: 41–2). It was not until late into the property boom, and
especially during the two-term administration of Tomas Osmeña’s protégé,
Alvin Garcia (1995–1998, 1998–2001), that the urban poor groups began to
realize that property-led growth and token participation in city development
planning had actually led them farther away from their objective of afford-
able housing. Thereafter, grassroots mobilization intensified, demanding
low-cost houses and lots from the city government, and criticizing the
medium-rise building schemes that the city government had started to
launch.27
Not only was there a lack of organizations of middle class and lower-
income and urban poor groups which might have constrained the growth
platform and rent-seeking of the ‘bosses’, but at the same time the Philip-
pine civil bureaucracy was in a state of systemic incoherence and under-
development, which seriously undermined the possibility of enforcing
meaningful legislation or electorally generated policies on social reforms
(see Anderson, 1998b). The condition of Cebu’s urban planning system and
its administrative capability to enforce certain significant social reform
provisions of housing legislation are particularly relevant to this case.
In Cebu, the urban planning office is traditionally a marginal agency,
lacking any independence from the influence and control of politicians and
big business interests. The chief planning officer is a political appointee of
the local ‘boss’, and his office is formally an adjunct of the mayor’s execu-
tive apparatus. The office suffers from a dearth of technically competent
and civically conscious personnel who would uphold the public interest in
the context of urban land development: the local planning agency and its

27. Facing the constraints of land scarcity and high land prices which were the result of the
earlier policies in Cebu City, in the second half of the 1990s Mayor Garcia’s
administration prioritized high-density, medium-rise building. Not only was the price of
these units still beyond the reach of the urban poor, the programme was also unacceptable
to urban poor groups because this type of housing would not allow them to maintain their
traditional backyard or home-based informal sector livelihood activities such as raising
hogs or chicken, or selling prepared food.
Globalization and the Property Boom, Metro Cebu 735

officials more often act as facilitators for the land document processing
concerns of big property developers, undertaking spot zoning and granting
exemptions from existing use classifications at the request of the bosses.28
Moreover, at the time of writing, Cebu City government is still in the
process of producing a comprehensive land use and development plan; in
the absence of effective urban planning, ‘large commercial and speculative
interests are transforming the urban landscape everyday’ (Scott, 1998: 387).
Unlike the spatial planning practices of some cities (see, for example, Ortiz
and Bertaud, 2001), Cebu City LGU has shown no sign of following a
master plan or using specific planning tools to advance its official develop-
ment objective of providing affordable, low-cost housing.
The weakness of the civil bureaucracy is also manifest in the failure to
enforce social housing legislation. National legislation requires that devel-
opers of non-socialized housing projects provide at least 20 per cent of the
total subdivision area, or project cost, for socialized housing developments:
compliance by a developer with this provision is a prerequisite for the
issuance by the government of development permits and/or licences to sell.
This provision was meant to institutionalize enhanced private sector partici-
pation in socialized housing. However, in Cebu — and in most areas of the
country — this well-intentioned legislation suffers from the lack of enforce-
ment capability of the existing bureaucracy. According to the monitoring of
the Cebu Provincial Development Office in the period 1993 to 1999, only
ten subdivisions out of 125 housing projects in the open market sector in
Cebu City complied with the requirement of the Urban Development and
Housing Authority. In the rest of cases, developers either allocated spaces in
remote locations outside the city and far from basic infrastructure and
support services or did not provide any space at all (Etimadi, 2000: 96). In
spite of this, subdivision projects in Cebu always get their development
permits and/or licences to sell from local regulatory agencies — these are
frequently given on the basis of a mere affidavit of the developer promising
compliance. The government has thus had no success in exacting any social
obligations from the high-end private property developers to advance its
goals of universal housing.29 The same lack of enforcement is true of
another regulation which requires developers to secure an environmental
compliance certification (ECC) permit before starting projects or offering
these to the public for sale. In Cebu, private developers have managed to
start bulldozing land for subdivision projects and offering these projects’
lots for sale to the public, without acquiring an ECC permit.

28. This situation is very different to other planning systems. In the UK, for instance, salaried
planning authorities, while expected to serve elected representatives, conduct their
business with reference to an ideology of professional planning practice and deliberately
use ‘planning gain’ to secure some public advantage in granting permits for development
projects (Fanstein, 1994; Short, 1996: 463–87).
29. Others countries, such as Singapore, have been more successful; see Huat (2000).
736 Edsel E. Sajor

CONCLUSION

Urban development in Metro Cebu in the late 1980s and 1990s shows how
global and local processes interact in a secondary metropolis of a developing
country, to produce an outcome that exacerbates the traditional problem of
access to housing land for low-income and urban poor groups. The growth
boom, which initially started as a surge in foreign investment in manufac-
turing but was immediately taken over by the property sector, resulted in
development dominated by the production of high-end residential real
estate commodities and the rise of a speculative land market. This has led
to a spatial allocation and reordering that is highly regressive, pricing out
the low-income and urban poor from formal land markets and minimalizing
land allocation for mass housing, while generating windfall profits for high-
end residential property builders, big real estate owners, and speculators.
State and politics have often received scant attention in studying the
phenomena of rapid growth and property development in Southeast Asian
cities and their equity dimensions. Equity problems have too easily been
seen as the manifestations of inadequate urban managerial capacity, or lack
of expertise. However, the way that globally-linked rapid property develop-
ment affects a given land market and its impact on certain groups as winners
or losers depends on the nature of the state and its intervention in the
process. As the Metro Cebu case illustrates, control and domination of
the state by rent-seeking bosses — who are not simply members of the
local oligarchy but major property developers and brokers themselves —
have shaped a strong pro-growth governing agenda and forms of interven-
tion that enhance real estate values in the metropolis for the foreign and
domestic builders, for Cebu’s landed elite and for themselves. With strong
backing at the national level, the local government has doggedly pursued
this agenda and has mobilized various state resources and instruments,
while ignoring the consequences on urgent low-cost and mass housing
needs. At the same time, the lack of mobilization among the middle classes
or among low-income and urban poor groups means that there is no
significant constraining social force to check the opportunism and rent-
seeking activities of these bosses or to oppose the overarching pro-
growth agenda. Compounding the situation further is an incoherent and
weak bureaucracy that has prevented the implementation of socially respon-
sible legislation pertaining to sound local planning and mass housing
provisioning.

Acknowledgements

This article is based on post-doctoral research and fieldwork undertaken by

the author from January 2000 to December 2001 as part of the research
Globalization and the Property Boom, Metro Cebu 737

programme of the Centre for Asian Studies Amsterdam, University of

Amsterdam, and the Free University of Amsterdam, entitled ‘Brokers of
capital and knowledge, producer services and social mobility in provincial
Asia’, and funded by WOTRO. The author would like to thank his former
colleagues in the ‘Brokers’ Research Programme — Otto van den Muijzenberg,
Heather Sutherland, Rosanne Rutten, Mario Rutten, Heidi Dahles, Pepijn
van de Port, and Harald Bekkers. The author also extends his thanks
to Zosimo Cano and Lourdes Montenegro for their invaluable help in his
fieldwork in Metro Cebu, Philippines, during the first half of 2000 and from
November 2001 to July 2002. Finally, the author would also like to thank
anonymous referees of this journal for their comments on an earlier draft.

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Edsel E. Sajor is an assistant professor at the Urban Environmental Man-

agement Field of Study of the School of Environment, Resources and
Development at the Asian Institute of Technology (AIT), Thailand. He
teaches governance and urban management and is also the co-manager of
the UN-Habitat Urban Management Program–AIT partnership project for
Asia. He is currently researching the institutionalization of land manage-
ment in Cambodia, particularly in Phnom Penh. His broad research interest
is on state–civil society relations in urban development, particularly in
the areas of housing and tenurial security for the urban poor, and local
environmental issues and their management. Correspondence can be sent to
P.O. Box 4 Klong Luang, Pathumthani 12120, Thailand ([email protected]).