Dormitory Feasibility
I. Introduction
1.1 The University of the Philippines
Founded in 1909 as the UP College of Agriculture, UPLB has since then established its leadership position as an academic institution. Today, the university being a coeducational, publicly funded academic, research and extension institution, is dedicated to advancing the knowledge and the education of students in science, technology, agriculture, forestry, veterinary medicine and other areas of scholarship that will best serve the Filipinos and the country in the 21st century.
UPLB is organized into nine colleges namely, Agriculture, Arts and Sciences, Development Communication, Economics and Management, Engineering and Agro-Industrial Technology, Forestry and Natural Resources, Human Ecology, Public Affairs and Veterinary Medicine, and two schools namely the Environment Science and Management and the Graduate School. The school offers about 27 undergraduate and 89 graduate programs to about 9,700 students. Student population increases by 10% annually.
The University also provides housing to its students. One of them is the International House, which is a dormitory for International Students. Other student housing are provided by private individuals.
The steady increase of student population that includes foreign students will result to an increase demand for student housing. Dormitories will become a primary need of the community. Currently, the community within the periphery of the University is providing this need. Private individuals who own lots have either converted their lots into two or three storeys buildings that offer single, double or bed space amenities. Other houses offers rooms available bed spaces just like the old houses that you see at the University Belt Area in Manila. These rooms accommodate from 4 to 8 persons. It is usually cramped and the rent is low. Usually there are no vacant bed spaces or rooms available within the periphery of the University due to its strong demand. Most students of the University come from the different parts of the Philippines.
Starting next academic year 2003, the UPLB will implement the Revitalized General Education Program (RGEP), which was given impetus by UP System President Francisco Nemenzo. The RGEP purpose is to broaden the students’ intellectual and cultural horizons, to foster commitment to nationalism balanced by a sense of internationalism, to cultivate a capacity for independent, to possess critical and creative thinking, and to infuse in them a passion for learning with a high sense of moral and intellectual integrity.
UPLB’s performance in various Professional Regulatory Commission (PRC) examinations in 2001 is proof of its dominance among state colleges and universities. The Professional Regulation Commission has recognized the university as a top-performing university for registering a passing mark of 100% in almost all examinations in civil, chemical, electrical and agricultural engineering, chemistry, nutrition, veterinary medicine and forestry. Moreover, a total of 15 colleges, institutes and units of UPLB have been declared as centers of excellence (COE) by the Commission on Higher Education and by virtue of presidential proclamations.
As UPLB gears up to meet the demands of instruction research and extension in the 21st century, UPLB is investing in modernizing and upgrading its facilities. The following are:
a. P 9.13 million has been earmarked to refurbish existing and buy new research and teaching laboratory equipment
b. P 17.5 million is allotted to complete a fiber optic cabling system that will interconnect the campus and link it to the Internet
c. P 8.4 million to upgrade computer laboratories and to provide computers to dormitories, library and academic departments
d. and P1.2 million to upgrade the main library.
With these aggressive projects being undertaken by the University, it will definitely attract more students thus making student housing/accommodations one major concern.
1.2 International Rice Research Institute
Located inside the University of the Philippines Los Banos is the International Rice Research Institute (IRRI). It is an autonomous, nonprofit agricultural research and training organization that have offices in more than ten nations. The Institute’s main goal is to find sustainable ways to improve the well being of present and future generations of poor rice farmers and consumers while at the same time protecting the environment. Most of IRRI’s research is done in cooperation with the national agricultural research and development institutions, farming communities, and other organizations of the world’s rice-producing nations.
IRRI was established in 1960 by the Ford and Rockefeller foundations in cooperation with the government of the Philippines and began its research activities in 1962. The Institute’s research headquarters has laboratories and training facilities located on a 252-hectare experimental farm inside the university. Besides doing rice research, IRRI is also very active in local communities through providing educational scholarships, organizing income-generating training activities, and arranging other community projects.
IRRI employs hundreds of scientific and support staff and 95 percent of who are Filipinos who come mostly outside Los Banos. More than 50 scientists are recruited internationally that come mainly from China and India. Although most of them work at the IRRI headquarters, others are also posted to other rice-producing nations such as Cambodia, India, Indonesia, Japan, Lao PDR, China, and Thailand.
IRRI training programs and research focus on relevant PhD theses, postdoctoral research, short-term group courses, and mid-career training opportunities for national rice scientists.
Under the supervision and guidance of IRRI scientists, MS and PhD students, mostly from developing countries, learn traditional and new research approaches to address rice production problems back home. Each year, about 200 trainees also learn new techniques and update their rice research skills.
Today, more than 13,000 scientists have been educated at the institute, with another 2,700 being trained in IRRI’s collaborative in-country courses. Many of these people have now advanced to senior positions and play a key role in ensuring the food security of their nations.
In 1997 alone, IRRI received more than 120,000 visitors, including farmers, heads of state, and members of international organizations, schoolchildren, members of the NGO community, students, visiting scientists, and the general public.
Given this significant number of students and scientists who come from the different parts of the world and the Philippines who study at IRRI and at the same time the aggressive improvement of the academic curriculum at UPLB, is building a dormitory be a feasible project to pursue in the Raymundo area of UPLB considering that the place is already filled with businesses offering room for rent and dormitory type of services?
1.3 Rationale of the Study
The aggressive move of the University to further improve its academic programs and research facilities will eventually resort to the increase of student population. And at the same time, IRRI’s pioneer work in rice production has resulted to an increase in interest by overseas students and visitors alike. These developments will definitely bring a need for safe, livable, affordable and comfortable housing accommodations for these students in the future.
This situation brings to the Jamero Family the concept of whether is it feasible to build a dormitory near the University of the Philippines Los Banos. The proposed site is near the Raymundo street gate of the University of the Philippines Los Banos. It is within the one block area from the gate. It is bounded by Mt. Arayat St. and Serafina St. Mt. Arayat Street is parallel to Raymundo Street. The lot has a fence and a caretaker. In front of it is a three-storey dormitory. And at both sides are bungalow and two storey houses. It is the only vacant lot within the vicinity.
The proposed project will be named “THE PEACH DORMITORY”. It is called Peach dormitory because the building will be in color peach. This name will instantly develop a strong name recall due mainly to its name. The primary target of this dormitory will be students from UPLB and IIRI. Aside from students, it will also cater to overnight backpackers and vacationers who visit the beautiful sights of Los Baños.
1.4 Assumptions of the Study
This study intends to determine whether is it financially viable to build a three-story dormitory within the periphery of UPLB. It is also based on the following assumptions:
1. The proposed project site is an eight hundred seventy seven square meter (877 sq. m.) vacant lot that is owned by Jamero Family.
2. The lot is a clean title.
3. The owners would like to build a four-storey dormitory with a multi-purpose roof deck. The dormitory will have 80 rooms from the second to the fourth floor. The ground floor is for commercial spaces.
4. The lot will be used to acquire an 18.5 Million commercial loan that will be used for the construction of the dormitory.
5. The study will not include the architectural planning and construction expenses because it is assumed that the loan will be able to finance the construction of the building.
6. The Jamero Family has the financial capability of raising the funds whenever it is needed.
7. This study assumes that the average commercial loan lending rate in banks start initially at 9%. It varies accordingly and reaches about 13.5% in 10 years.
It is also the intention of the study to determine the following:
- To determine the probable demand for housing in the area.
- To calculate the projected revenues of the dormitory
- To establish the services that will make the dormitory different from other dormitories.
II. Market Study
This feasibility study is conducted in order to find out if it is viable to build an eighty-room dormitory in the Raymundo area. It is called the Raymundo Area because the Raymundo street is the street that leads to the side gate of UPLB. It is composed of one to two storey houses. There are dormitories and at the same time commercial establishments along the street.
The proposed site is parallel to Raymundo Street. It is located along Mt. Arayat Street, which is parallel to Raymundo Street. It is within a one block area from the UPLB gate. This study will name the dormitory project the Peach Dormitory.
This chapter contains the identification of its target market, the analysis of its existing competitors, the determination of the demand-supply gap, and the dormitory’s entry marketing strategy.
2.1 General Description of the Market
The primary target market of the Peach dormitory are the students, both local and foreign, visiting faculty and visitors of the University of the Philippines Los Banos and have the International Rice Research Institute (IRRI). The proposed Peach dormitory is located in Los Baños, Laguna that is well known for its history, hot springs, coconut plantations, lakeshores and waterfalls. Thus, making it a favorite destination among Metro Manilans during the weekends.
2.2 Detailed Demand and Supply Analysis
2.2.1 Demand Analysis
2.2.1.1 Demand Assumptions
- The student population growth rate of the University of Los Baños is 20%. It is assumed to be accurate and the number of freshmen who enrolled determines the growth rate. The data was taken from the UP Admissions Office.
- The number of graduates per year vary so the study assume that an average of about 10% of the student population graduate annually.
- The study will determine the total student population and will consider it as its primary target market. Other target markets are the office workers, visitors and non-residents who work in Los Baños.
- There is no available data on the number of UPLB students that are residents of Laguna (where Los Baños is a town). The study assumes that about 2% of the student population in UPLB is residents of Los Baños.
2.2.1.2 Demand Components
This study will focus on the following categories:
- Total student population of UPLB is obtained and used as basis for demand.
- Population and household growth of Los Baños and Laguna in General.
- Types of Industries and work classification in Laguna. This will determine the secondary target market of the dormitory that is non-resident workers of Los Baños.
2.2.1.3 Demand Data/Computation
Based from the data taken at the University of the Philippines Admissions office. Total student population in UPLB for the school year 2000 was 9,700 students.
That same school year, the University of the Philippines accepted around 10,706 freshmen and about 6,849 of which have actually enrolled. A high number of freshmen came from public schools. The UP Office of Admissions had showed that UPCAT qualifiers from public high schools outnumber those from the private secondary schools. Out of the 10,706 who passed the UPCAT for the year 2000, 5,902 out of 24,491 came from public high schools while 4,804 out of 41,163 are from the private schools. This means that more students from the C-D classes were able to enter the university. This will be taken into consideration for the pricing of the rental rates for the Peach Dormitory. The distribution of applicants and qualifiers by high school type are shown in Table 2.1
Table 2.1 Distribution of Freshmen by high school type
|
A. Public Schools |
Applicants |
Qualifiers |
|
Public General |
15,993 |
3,324 |
|
Public Special |
2,495 |
1,163 |
|
Public Vocational |
1,212 |
229 |
|
Public Barrio/Barangay |
22 |
2 |
|
UP Administered |
550 |
274 |
|
State University/College H.S. |
4,219 |
910 |
|
|
Total |
5,902 |
|
B. Private Schools |
40,994 |
4,773 |
|
Foreign Schools |
169 |
31 |
|
|
Total |
4,804 |
|
TOTAL |
|
10,706 |
From the 10,706 who passed from the UPCAT only about 6,849 have actually enrolled. The University of the Philippines has 9 campuses and this study will also determine the number of freshmen who enter the different campuses. Table 2.2 will show the distribution of the new enrollees to the different campuses of the University of the Philippines.
2.2 Freshmen Distribution to the Different UP Campuses
|
|
Qualifiers |
Enrollees |
|
UP College Baguio |
881 |
505 |
|
UP Clark |
210 |
167 |
|
UP Diliman |
3,735 |
2,700 |
|
UP Los Baños |
2,560 |
1,962 |
|
UP Manila |
1,011 |
897 |
|
UP Iloilo |
1,061 |
667 |
|
UP Cebu College |
433 |
316 |
|
UP Tacloban |
434 |
319 |
|
UP Mindanao |
381 |
213 |
|
TOTAL |
10,706 |
7,746 |
The data above shows that about 25% of the freshmen or about 1,962 students enrolled at UPLB. It came in second in terms of student enrollees after UP Diliman. This means that the Los Baños campus is well known for its programs and it is being considered as their first choice of campus by most students applying at UP. It also indicates that the University should be able to provide at least 2,000 new accommodations for these students annually.
The number of graduates at UPLB varies from year to year. This study assumes that about 10% of the student population graduate annually. Table 2.3 will show you the projected student population in 15 years. The owners are taking out a loan to finance this project. The longest term available from banks for a commercial loan is 15 years. Projecting the student population for 15 years will help us determine whether there would be a demand for student housing.
The table shows that with an average of a 20% annual increase of student population, it will increase by 5 fold after 15 years. By year 2015, the projected student population of UPLB will be at 40,519. By year 2017, total student will hit 49,000. This steady increase indicates that there is a great demand for student housing in the future. The projected increase of the student population is accurate since the university will start the aggressive implementation of its Revitalized General Education Program being undertaken by UP System President Francisco Nemenzo by year 2003. Millions of pesos have been earmarked for the upgrading and improving of the University. UPLB’s dream is to be able to meet the demands of instruction in the 21st century.
The International Rice Research Institute is an independent-research based institution that offers programs on rice research. It currently has 2,700 researchers and students. The study assumes that the student population increases by 5% annually. The student population increase is minimal because IRRI is a highly specialized school that offers programs related to rice production. Their own governments sponsor a majority of the students. Table 2.4 shows the projected student population at IRRI.
The student population of IRRI will double in the next 15 years. Majority of the students of IRRI are foreigners who come from rice producing countries. There are no plans of building a new dormitory to house these students inside the campus, thus forcing these students to look for housing outside UPLB. This makes them a potential market for the Peach dormitory. Foreign students are normally affluent students. These students normally rent out single rooms and apartments for security and privacy reasons.
The combined student population for both schools will be at 55,000 students after 15 years. UPLB’s student population growth is moving at a faster rate. The increase of the student population of IRRI is slower than UPLB because the Institute offers a specific type of instruction and specialization. Student housing is potential need of the community in the future.
Aside from the students of both UPLB and IRRI, it is also important to determine the growth rate of the population of Los, Baños and Laguna in general. The study will also include the workers of the different industries located in Laguna. The province is a thriving community and has been attracting people from other parts of Luzon to work in the area. The Peach dormitory will not be marketed solely as a student dormitory but as a condominium project. It will offer rooms for rent for individuals and single unit families. This type of room can be the potential market for non-resident workers who are based in Laguna. Table 2.6 shows the major occupational groups and the classes of workers in Laguna.
Table 2.6 Employments by Industry
Table 10. Employment by Industry:
|
MAJOR OCCUPATIONAL GROUP AND CLASS OF WORKER |
MAJOR INDUSTRIES |
||||||
|
Nos. |
% |
|
|
|
|
|
|
|
All Classes of Workers |
|
|
|
|
|
|
|
|
PROFESSIONAL WORKERS |
8.320 |
6.71 |
|
|
|
|
|
|
ADMINISTRATIVE WORKERS |
4.220 |
3.40 |
|
|
|
|
|
|
CLERICAL WORKERS |
7.240 |
5.83 |
|
|
|
|
|
|
SALES WORKERS |
20.300 |
16.37 |
|
|
|
|
|
|
SERVICE WORKERS |
14.570 |
11.75 |
|
|
|
|
|
|
AGRICULTURAL WORKERS |
29.970 |
24.16 |
|
|
|
|
|
|
PRODUCTION WORKERS |
39.140 |
31.65 |
|
|
|
|
|
|
OCCUPATION NAD |
280 |
0.23 |
|
|
|
|
|
Table 2.6 shows the Major Occupational Groups and the Class of Workers in Laguna. Production workers and agricultural workers account for more than half of the group. This means that it is primarily an industrial and an agricultural town. The average salary of this type is the minimum wage, which is P 280 a day. These types of workers are locally sourced and are residents of the community.
The professional and sales workers account for about 25%. These types of workers are mostly non-residents and can be a potential market for the Peach Dormitory.
2.2.1 Supply Analysis
2.2.2.1 Supply Assumptions
- There is insufficient data as to the exact number of households that offer student housing accommodation in Los Baños. This study will assume that about 10% of the total household in the town of Los Baños is engaged in offering student housing accommodations. The study arrived at this percentage based on the assumption that the term “household” from the data taken from the population census does not equate as a “homeowner”. Thus, there could be two or more households in a single dwelling unit.
- The study has interviewed 10 dormitories/houses that are located in Los Baños. It was able to determine the number of rooms, rental rates policy and their expansion plans for the future. The projected supply data will be derived from this survey.
- The 10 dormitories interviewed are located within the proximity with the University and the surrounding areas.
- The projected increase of households will be used in determining the projected supply.
2.2.2.2 Supply Components
- Projected supply of rooms will be taken from the average room of the dormitories that were surveyed.
- Household projection in Los Baños and Laguna.
- Projection in supply should be made using historical supply data.
2.2.2.3 Supply Data/Computation
Students can opt for four types of housing accommodations. The following are:
1. University Dormitories / Privately Owned Dormitories
2. Rooms for Rent
3. Bed Space
4. Apartments
An example of a University Dormitory is the International House. It usually caters to foreign students and graduate students. The rooms are air-conditioned and are shared by two or three students. Each room has its own toilet and bath and a work/study area. As is the case in most dormitories in Los Baños, there is no hot water. Linens, pillows, and blankets are usually provided by the center.
Dormitories within the periphery of the University are privately/family owned. Since it is easily filled up, they have a policy of “a first-come-first-served basis”. There is insufficient data on the actual number of households that are offering student accommodation. This study has assumed that about 10% of the household population in Los Baños is engaged in such activity. Rooms in these dormitories costs from about P 4,000 to P 6,000 a month.
Bed Spacing is a cheaper alternative of a student housing. These rooms for rent spaces are usually located in private houses. Bed spacing can be in 4 or 8 persons in a room. Average rent is from P 500 to P 2,000/month.
Apartments can be considered as the most expensive type of accommodation. Rental fees for a two-bedroom house are from P 4,000 to P6, 000 monthly.
There is no existing dormitory that is being constructed in the proposed area. However, there are certain existing household dwellings that are being converted into dormitories and rooms for rent. Door-to-door households offering rooms for rent and bed spacing surround the area around the University. Most of these households are fully booked throughout the year.
Table 2.7 will show you the total population and the total number of household in
Laguna. Los Baños is one of its towns.
Table 2.7
Total Population, Number of Households, Average Household Size, Population Growth Rate and Population Density by Region, Province and Highly Urbanized City: as of May 1, 2000
|
Region/Province |
Total |
Number of |
Average |
Annual Growth Rate |
Population |
||
|
1990-1995 |
1995-2000 |
1990-2000 |
|||||
|
Laguna |
1,965,872 |
417,886 |
4.69 |
3.32 |
4.08 |
3.67 |
1,117 |
Laguna’s is increasing by almost 4% annually. It shows that there are also a significant number of people aside from students that need housing. Table 2.8 will show you the total number of population and the number of households in the Los Baños area.
Table 2.8 Population Distribution of Laguna
|
MUNICIPALITY |
NO. OF HOUSEHOLDS |
TOTAL POPULATION |
ANNUAL GROWTH RATE |
% TOTAL POPULATION |
|
ALAMINOS |
7,466 |
36,120 |
3.02 |
|
|
BAY |
9,194 |
43,762 |
3.33 |
|
|
BINAN |
42,307 |
201,186 |
5 |
|
|
CABUYAO |
22,552 |
106,630 |
7.14 |
|
|
CALAUAN |
8,818 |
43,284 |
3.61 |
|
|
CAVINTI |
4,473 |
19,494 |
4.11 |
|
|
FAMY |
2,147 |
10,419 |
1.63 |
|
|
KALAYAN |
3,788 |
19,580 |
3.13 |
|
|
LILIW |
6,205 |
27,537 |
2.59 |
|
|
LOS BANOS |
17,030 |
82,027 |
2.93 |
|
|
LUISIANA |
3,811 |
17,109 |
1.07 |
|
|
LUMBAN |
5,456 |
25,936 |
3.59 |
|
|
MABITAC |
2,990 |
15,097 |
2.74 |
|
|
MAGDALENA |
3,784 |
18,976 |
3.83 |
|
|
MAJAYJAY |
4,978 |
22,159 |
3.36 |
|
|
NAGCARLAN |
10,708 |
48,727 |
2.37 |
|
|
PAETE |
5,101 |
23,011 |
1.15 |
|
|
PAGSANAJAN |
7,274 |
32,622 |
2.55 |
|
|
PAKIL |
3,698 |
18,021 |
3.05 |
|
|
PANGIL |
4,160 |
20,698 |
3.45 |
|
The annual growth rate for Los Baños is 3%. It has about 17,000 households that basically serve the needs of the UPLB. About 10% of these households are engaged in the business of offering student housing.
This study surveyed 10 dormitories within the area to give an actual account on the rentals and fees. The following are:
1. Dormitory of Rodolfo Ela
The building is located at Sante Fe Subdivision. The rooms are part of the residential unit of the owner. It has three rooms composed of a two-man room, three-man room and four-man room. The rental policy is P1, 200 per head and is the same to all the lessees. The owner also requires a two-month deposit plus one-month advance as initial payment. The consumption for electricity and water are inclusive to the payment. However, extra charges are imposed on extra appliances; radio and television are charged P300 per month while computer is P500 a month.
2. Dormitory of Juanita Dalisay
The apartment is located at F.O.Santos St. It has five units rented for P3, 000. Each room has a maximum occupancy of four persons. The policy is one-month deposit and one-month advance. The consumption for electricity and water are exclusive of the monthly rental.
3. Shalom Apartments –
It is an exclusive all-girls residential apartment and belongs to the high-end rental rate apartments. It is located in the place called Umali, a place where most dormitories and apartments are available. The apartment has a total of 16 units. Each apartment unit has different configurations. Two of the units are allotted for bed spacing wherein each person pays P 1,100, inclusive of electric consumption and water. Three units are studio types and are rented out at P3, 000 exclusive of` electrical and water use. The rest are three bedroom apartments that are rented out at P7, 000/month exclusive of electrical and water use.
4. EDV Apartments –
The apartments are also located at Umali, along Diamond St. It has seven units offered only for girls. It has a rental fee of P6, 000 a month, exclusive of electricity and water bills. Occupancy for every room is limited to six persons. The rental policy is one-month deposit plus one-month advance.
5. Mother’s Ladies Dorm –
The residential/commercial building was built in 1993 and is located at Umali. The building is near the main road going to the campus. The building has allotted two units to be used as dormitory exclusively for girls. Each unit has eight rooms and can accommodate from 2 to 3 dormers. Each room is provided with electric fans and mattresses. Each dormer is charged with P1, 100/month inclusive of electricity and water consumption. They also offer board and lodging for P 2, 700 a month. Rental policy is two-month deposit plus one-month advance.
6. Claberio Apartments -
The studio-type apartments are offered for a rental fee of P 6, 000 a month. Each unit is fully furnished and has a maximum occupancy of four persons. Water and electric consumption are not included in the monthly fee. The owner requires a one-month advance plus two months deposit.
7. Galvez Compound -
( * These dormitories that are highlighted in color blue are located within the project site.)
The compound is located at a place known as Raymundo. It has eleven units whose prices vary from P5, 500, P6, 000, and P6, 500, depending on the size of the unit. The units have maximum of four, six, and eight persons respectively. The owner requires a three-month deposit and one-month advance for each lessee. Raymundo is the place where the proposed dormitory of this study is located.
8. Dormitory of Rufina Rodriguez
It also located at Raymundo. The building has eight rooms for bed space with a maximum occupancy of four persons per room. The owner charges a bed space fee of P600 per person every month; the water and electric consumption are included. The policy is one-month deposit plus one-month advance.
9. Maria Makiling Ladies Dorm -
The building has twenty-four rooms composed of two-man rooms, three-man rooms and four-man rooms. Rental fee is per person basis. Two-man and three-man rooms have the same rental fee of P1, 200 while the four-man room is P900. Rental policy is one-month deposit and one-month advance.
10. Dormitory of Angelita Umali
The building is five-door apartment. The rental fee is P3, 000 per unit per month. The maximum occupancy is three persons per unit. It has a rental policy of one-month deposit plus one-month advance.
The ten dormitories/households surveyed yielded an average number of rooms of about 8.5 rooms/household. The average number of room per household is determined by adding all the existing rooms of the 10 dormitories/households surveyed and then divided it by 10 to get the average room per household.
The projected supply of rooms will be determined by multiplying the average number of room per household with the number of households of Los Baños. Data on the exact number of households in Los Baños that are actually offering student housing is unavailable. This study has assumed that about 10% of the households in Los Baños are engaged in the business of student housing. The study assumes that 10% of these households are located within the vicinity of UPLB.
The current number of households in Los Baños is currently at 17,000. Ten percent of it is 1,700. This means about 1,700 households in Los Baños are offering student housing.
The 1,700 households will then be multiplied by 8.5 rooms, which is the average number of rooms based from the survey, in order to get the projected annual supply. The projected current supply of room available for student housing in Los Baños is 14,450 rooms.
In order to get the projected supply of rooms for the next fifteen years, the study will base its computation from the average increase of household population in Laguna, which is 3%. Table 2.9 will show the projected number of rooms for the next 15 years that will be available for housing.
By year 2017, there will be approximately 24,000 households that are engaged in the business of student housing. The supply increased 65% over 15 years.
Currently, availability of student housing within the periphery of the University is scarce. This might be due to the steady increase of the student population. Aside from students, there are also visitors, short-term school faculty and non-resident workers that are also in need of housing.
Private homeowners who offer their extra rooms for rent provide the majority of the student housing. Others are apartment owners. Some are dormitories. Occupancy rates are always full.
In order to increase the number of rooms to offer, one needs to renovate or build a new structure or building. This would not likely be the case for the existing households since it will involve a big sum of money. Another option is through building dormitories on vacant lots. Given that student population is increasing each year, the number of rooms that are available within the periphery of the University will remain the same unless the existing structures are renovated or destroyed to add more rooms.
2.2.3 Demand – Supply Gap Analysis
To evaluate the feasibility of the project, the demand and supply must be carefully studied. Thus, the gap between the two must be resolved. Table 2.10 will present the inability of the current dormitories to cater to the increasing need of student housing.
Based on the projections above, next school year 2003, and shows that there are just enough students housing available. The projected number of students for both UPLB and IRRI is 15,700 while the projected room supply is 15,790 rooms. The figures were taken from Table 2.5 and table 2.9 respectively. Succeeding years will have a deficit supply of student housing and it increases at a fast rate.
For a business to prosper, difference between demand and supply must be significant. The table above shows that the projected supply of student housing is inadequate for the huge demand for student housing for the next 15 years. Therefore, the Peach dormitory will be able to address the need for this inadequacy.
2.3 Target Market Segmentation
2.3.1 Demographics
The target market for the Peach Dormitory is the following:
1. Students of UPLB and IRRI.
2. Non-resident workers in Los Baños and Laguna. The work class types are professional and sales workers.
3. Vacationers and visitors of the students.
The location of the target market is Los Baños because it is where the Peach Dormitory is located. It is also where UPLB and the IRRI are located.
2.3.2 Market Targeting
The students of UPLB and IRRI are the main target market of the Peach Dormitory because it is located within a block away from the Raymundo gate of UPLB. Ninety eight percent of the students of UPLB are non-residents of Los Baños thus these students need student housing that is within walking distance to the campus.
Since UPLB is located in Los Baños, which is known for its hot springs, the peach dormitory will also target the vacationers who normally stay overnight in the town. Furthermore, non-resident professional and sales workers can be a potential market for the Peach dormitory. These workers are mostly single people who are working for companies and industries based in Laguna. This type of workers prefers safe places to stay considering that they do not belong to the area.
2.3.3 Market Positioning
Peach Dormitory will be positioned as the premier dormitory in Los Baños, Laguna. It is the only dormitory that provides safe and affordable housing. It is centrally located and offers complete amenities to all its dormers. Laundry, computer service, mailing service, sewing services, beauty services and food services are located at the ground floor. This offers convenience and savings for the dormers. It will offer two types of accommodations. One is bed spacing, which are ideal for students. The other is room that can be rented out for one year or for short stays. It will be positioned as a one stop shop dormitory housing where all your needs are being taken cared of.
The dormitory is colored Peach and it is named after it. It has a distinct name that can easily be remembered. It will become a landmark in the area.
2.3.4 Market preference
The market is predominantly students so rental rates is a major concern. The dormitory is an eighty-room dormitory, twenty of which are rented out by the room. The rest are rented out as bed spacing. This will provide flexibility and offers an option to the market. Since, the dormitory will have all the amenities that are usually needed by students, rental rates will not be a major consideration when choosing a student housing. Nevertheless, the rental rate of the Peach dormitory is competitive.
2.3.5 Competitors Profile
The competitors profile is analyzed through determining the competitor’s strengths and weaknesses. The 10 dormitories/housing that the study surveyed are the direct competitors of the Peach Dormitory.
There are four types of student housing in Los Baños. The following are the University dormitories, Rooms for Rent, Bed Spacing and Apartments.
The university dormitories are usually full. The selections of students that are allowed to stay at the dormitory are based according to the greatest need. This means that foreigners and indigent students are given a priority. Rental rates at these dormitories are reasonably low because the government manages it.
The surrounding community of UPLB provides the student housing for the rest of the students. It is provided mostly by private houses and some are multiple room dormitories.
There are big dormitories in the area. Some have more than 20 rooms. Others have 15. The big dormitories are usually exclusive for girls. There is no co-ed dormitory in the area. It has studio types and rooms that are rented out to bed spacers. Studio rental starts at Php 3,000 exclusive of light and water. Bed spacing cost around Php 1,100 and its inclusive of light and water. The room can accommodate from 4 to 6 persons.
Private houses with extra rooms are also being rented out to bed spacers. Normally, these rooms are cramped and usually accommodate 8 persons in one room. The owners of these houses maximize the number of persons that can be accommodated in the room regardless of its size. Generally the rooms are small and owners of these houses are trying to take in as many students as possible since there is a strong demand. This type of accommodation offers no privacy and horrible living conditions. Bed spacing is considered as the cheapest student housing. Rental rates starts at Php 500 up to Php 2,000 a month. This accommodation provides the worst living conditions.
Apartments are considered the best student housing. The only disadvantage is the high rental rate that starts at Php 6,000. There are also houses that rent out rooms. It usually starts at Php 4,000. The only catch for this type is that the owner imposes a limit on the number of occupants. Normally, the room should accommodate 4 persons only.
All types of student housing has a policy of “a first-come-first-served basis”. This indicates that there is a strong demand for student housing in Los Baños. Furthermore, it indicates that the community cannot fully accommodate the demand for student housing.
III. Entry Strategy of the Peach Dormitory
3.1 Target Market
The target market of the Peach Dormitory is the following:
1. Students of UPLB and IRRI.
2. Non-resident workers in Los Baños and Laguna. The work class types are professional and sales workers.
3. Vacationers and visitors of the students.
It will be positioned as the One Stop, Premier dormitory in Los Baños, Laguna. It will project an image of a student housing that provides safe, livable, complete and affordable housing. The ground floor of the dormitory will house businesses that will cater specifically to the needs of the dormers. Such businesses will include laundry services, computer service, mailing service, sewing services, beauty services and food services.
Furthermore, the dormitory is colored peach so as to create an instant name recall. It will also become a landmark in the area since it will stand out among the rest of the houses. It is brightly colored and pleasing to the eyes.
3.2 Pricing
Households that offer student housing surround the Peach Dormitory. Most of them are bed spacing that rents for Php 1,100 a month. The dormitory in front of it goes for Php 5,000 a room/month.
Based from the data of the UP Admissions office, it showed that almost half of those who passed UP come from public high schools, the study assume that these students have a limited budget. The rental rates of the Peach dormitory will be competitive. Aside from the rental rates of the adjacent houses, other factors such as the convenience and room size will be factored in for the rental rate of the Peach dormitory.
The dormitory will have twenty rooms that will be rented out as a room and the rest will be rented out to bed spacers.
The monthly rental rate of the Peach dormitory is as follows:
1. Room Php 6,000 /month
2. Bed Spacing Php 1,200/month inclusive of light and water.
3. Commercial Spaces Php 8,000
The rooms of the Peach dormitory will be targeted to foreigners, upper class students and to the non-resident workers. The foreigners are good prospects since the dormitory can demand a one year advance rental. There are also students who belong to the AB Class that can afford to rent one room. There is a 4-person occupancy limit for the room. It has its own toilet and bath but the rent is exclusive of light and water.
The rest of the rooms will be offered for bed spacing. It is a co-ed dorm. Each room has 3 double deck beds. Each room will be able to occupy 6 persons. The dormitory will provide the cushions but no pillows. It is inclusive of light and water expenses. However, extra appliances such as computers and flat irons will be charged an additional of P 500 per month per person. The rooms are also provided with closets.
3.3 Number of Rooms
The owner would like to build a four (4)-storey building having eighty rooms (80) rooms. The architectural firm that the owner will hire will do the configuration of each room. The architectural and construction cost of the project is not included in this study because the budget is dependent on the loan. However, for estimation purposes, the current industry standard for construction cost is at P 12,235 per square meter. This cost is for an all-concrete structure that can last for fifty (50) years. Table 3.1 shows the number of rooms per floor of the dormitory.
The total number of rooms available for rent will be 80 eighty rooms. Twenty commercial spaces will be allotted for in the ground floor.
Twenty six (26) rooms will be rented out as a single dwelling unit. It will have its own toilet and bath. The rest of the rooms will be available for bed spacing. All of the twenty-six rooms are located on the second floor. These rooms will also be rented out for overnight and short term stays.
Total lot area is 877 square meters. The dormitory will occupy about 45% of the lot. The rest will be allocated for the parking lot. Approximately 400 square meters will be used for the construction of the dormitory. Since the dormitory will be four storeys high, the total floor area will be 1,600 square meters. We multiplied 400 square meters by (4) four.
The ground floor will have 20 commercial spaces. Each space has an area of twenty (20) square meters. These spaces can be expanded up to one hundred (100) square meters.
The second floor will have (26) twenty-six rooms while the third and fourth floors will have (27) twenty-seven rooms. Each room will have a floor area of 16 square meters.
Specific measurements of the rooms and the ground floor of the Peach dormitory will be done by the architectural firm that the owners will hire. This study has excluded the architectural and construction layout of the project since the budget for the construction will be based on the available funds of the owners.
A space will be allotted for the elevator.
3.4 Deposit Scheme
Current rental practices in the area are as follows:
Room’s - Two months advance and one month deposit. Light and water excluded.
Bed-space - one-month advance and one-month deposit. Light and water is included.
The dormitory will implement a uniform deposit scheme for the room, bed space and the commercial space. All will require two months deposit and one-month advance. The commercial spaces will require one-year postdated checks. The lease contract is for one year and it is renewable annually.
Extra appliances such as ironing, television and computer will be charged an additional monthly rental of P 500. No need for deposit for this.
The daily rental for rooms that are rented out on a short time basis is P 1,000 a day. It is inclusive of linens and towels. These rooms are designed for the visitors of the students of UPLB or the vacationers needing for an overnight stay. Advance reservations are required although walk-in guests are entertained.
Table 3.2 will show the rent of each commercial space. The rental rate of the single rooms located at the second floor and the rate of the bed space for the rooms of the third and fourth floor. It also shows the deposit required for each type of accommodation.
3.5 Possible Fringe Benefits
The major benefit of the Peach dormitory is that it is a stone’s throw away from UPLB. It is a walking distance to the Raymundo gate of the University. It is one block away from the main road going to the main entrance of the University. Aside from that, the dormitory is open for short staying visitors. Families of students can stay in the dormitory thus maximizing their quality time with each other. The families of students who plan to visit will be given priority for accommodation.
3.6. Other amenities
Existing dormitories in Los Baños don’t have a commercial area. The students normally go out to the main street to buy their needs. The ground floor of the Peach Dormitory will become a mini-mall. It will have ten (10) commercial spaces that will be leased out to businesses that will cater to the needs of the building occupants. Careful selection will be made so as to ensure that businesses will be of help to the occupants. Services such as a laundry shop, an internet shop, a business center, a beauty parlor, pawnshop, grocery and a mail station will offer convenience to the occupants since they do not need to go far just to get what they need.
IV. Financial Output
4.1 Lending Rate
The owners will make a Php 18,500,000.00 to finance the building of the four-storey dormitory. The construction cost of the dormitory is dependent on the available fund of the owners and the amount of loan that will be approved. This study will not include the architectural and construction planning. The owner will be the one to select the architectural and construction firm.
The loan will be a commercial loan with an annual initial interest rate of 9%. The interest rates for a commercial loan is from 9% up to 13.5%. This study will assume that the interest rate for the loan will be at 13.5%
4.2 Projected Revenue for Ten Years
The dormitory will have 80 rooms and 20 commercial spaces. It will have 26 individual rooms with its own toilet and bath. The rent for this room will be at P 6,000 a month. Maximum occupants for the room are 4 persons.
The rest, which is about 54 rooms, will be rented out as bed spacing. Each room will accommodate 6 persons. The fifty-four (54) rooms will be able to accommodate about 324 bed spacers. The rent will be inclusive of the light and water charges.
The ground floor will have 20 available commercial spaces. Rent for each of the space will be at P 8,000 per month. The current rental rate for a Class A Building in Metro Manila is at Php 450 per sq. meter. Each commercial space is about 20 square meters. If based on the current industry standard rental rate, the ideal rent of the commercial space should be at Php 9,000. This study will set that rental rate for the commercial space will be Php 400/sq. meter or at Php 8,000 per month. The study arrived at this price because the building is brand new and to keep it competitive.
Each of the tenants will be screened properly and will be engaged in a business that would be catering to the needs of the dormers. The projected monthly rental is shown in Table 4.1
Monthly revenue at 100% occupancy is at P 704,800.00. The study will also show a projected 15-year rental revenue income so as to determine whether the dormitory project can be able to finance its loan.
Table 4.2 shows the annual revenue projection of the dormitory for Fifteen (15) years. The rental rates will increase at 5% every 3 years. It will have a renewable yearly contract. The occupancy rate in the area where the proposed site is located is at 100%. The study will assume that for the first three years of operation, the dormitory will have an initial 80% occupancy rate.
Table 4.2 will show the projected rental revenue for 15 years. This will show if the rental revenue will be able to pay the monthly amortization of the loan.
The table shows a healthy revenue projection for the next fifteen years. The first three years will have annual rental revenue of about Php 6,766,080.00. The dormitory will have an eighty percent (80%) occupancy for three years. After three years, the dormitory will be at its full capacity. The annual revenue by then (Year 2006) will be at Php 8,880,480.000. The revenue will increase every three years due to the rental rate increase of 5%. The rental rate increase is only minimal because the dormitory would like to be competitive and its’ main target market are students.
The dormitory will require a two months deposit and a one-month advance rental to all its lessees. Table 4.3 shows the initial revenue of the dormitory at the start of its’ operation.
The dormitory will have an eighty percent (80%) occupancy rate. Based on this, the following number of rooms will be rented out: 16 commercial spaces, 20 single rooms and 44 rooms for bed spacing or about 264 bed spacers.
Table 4.3 shows that the dormitory will have about Php 1,712,400.00 as advance payments at the start or opening of the dormitory.
The dormitory will have a minimal start up cost. Its overhead expenses are the salaries of the personnel and the utilities expenses. The study assumes that these expenses are the essential ones and the dormitory can operate on this. The projected monthly and yearly expenses are shown on Table 4.4.
The dormitory will have a monthly expense of about Php 293,000. 00. This will include all the personnel salaries and the light and water expenses. The dormitory will have about 10 personnel. The number is already sufficient to effectively run the dormitory. The Manager will report directly to the owner. He or she will have an assistant. One accountant will head the accounting office. Additional clerks will be added if necessary. There will be one full time all around technicians/plumbers. His main responsibility is to keep the building in tip-top shape. There will be three janitors who will maintain the cleanliness of the dormitory. It will also have 3 security guards that will protect the building 24 hours.
The study assumes that the light and water bill every month is at Php 100,000 each.
4.3 Loan Amortization
The owner will make a P 18,500,000.00 Eighteen million and five hundred thousand loan that is to be paid in 15 years. The prevailing interest rate for a commercial loan is 9% in its initial year then it goes up to 13.5%. This study will assume that the owner will pay the loan in ten years and in equal monthly installments. The interest rate will be at 13.5%
Computation of the annual amortization is as follows:
Principal Amount P 18,500,000.00
Terms of Payment: 15 years
Bank to Borrower’s Agreement:
· 13.50 % interest rate
· Kind of Payment: Equal Monthly Installment
Factor Rate for a 15-year loan: 0.0129831854 monthly at 13.5%
* Please see Appendix
A = P (Factor Rate)
A = 18,500,000.00 (.0129831854)
A = Php 240,189.00 - monthly amortization
Table 4.5 will show the annual and monthly loan amortization.
V. Conclusion
5.1 The Peach Dormitory Project is VERY VIABLE.
5.2 The Peach Dormitory will be able to pay its annual loan amortizations for fifteen years. Table 5.1 will show you the annual projected revenue and the annual loan amortization for next ten years. The annual rental revenue is assumed at 80% occupancy rate for the first three years. After which, it will have an occupancy rate of 100%. The occupancy rate of the proposed site is currently at 100%.
In the first year of operations alone, the annual loan amortization will account for about 75% of the gross revenues. The revenue for the first year does not include the deposits that amounted to Php 1,712,400.00 (See Table 4.3). The first year of operations gross an income of almost 4 million. There will be no increase on the rental revenue for the next three years because the rental rates will stay the same. On the fourth year, the dormitory will have a 5% increase of rentals. It will have annual rental revenue of Php 8,880,480.00. It increased by Php 2,114,400.00 over the last year. This increase was brought about by the 5% rental rates increase which happen every three years and to the 100% occupancy rate as compared to the 80% occupancy rate the year before.
In three years time, the dormitory is expected to be in full occupancy annually. This will in turn bring in more revenues for the Peach Dormitory. Furthermore, the current supply of rooms for student housing is still insufficient to meet the increase of student population.
With the healthy revenue projections, the Peach Dormitory will adequately pay their loan amortizations for fifteen years. The owners can even opt to pay the loan in 4 to 5 years time.
The monthly overhead and utilities expense is only Php 293,000 or about Php 3,516,000.00 annually. Table 5.2 will show you the net income of the dormitory for the next 15 years. The overhead and utilities expense will increase at 2% each year. This increase can be attributed to the need of the dormitory for additional personnel and to the fluctuating rates of our water and electricity.
The dormitory will have a reasonable income for the first three years of operations. This small income is attributed to the 80% occupancy rate of the dormitory. This is a conservative estimate considering that the current occupancy rate where the proposed site of the dormitory is at 100%.
5.2 Student Population Profile
The majority of the students of UPLB come from the different parts of the country. Only about 2% of the student population is residents of Los Baños and the neighboring towns of Laguna. Given this small and insignificant percentage of resident-students, the need for a comfortable and affordable student housing is essential and significant.
5.4 Enrollment Trend
The implementation of the Revised General Education Program by the University by school year 2003 will bring about an increase of interest among high school students in entering UPLB. The program is geared towards improving the teaching methods and facilities of UPLB in order to meet the demands of the 21st century.
For the school year 2000, about 2,000 high school students who passed the UPCAT enrolled at UPLB. The number of students who went to UPLB came in second to UP Diliman which was 2,700. This means that UPLB is becoming a first choice of campus among high school students. Its’ focused and strong academic performances are evident through the 100% passing mark of its graduates on almost all examinations given by the Professional Regulation Commission.
The student population increases 20% annually thus indicating a great demand for student housing annually.
5.5 New Programs
UPLB will offer new academic programs starting school year 2003. This new academic programs will surely contribute to the increase of the student population. The colleges that will offer new programs are the following:
1. The College of Engineering and Agricultural Technology will offer the course of Industrial Engineering for the school year 2003.
2. The Institute of Computer Science will offer Master of Information Technology.
3. Department of Economics (DE) started offering the Master of Science in Economics in the year 2000.
4. Lastly, the University has allocated Php 200 million for its modernization program. Thus, indicating that it is geared on accepting new students for its various academic programs in the future.
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