Meet the billionaire who is betting big on an idyllic island retreat in the Philippines

A look inside Andrew Tan’s $720 million ecotourism project in the country’s pristine beach paradise.

_{By means of Jonathan BurgosForbes staff}

TThe pitch is for tropical paradise: turquoise waters hugging a pristine coastline, fringed by lush, misty greenery. Philippine real estate giant Megaworld on its Facebook page extols the virtues of the island of Palawan, the largest of a group of 1,780 islands of the same name that lies to the left of the island nation in the Pacific Ocean. Here, Megaworld is pursuing its most complex project yet: a resort and residential complex that will be the island’s largest real estate development to date.

On 462 hectares in San Vicente, a quiet, relatively untouched corner of Palawan’s northern coast known for its rich biodiversity, pristine forests, steep karst cliffs and the Philippines’ longest white-sand beach, Megaworld has a 15-year plan to create a town between coconut trees – an environmentally friendly addition, it says, to the hospitality, office, retail and residential portfolio that stretches across the country. When completed, Paragua Coastown will include two ten-story hotels, a residential complex, villas, a hospital, a school and wellness-related centers.

Megaworld, owned by Alliance Global Group, billionaire Andrew Tan’s spirits-to-property conglomerate, is investing more than 40 billion pesos ($720 million) in the venture – a tenth of what it plans to spend on building townships in the next five years the Philippines. . The company hopes to get in on the ground floor as the island redevelops into one of the country’s top tourist destinations. About 1.5 million people, including about 650,000 overseas travelers, visited the island in 2023, almost twice as many as the year before, according to government figures, as tourists return to the Philippines after the Covid-19 crisis. (Boracay, the archipelago’s most popular resort island, had more than 2 million visitors last year.) “We plan to showcase the best concepts of sustainable tourism and green living by developing it into an ecotourism township,” Kevin Tan, Andrew’s eldest son and director of Megaworld. vice president and chief strategy officer, said by email.

San Vicente is seen as the next frontier in the island’s commercial boom, in line with Palawan’s other island centers where tourism is flourishing, including the capital Puerto Princesa City (home to the 8.2-kilometer-long Underground River, a UNESCO World Heritage Site), and El Nido, a municipality of small islands at the northern tip of Palawan that has become a playground for backpackers and jetsetters alike in recent years. Ayala Land, controlled by billionaire Jaime Zobel de Ayala and his family, has already emerged as El Nido’s largest developer and owns the 325-hectare Lio tourist estate, along with four other resorts on the city’s smaller islands.

Megaworld last year broke ground on its 306-room Savoy Hotel Palawan and the nearby 189-unit Oceanfront Premier Residences tower, both of which will be completed in 2028. Construction has yet to begin on the 313-room Paragua Sands Hotel, which will open in 2029.

Most rooms have water views, and the hiking trails of the Pagdanan Mountains, home to endangered wildlife such as the Philippine cockatoo, gray imperial pigeon and blue-naped parrot, are a short drive away.

“More than just sustainable tourism, our vision for Paragua Coastown is to provide opportunities for those who want to live the island life in a lush and sustainable landscape,” says Tan. To that end, he says Megaworld will incorporate solar energy and other renewable energy sources into the building design. There will be a waste-to-energy plant that will supply the municipality with electricity as part of a new waste management system and sewage treatment centre.

About 40% of Paragua Coastown’s land area is dedicated to open (albeit landscaped) spaces, while a mangrove forest reserve within its boundaries will remain untouched. Megaworld also plans to plant thousands of trees on 100 hectares deforested by commercial logging, once a mainstay of the local economy, and to upgrade to a network the largely unpaved roads used by San Vicente’s 30,000 residents of roads in and around the site.

Ana Margarita Lustre-Malijan, vice president at local hotelier and construction firm Arlustre Group, believes such developments will be a huge boon for Palawan, bringing jobs and income to the island, where about 15% of the population is under poverty line falls. It could also be the turning point to improve the accessibility of the area. There is an airport in San Vicente, but Philippine Airlines and Cebu Pacific, two of the country’s largest airlines, do not fly there. Reaching San Vicente means a 90-minute flight from Manila or Cebu to Puerto Princesa and a bumpy four-hour drive over rugged terrain. Cebu Pacific CEO Michael Szucs says Forbes Asia that the airline will consider flying to San Vicente once the Megaworld hotels are built.

In addition to attracting homegrown developers, Palawan has become a stop for international hospitality brands. “Palawan stands out as an attractive destination, combining cultural richness with natural landscapes,” said Raj Menon, Marriott’s president for Asia Pacific excluding China, by email. The US group will add more than 70 rooms this year to the recently opened 168-room Four Points by Sheraton on Sabang Beach, near Puerto Princesa’s Underground River, to meet demand. The American hotel chains Best Western and Wyndham Hotels’ Microtel have also established themselves on the island.

Megaworld has started marketing the residential units at Paragua Coastown, which will range from studios of 32 square meters to two-bedroom suites of 106 square meters, and expects them to generate around 2.3 billion pesos in sales to generate. Megaworld doubled its bet on Palawan, announcing in December that it would spend another 7 billion pesos to develop a mixed-use complex on a 6-hectare oceanfront site in Puerto Princesa. The commercial, hotel and residential project, dubbed Baytown Palawan, is expected to take five years to complete. “Palawan has always been a hotspot for local and international tourists,” says Tan.

WISHLIST

International visitors to the Philippines have gradually returned but remain below pre-pandemic levels.

Palawan is not the only tourism play of the Tans. They are building resorts, retail space and conference facilities across the archipelago, including tourist hotspots Boracay, Cebu and Davao. Megaworld’s hospitality business accounted for more than 5% of the company’s 2023 revenue (69.7 billion pesos), and the company expects the business to account for at least 10% of revenue by 2028.

Andrew Tan launched Megaworld in the late 1980s and pioneered the living concept of a city within a city in the Philippines. It now has 24 townships (with another seven under construction) across the country, part of its sprawling business empire under Alliance Global, consisting of a controlling stake in Emperador, owner of the Dalmore whiskey and Fundador brands, and a stake in the Philippine McDonald’s franchisee. . Tan was ranked number 11 on the Philippines’ 50 Richest 2023 list with a net worth of $2.4 billion.

“Expanding our townships across the Philippines will support our growth as a company and allow us to diversify our offering in the real estate sector,” said son Kevin, who is also vice chairman and CEO of Alliance Global. “These developments allow us to have a significant impact across all economic sectors.”

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