Conviction Ideas – Bonifacio Global City (BGC)
When it comes to investing, in my heart of hearts, I truly believe that I’m an equal opportunity employer. In others words, I dig both Deep Value Investing as well as Hyper-Growth Investing. Although I don’t always get it right (c’mon give me a break I’m a very flawed human being, after all), I have been fortunate enough in my lifetime to have made “life-changing gains” via both the aforementioned routes.
In short, Deep Value Investing and Hyper-Growth Investing both work!
The reality, though, is this — Markets are cyclical, dynamic, and constantly changing. What worked yesterday seldom will work again just as effectively today… Asset classes rotate into favor and out of favor… and as investors/speculators, we just have to try and do our best to identify emerging trends…
Of course, it’s never ever easy to do… without the benefit of hindsight…
And absolutely, there’s nothing wrong with just going on auto-pilot and practicing Dollar-Cost Averaging (DCA) using investment instruments such as passive index funds!
With that said, there’s always going to be crazy folks (like myself) who want to veer off the beaten path and look for opportunities that are more under the radar from the mainstream, regardless…
If you’re lucky, a winning speculation can indeed change your life for the better… potentially FOREVER.
If you’re unlucky, well, there’s a reason why no sane person out there would ever recommend anyone “put all their eggs into a single basket.”
Anyway, for kicks, let’s just go over some of my own past real estate speculations:
2014: Bay Area Real Estate
Side Hustle #1: Purchase Price: $490,000
Side Hustle #2: Purchase Price: $521,000
2015 Bay Area Real Estate
Side Hustle #3: Purchase Price: $470,000
Here’s some of my thoughts from way back when…
Fast-forward to late 2018, and here’s how this batch of Bay Area real estate speculation has played out (if each unit was held until today)…
2018: Bay Area Real Estate
Side Hustle #1 Market Value:
Side Hustle #2 Market Value:
Side Hustle #3 Market Value:
I call it life-changing gains, but really, you can call it whatever you want…
My favorite critics/bashers/haters will probably call it another one of Idiot Fighter’s “gamble gamble” plays….
Funny enough, looking back, I vividly recall switching my tune from chasing after junk “cash flow baby” properties in 2014 into diving heavily back into Bay Area properties because my mentors (who are way smarter than me) were all scoffing at my plan of trying to reach early FI via junk properties in the Midwest…
They reasoned, “Why are you wasting your time and exerting so much energy on junk assets that will never produce a decent return!?! You’ve got wonderful opportunities staring you right in the face right here in the Bay Area… I really think you’re going to live to regret you decision to go out of state…”
4 years later, my mentors were spot on and I was left holding the bag… losing over $200,000 in Shitcago, after the dust finally settled earlier this year…
Feel free to call me a fucking moron, it is criticism and scolding that is well deserved for my monumental blunders…
I had to learn the hard way…
School of Hard Knocks, if you will…
So, why am I sharing all this with you?
As as been the case with this blog since inception, I seriously want to help other people achieve early FI and learn from my most MASSIVE fuck ups… There are plenty of landmines out there, and even more cunning liars/snakes/assholes out there that want you and your money to soon part ways!
I fight for the little guy/gal, and that will never fucking change…
Believe it or not.
What a “boring” answer, I know… but luckily, there are many loyal readers who appreciate my efforts… Thank you, thank you!
Further, I do take pride in the fact that I can at least look myself in the mirror and sleep soundly at night… Sure, I’m random as fuck, completely unfiltered (doh!) with my writing/messages, make mistakes all the time (damn it!), but at least I have a clear conscious and know that I’m NOT intentionally trying to con innocent people just so I can get ahead in my own life…
Fuck that shit!
Anyway…
Yes, I realize that “speculating” on Hyper-Growth stories isn’t popular at all these days… and we now live in a day and age where the mediocre “cash flow baby” style of “investing” TRUMPS all (the marketing propaganda behind this “gravy train” has duped a lot of newbs, so sad, so sad), but fuck, what do you want me to say to you?
I really tried my hardest to make “cash flow baby” a success story, and ended up nearly blowing myself up entirely…
That’s the God’s honest truth…
No doubt, one could make the strong argument that investing/speculating in South Chicago (i.e. Shitcago) was a hopeless newb thing for me to attempt to do right from the jump, but if I’m gonna speak TRUTH to you all here, my Indy investment ain’t all that great either! Sure, my Indy home is owned FREE AND CLEAR and the monthly “cash flow baby” is very nice (I won’t deny it), but the property has gone up a dismal $5,000 in 5 years…
Nothing to write home about with a $5k profit in 5 years, fellas, I’m sorry… I’m almost too embarrassed to even admit this fact…
As for the slow trickle “cash flow baby” every month?
Definitely not life-changing, by any means…
Do I regret my Indy purchase?
Absolutely!
It’s called OPPORTUNITY COST… Woulda, coulda, shoulda just stayed in the Bay Area… sighzzzzzz.
The new strategy?
Stick to what the rich kids covet and want to own. Follow the BIG $$$. In other words, for me, it’s all about chasing after World Class Tier 1 Assets from this point moving forward. No more targeting after cheap junk assets that anyone and their dog can afford to own. Nope, I ONLY want to own Cr??me de la cr??me assets in my portfolio.
Quality >>>>>> Quantity
Especially when it comes to real estate because this asset class on the whole is so highly illiquid and such a pain in the ass to sell.
Anyway…
For whatever reason, people don’t get it that if you invest in Hyper-Growth areas (especially with the use of responsible leverage), well hot daymn, you don’t really need to own that many units to, again, make some INSANE life-changing gains!
Translation:
Hyper-Growth = Strong appreciation potential
World Class Tier 1 traits (e.g. Bonifacio Global City):
Low to no crime.Lots of job opportunities.Super safe and clean.Excellent schools.Strategically located with good transportation access.Awesome amenities, services, infrastructure in place.Modern, high-end, and shiny community and nearby surroundings.BIG $$$ pouring in (lots of construction activities).Robust population growth.Etc.
Yes, price appreciation is highly speculative, but when in doubt, stick to the above bullet points and you’ll probably increase your odds greatly to avoid a Shitcago-type of disaster.
Characteristics of junk properties (e.g. Shitcago):
High crime.Few job opportunities.Unsafe and dirty.Horrible schools.Dependence on government/state subsidies.Rundown, low-end, and blighted community and nearby surroundings.BIG $$$ is fleeing (limited amount of construction activities).Declining population growth.Etc.
World Class Tier 1 ftw!!!
All day, everyday.
No exceptions!
Live and learn guys, live and learn…
Granted, I did sell out of both Side Hustle #1 and Side Hustle #2 way prematurely, so I missed out BIGLY in profits there…
Oh well, I still made some coin, and more importantly for you readers, it’s another datapoint for you to chew on… but please spare the praise, I’m obviously NOT that bright… *FACEPALM*
Anyway, enough with playing the Captain Hindsight game, let’s look at my latest conviction idea, Bonifacio Global City (BGC) located in Manila!
Wait…
One last note: Here’s the thing about me that my most hardcore readers appreciate the most — I’m NOT a total homer! Sure, I drink lots of Kool Aid from time-to-time, but when assets become over-inflated and way overbought, I’m not afraid or shy to call them out… So yeah, even though I made life-changing gains with Bay Area real estate, dude, I have no issue with reversing my tune and saying those once AMAZING speculations are now in bubble territory and a relic of the past (dangerous for newbs attempting today!).
I mean you try and make sense of the following, but for the life of me, I just can’t do it… I refuse to do it!
The above is obviously the type of “investing” that I could never condone… or do myself.
Nope, I never did that…
I would be shitting bricks every night, if I did…
Funny enough, when I first started buying Bay Area property in 2012, that above screen capture was BRIGHT GREEN across the board… and people (i.e. old co-workers) still gave me shit all day long about how I was being a reckless dummy!!!
But anyone doing the above now when it’s NASTY RED draped across the screen, guess what? It’s ummmm now considered prudent Buy and Hold Investing, by the masses, especially compared to the stuff that gambling moron FI Fighter does on a regular basis…
I’ll never win…
So be it…
Anyway, now let’s FINALLY get to BGC!
Another one of my “idiot” speculations… ??~?
Bonifacio Global City (BGC)
I first stumbled upon BGC in late 2017/early 2018 when I visited Manila for the very first time in my life… Immediately, I was impressed which just how new, modern, and shiny the place was… In many ways, BGC felt like to me a perfectly planned community where every last detail was meticulously thought about and accounted for.
I liked BGC so much, I decided to return for Round 2 and I’ve been here since September now…
Anyway, one thing that really struck (and surprised me) was the fact that there’s just a ton of development happening right now in the Uptown area of BGC…
The weird thing, though is this — The prices haven’t run away… yet… even though Uptown is way newer, updated, more posh/high-end than other parts of town… The pre-sale prices for many of these new development projects in Uptown are more or less inline with what you would find in say Burgos Circle, an area that was developed ~10 years ago (albeit, still super nice in its own right!)…
The view from Bellagio Tower, looking down at Burgos Circle.
For instance, check out the turnover date for Bellagio Tower…
From Megaworld.
Most 2 bedroom re-sale units at Bellagio Tower go for around 11-13 million PHP, give or take…
But, for some reason, anyone can head on over to *BRAND SPANKING NEW* Uptown (also developed by Megaworld) and purchase a 2 bedroom unit for around 13-15 million, or so…
And in case you were wondering…
1 million PHP is ~$19,000 USD.
Would you NOT pay ~$19k more to buy a *BRAND SPANKING NEW* apartment unit versus one that has wear and tear spanning ~10 years!?!
This type of “deal” would never exist in places like say the Bay Area, where new construction ALWAYS sells at a GINORMOUS premium to the old stuff of yesteryear… Like, say $200,000 plus, easily!
Weird science, right?
But that’s not all…
Although BGC by and large is a very nice/modern/clean/safe area where you could literally live ANYWHERE in town and be more than content, again, Uptown is even more posh/glitzy/shiny/high-end, and well, the speculator in me feels 1,000% confident that the units here will appreciate in value at a far greater rate than most anything else in BGC…
There are just so many catalysts for significant price appreciation in Uptown that I don’t really even know where to begin…
How about this, for starters?
The Icone Tower
The Icone Tower.
As covered and borrowed text from my previous article discussing BGC…
From Arch Daily.
From Arch Daily.
Although a few years out, I’m fully convinced that Icone Tower is going to be a tourist magnet that’s going to attract a lot of visitors to Manila (and in particular BGC/Uptown).
Yes, I’m speculating, but I have a hard time believing that a country’s “crown jewel centerpiece” landmark structure isn’t going to help boost up property values of the surrounding buildings…
Next up…
Grand Hyatt Hotel
As if one “crown jewel centerpiece” landmark wasn’t enough for Uptown, how about we throw in another?
Like the 5-star Grand Hyatt Hotel…
Speaking purely for myself, the tallest building in Metro Manila (since completion in 2017) is certainly a main attraction I wouldn’t mind owning property right adjacent to….
From Wikipedia.
The Grand Hyatt Hotel clearly stands out from the pack…
As covered and borrowed text from another previous article I wrote…
Really, if I was a betting man (I am), of course I would prefer to speculate on the side of The Grand Hyatt and The Icone Tower as opposed to say Section 8 junk properties in South Chicago (what a tragic mistake that was on my part; I blame both being naive and dumb as fuck)…
With real estate, in my own humble opinion, we increase our odds for success substantially when we buy into properties strategically situated next to “status symbols” that are synonymous with wealth.
Call it the “wealth effect” if you want, but the above map will give you a good idea of why I want to own an apartment unit in Uptown.
Again, as speculators, when in doubt, follow the BIG $$$ and speculate in areas that are booming (or gonna boom big in the future) and are/will be highly coveted by everyone… Ideally, you wanna get in early before these properties become “unobtainable”.
So far, we’ve got Icone Tower and Grand Hyatt highlighting the Uptown area, but that’s not all!
Sunshine Fort
As if the already well established (and attractive) Uptown Mall complex wasn’t enough shopping for you… here comes a lot more!
The Japanese are coming to add their own flavor to Uptown and BGC!
To the tune of investing $400 million.
From Inquirer.
Yup, more retail and residential units to a fast-growing and emerging district!
Check out this artist rendition of the new complex + 4 new towers encompassing Sunshine Fort.
From Federal Land.
Although it’s super early days for the Sunshine Fort project, it’s gonna be pretty freekin cool… when it’s finally completed.
There’s “Four Zones of Activity”…
Active SpringBreezy SummerCreative AutumnDreamy WinterFrom Federal Land.
Pretty neat to have a development project that is gonna have the Japanese touch, in my own humble opinion, to accentuate all the other projects surrounding Uptown…
Here’s what the extremely early days of Sunshine Fort look like (from my view looking at it from a unit located in Grand Hyatt Residences).
Gonna be very cool to watch how this progresses over time…
Grand Central Park
Speaking of other projects, right adjacent to the Sunshine Fort is another Federal Land project, Grand Central Park. Here, we’ve got even more shopping and another 4 towers!
Shopping courtesy of the future Big Apple Mall…
From Federal Land.
And the 4 new towers:
Central Park WestMadison Park WestTimes Square WestPark AvenueWhich will add to the Federal Land collection, teaming up with the already completed projects:
Grand Hyatt HotelGrand Hyatt ResidencesPark WestGrand Central Park, ladies and gentlemen…
From Federal Land.
The first tower, Central Park West, is slated for full completion by the end of Q1 2019…
In the pic below, you can see Central Park West (LHS) and Times Square West (RHS), I believe…
And like I mentioned earlier, even though a project like Central Park West is *BRAND SPANKING NEW*, the current asking price is not much different (splitting hairs, really) from the “old stuff” you’ll find elsewhere in BGC, like those 10 year old Bellagio Towers near Burgos Circle.
Here’s a model of all the Federal Land projects, taken from the showroom (the buildings on the far right are Megaworld projects, so that’s the reason the details are omitted, heh)…
If all that shopping (Uptown Mall, Big Apple Mall, Sunshine Fort Mall; not sure what the official name will be yet), Federal Land residential towers (Central Park West, Park Madison West, Times Square West, Park Avenue West, Park West, Grand Hyatt Residences, 4 towers making up Sunshine Fort; details are scarce at the moment, so I will refrain from commenting too much here), Grand Hyatt Hotel, Icone Tower weren’t enough for you…
Well, we’ve also got all of Megaworld’s stuff…
From Megaworld.
Quite frankly, after touring One Uptown Residence, I gotta say I’m a big fan of the Megaworld residential projects in the Uptown region… I have no doubt that Uptown Ritz and Park Suites are gonna be massive success stories too…
And of course, right next door to Uptown Mall is Uptown Parade, where you’ve got a lot of restaurant options and nightlife stuff going on…
From Megaworld.
And I’m not even gonna get bother getting into the Ayala Land projects, such as Montaine, which are also located in Uptown… There’s already enough to chew on, as is…
JP Morgan Chase Manila HQ
Ok, that’s all fine and dandy with all the shopping, residential towers, and even 5-star hotel and funky looking future tourist attraction, but what about JOBS?
Well, although not clearly depicted in the Uptown Bonifacio Master Development Plan image above, there are actually commercial towers erected in Uptown Place.
How do I know?
I’ve been inside there…
And in the future, “too big to fail” JP Morgan Chase will be moving into Uptown!
From Megaworld.
Check this out…
“70,000 square meters of gross leasable area”
From Megaworld.
“Booming Uptown Bonifacio”
When in doubt, follow BIG $$$, right!?!
Like, you know… JP Morgan Chase!?!
Hmm…
Wait, there’s more…
“Strategically located”
From Megaworld.
The new JP Morgan Manila HQ should be done around 2022!
Pretty cool…
But, really, it’s some of the other highlighted text above that caught my eye the most…
“Transport Hub”
“Skytrain monorail”
“Mega Manila Subway”
Ergh, what?!?
Hold up, wait a minute…
You know what the #1 gripe about Manila and the Philippines is from pretty much anyone you talk to on the street?!?
Arguably, some of the most HORRENDOUS traffic you’ll ever encounter on this planet…
Compared to other leading global cities in Asia (e.g. Hong Kong, Taiwan, Singapore, Japan, South Korea, etc.) the current Philippines transport system is still stuck in the Stone Age…
And in great need of MASSIVE overhaul…
See below, during rush hour (EDSA)…
You’re telling me they’re working on a solution to solve this nightmare!?!
Transport Revolution
Well, I wouldn’t get too excited just yet… because everything is so preliminary at this stage of the game, but there are concrete plans in place to (eventually) solve Manila’s dreadful traffic problem…
From Wikipedia.
From ABS-CBN.
Wow… Can you say “total game changer”!?!
Check this out…
From ABS-CBN.
Yup, the BGC subway station is going to be located in Uptown, btw…
This MASSIVE infrastructure project is going to “unite the clans” and connect the 3 main core Central Business Districts (CBDs): BGC, Ortigas, Makati…
Further, people will finally be able to get from the airport all the way up to Quezon City… in a relatively short amount of time (less than 3-4 hours, heh!).
Or, say from BGC to Quezon City in 30 minutes, or less?
Fancy that! Sure beats 2-3 hours (when stuck in super bad rush hour traffic)…
With “plan envisions a North zone that will extent to Bulacan and a South zone that will extend to Cavite.”
Even more wow!!!
Yes, it’s true the Metro Manila Subway Project isn’t slated for completion until around 2025, which is still a looooong ways away… Still super exciting, regardless…
But first up…
Here’s that bit about the Skytrain…
From ABS-CBN.
From BGC to Guadalupe MRT Station in just 5 minutes!?!
Right now, it’s closer to 30 minutes plus riding the MRT… First, you gotta take the BGC bus to Ayala MRT Station… You know, go south to go north… Sigh, what a total pain in the ass it is right now…
I’d say, the Skytrain is a nice “holdover”, or “appetizer” until the subway is ready… and it’ll be very much welcomed!
And what do you know, the Skytrain is gonna be located in Uptown…
From Wikipedia.
Uptown ftw… yet again!
The macro for Uptown just keeps getting better and better as I do more and more research…
And better still… Keep reading.
Uptown Arts Residence
In my own humble opinion, I feel like Megaworld is one of the top developers in Manila, and even though they’ve already got a slew of projects under construction in Uptown, there’s a brand new one that is about to break ground, Uptown Arts Residence.
From Megaworld.
Here’s a most recent press release announcing the project to the public…
From Megaworld.
Check out this new development map for Uptown, highlighting Megaworld’s projects (and showing the location of the future Uptown Transport Hub)…
From Megaworld.
Uptown Arts Residence is large (45 total levels), but it isn’t a MASSIVE development project, by any means, relative to some of the other stuff found in BGC…
From Megaworld.
But it’s the starting price that has me reeling… Check out this recent quote I got from someone working at Megaworld…
~28 million PHP to reserve a 2 bedroom apartment unit that is 84 sq. meters…
Or, ~$530,000 USD.
Now, let’s do the math on the unit using PHP/sq. meter…
That’s ~333,000 PHP/sq. meter!!!
Holy smokes!
Why is the sticker price of Uptown Arts Residence important? Because that’s the presale price and it’s what’s gonna set the trend for prices moving forward in Uptown…
More importantly, at least for myself, I’ve been hunting for deals aggressively in Uptown, and have been able to locate new construction units (not yet turned over/ready for occupancy; RFO), also 2 bedroom and ~80 sq. meters selling closer in the range of 180,000-230,000 PHP/sq. meter.
Let’s do some more math, again…
That works out to a range of ~15.12-19.32 million PHP for a 2 bedroom unit!
Or, the following delta…
~8.77-12.97 million PHP
On the low end of things…
That’s ~$165,000 USD (the delta from the Uptown Arts Residence selling price of ~333k PHP/sq. meter to my “pocket listing” deal going for 230k PHP/sq. meter)…
Interesting… Right?
“Instant Equity”
Now, I’m not implying by any means that my pocket listing deal could command ~333k PHP/sq. meter right this moment in time, but as a speculator, I can CLEARLY see where the trend is going, and over time, I see no reason why my pocket listing (also brand new construction located in Uptown) couldn’t climb to such levels…
In fact, just check out the re-sale prices for One Uptown Residence after turnover (they have skyrocketed)…
Lots of One Uptown Residence’s units selling in the range of 270k PHP/sq. meter now…
No joke, I got the above listing from a realtor, and have confirmed prices with other brokers as well…
So, even if my pocket listing deals (180-230k PHP/sq. meter) can’t fetch Uptown Arts Residence’s type of pricing (~330k PHP/sq. meter), they should still be worth AT LEAST as much as what these One Uptown Residence’s units are selling for (~270k PHP/sq. meter)…
Instant equity, I believe is built in from Day 1 with these pocket listing deals…
Yes, I am very much a “gambler” and speculator at heart, but anytime I can own something that I believe with full conviction qualifies as a World Class Tier 1 asset for an attractive price, I’m listening closely…
I’m not sure if I ever disclosed the following datapoint to readers, but here it is anyway:
In the summer of 2015, my Bay Area agent presented me a pocket listing for a Santa Clara townhouse for $100,000 USD less than what the next door neighbor’s unit was being sold at…
Naturally, because I was so active in real estate back then (remember, I closed Side Hustle #3 in February 2015), I was totally spent and unable to make a move… So, even though I knew this was a tremendous opportunity, again we’re talking about $100,000 USD in “instant equity”, I had to decline…
But like the AWESOME friend that I am, I passed the deal along to my buddy (Hello, King David if you’re reading this!) and he pounced on it immediately… I’ll never forget his enthusiasm when I spoke to him shortly after he closed escrow… Long story short, that Santa Clara property is worth about ~$1 million USD today, and he’s up about $400-500k USD…
No, of course I’m NOT suggesting the same thing will happen to any of these BGC condos… and even if it does, it won’t happen overnight!
More Rambling
With all the development going on though and BIG $$$ pouring in aggressively, I do feel the future outlook here in BGC/Uptown is very bright, especially around the 2025 timeframe when (hopefully) the subway gets completed and many of these important projects (Grand Central Park, Sunshine Fort, Uptown Park Suites, Uptown Ritz, Icone Tower, JP Morgan Chase Manila HQ, etc. get completed).
But I won’t deny it either — My gut feeling towards BGC and all the future development in many ways mirrors and elicits the same type of vibes I was getting from Santa Clara back in 2014-2015…
And, yes, although I have to admit even though King David is a big baller (worth many millions these days), I’m sure he will gladly admit that making $400-500k USD in about 3 years time was a killer deal (c’mon David, be humble even if we all know you don’t need to be, hahaha).
Anyway, I’m clearly biased and much enamored with BGC, so keep that in mind… I may not be thinking/seeing clearly…
But to be brutally honest with everyone, I really haven’t felt this confident and fully convicted in such a speculation since I was buying up mining stocks hand over fist in summer 2015-early 2016…
As for that last speculation? My mining stocks profits reached an apex in January of this year, eclipsing $1 million in gains.
For sure, I don’t ALWAYS get it right (looking at you Shitcago!)… and at the end of the day, I really don’t know jack shit about anything…
Haters are gonna hate, regardless, but you know what? It’s NOT easy documenting all this stuff in real-time BEFORE IT HAPPENS, So please cut me some slack! I’m doing my absolute best to tell it like I see it and NOT be a bullshit artist!
Please note:
There are absolutely no guarantees when it comes to speculation, and honest (and humble) people with even a shred of integrity will happily admit that they are wrong, from time-to-time, or quite frequently (like my own dumb ass)…
Speculating in BGC and Uptown, there are risks of course! You’re banking on the economy of the Philippines doing well in the future, for these development projects to get completed on time, and for stability and growth on the whole as it pertains to the global markets…
I mean, if we see another market crash, then yes, all bets are off, and most likely BGC and Uptown apartment units are going to come down in price… perhaps a lot!
But, I mean, I’d still argue that being able to buy a World Class Tier 1 asset, such as a 2 bedroom unit at ~$300,000 USD and below today still represents tremendous value relative to some of the more expensive places in the world (e.g. $1 million in the Bay Area can’t even get you a rundown shack these days)…
To each their own, I suppose…
Anyway, I pour my heart and soul into sharing/researching this stuff, so for those who appreciate the efforts, THANK YOU, it makes it all worthwhile.
For anyone reading this, no way am I saying in any way, shape, or form that you should follow my lead and invest/speculate in BGC properties… I really don’t know what the fuck I’m doing, but I keep on trying, anyway…
In my own humble opinion, the important thing is to just use my own journey and actions as a case study (i.e. datapoints) for yourself, and to try and figure out/dissect what worked and what didn’t work… Hopefully, these datapoints are of use to you in your own early FI journey, but as ALWAYS, please do your own due diligence and research!
Just sharing my thoughts/thinking, as usual, in my next big conviction idea.
We’ll see what happens, in time…
Go Uptown!!! Go BGC!!!
Fight On!