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SILONG RENTALS SIARGAO

Testing the value of a property before committing to the project

Siargao, Philippines · 2017 Serviced Apartment Feasibility Study 300 sqm Site · 6 Units · Unbuilt

Silong Siargao was a theoretical feasibility study for a small serviced-apartment development on a 300 sqm property in Siargao.

The original design question was relatively straightforward: could a narrow 10-meter by 30-meter lot accommodate enough rental units to make the property productive?

The study showed that six compact one-bedroom loft apartments could fit, together with the basic facilities required to operate them. But once we began testing construction cost, rental strategy, occupancy and operating expenses, the project raised a more important question.

Was developing the property immediately the best use of the owner's capital, or was the underlying land itself the stronger opportunity?

Silong ultimately did not proceed. That makes it useful as a case study because feasibility is not only about proving that a project can be built. It is also about identifying when to proceed, how much to commit, and which options are worth preserving.

The Opportunity

Siargao in 2017 was already growing as a tourism destination, but it had not yet gone through the development cycle that followed.

The potential site measured approximately 600 sqm, with a working acquisition cost of ₱900,000, equivalent to around ₱1,500 per square meter.

At that price, acquiring the property and fully developing it represented two very different levels of commitment.

The land required approximately ₱900,000. A completed six-unit serviced-apartment development would require several times that amount.

Before committing to either direction, we needed to understand what the property could support and what each strategy would require financially.

FIGURE 01 SILONG

Tourist Arrivals over time

Recorded tourist arrivals before and during the first disruption cycle.

Testing the Site

The property was approximately 10 meters wide and 30 meters deep. Rather than maximizing the lot with conventional hotel rooms, we explored a compact serviced-apartment type that could support both short and longer stays.

Each unit consisted of approximately 32 sqm on the main level and another 16 sqm in the loft, giving around 48 sqm of usable space.

The bedroom was located in the loft, while the main floor accommodated the living area, kitchenette, dining or work space, bathroom and storage.

Six units could potentially fit on the property together with an open reception, a small office, housekeeping facilities, staff accommodation, circulation, landscaping and general site improvements.

Architecturally, the development was feasible. The more consequential part of the study began when we put a cost against it.

From a ₱900K Property to a ₱6.5M Development

Silong was intended to be value-engineered rather than positioned as a high-cost resort development.

Because the project remained theoretical, the figures below are reconstructed feasibility assumptions rather than tendered construction prices. Using a working allowance of approximately ₱450,000–₱500,000 per accommodation unit, the six units would require approximately ₱2.7M–₱3.0M.

A further ₱1.5M was allocated for site development and supporting facilities. We then applied a 30% contingency to the construction and site-development costs.

This produced an indicative total investment of approximately ₱6.36M–₱6.75M including the land. For the feasibility scenarios, we use approximately ₱6.5M as the working development cost.

land only

₱900K

Capital deployed progressively over time.

full development

₱6.7M

Capital committed at the outset.

~7× more capital to develop immediately

The comparison changed the nature of the decision. Buying the land secured the underlying property. Developing Silong converted that property into an operating hospitality business with construction, management and occupancy risk.Neither was automatically the better choice. They simply represented different levels of capital commitment.

Where the Development Budget Goes

The basic apartment structures were not the only cost involved.

A working development budget also needed to include common facilities, staff and housekeeping requirements, site infrastructure, landscaping, circulation and a meaningful allowance for uncertainty.

FIGURE 03

Development cost stack

Indicative allocation across the development process

WORKING TOTAL~₱6.7M

Land and acquisition₱900k14%

Construction Costs (6 Accommodation Units)₱2.70M-₱3.00M44%

Site and Support Facilities₱1.50M23%

Contingency₱1.31M20%

FEASIBILITY STUDY WORKING ESTIMATE

One Design, Several Rental Strategies

The configuration of the units allowed Silong to operate in more than one way.

One option was conventional long-term rental. At a working assumption of ₱15,000 per month per unit and 90% stabilized occupancy, six units would generate approximately ₱972,000 in annual gross revenue.

After allowing approximately 30% for operating expenses, the model produces around ₱680,000 in annual net operating income.

The second option was to operate Silong as serviced accommodation. For the study, we tested nightly rates between ₱1,500 and ₱2,500 depending on the number of occupants.

Short-term accommodation potentially generates substantially more revenue, but it also requires more management. Housekeeping, utilities, guest turnover, linens, booking costs and maintenance increase operating expenses, so we modeled approximately 45% OPEX for the serviced-apartment scenarios.

At an average ₱2,000 nightly rate and 55% occupancy, the six units could generate approximately ₱2.41M in gross annual revenue and around ₱1.32M in net operating income.

NOI BY OPERATING MODEL

Estimated stabilized annual net operating income under alternative rental strategies.

₱5M

10.5%

Long-Term Rental · ₱15,000/mo · 90% occupancy

15.3%

Short-Term — Low · ₱1,500/night · 55% occupancy

20.4%

Short-Term — Base · ₱2,000/night · 55% occupancy

25.5%

Short-Term — High · ₱2,500/night · 55% occupancy

Gross Annual RevenueOPEX AmountAnnual NOI

SILONG SIARGAO · FEASIBILITY STUDY · 2017

How Much Occupancy Did the Project Need?

A short-term rental calculation becomes misleading very quickly if it assumes the property will always be full.

Instead of relying on a single occupancy forecast, we tested the ₱2,000 nightly scenario across several levels of demand.

At 30% occupancy, projected NOI was approximately ₱723,000. At 50%, it increased to around ₱1.20M. At the 55% base scenario, NOI reached approximately ₱1.32M.

One of the more useful findings was that the serviced-apartment strategy did not require extremely high occupancy to begin competing with long-term leasing.

At roughly 30% occupancy at ₱2,000 per night, the short-term model already produced approximately the same NOI as the long-term strategy operating at 90% occupancy.

That did not eliminate tourism risk, but it showed where the project's operating leverage was.

Comparing Investment Recovery

The different operating models also changed how quickly the development could theoretically recover its initial capital.

Using the ₱6.5M development scenario and stabilized NOI, the long-term rental strategy produced a simple payback of approximately 9.6 years.

At 55% short-term occupancy, the estimated payback varied substantially according to nightly rate.

Payback timeline

Estimated time to recover initial investment by operating model.

0 1 2 3 4 5 6 7 8 9 10

Long-Term Rental

9.6 years

Short-Term ₱1,500/night

6.5 years

Short-Term ₱2,000/night

4.9 years

Short-Term ₱2,500/night

3.9 years

These are simplified feasibility measures rather than investment forecasts. They do not account for financing structures, taxes, major capital replacements or the time value of money.

Their value was comparative. They allowed us to see how much the outcome changed when the operating strategy changed.

Then Siargao Changed

The market subsequently developed far faster than a conservative 2017 model might have assumed.

Recorded tourist arrivals increased from approximately 129,730 in 2017 to 257,900 by 2019, almost doubling in two years.

Had Silong been operating during that period, the short-term accommodation strategy could have been exposed to unusually strong demand.

But hindsight also shows why it would have been dangerous to treat that growth as permanent.

The pandemic severely disrupted tourism beginning in 2020. Typhoon Odette then struck Siargao in December 2021, creating another major physical and economic disruption.

The market eventually recovered, but the sequence illustrates why feasibility cannot depend on a single forecast behaving exactly as expected.

A model should help us understand what happens when assumptions change.

The Land Was a Separate Opportunity

There was another strategy available that did not require constructing Silong at all.

The theoretical property could be acquired for approximately ₱900,000. Once acquired, the owner could hold the land while deciding what form of development—if any—made sense later.

Current market indications for established parts of Siargao vary widely, but they demonstrate how significantly the property environment has changed since the period in which Silong was studied.

For illustration, if a 300 sqm property acquired at ₱3,000 per square meter later reached an indicative ₱12,000 per square meter, its value would increase from approximately ₱900,000 to ₱3.6M.

This is not an appraisal of the Silong property and should not be interpreted as a realized investment return. It simply illustrates the importance of separating the land decision from the development decision.

The Decision Wasn't Build or Walk Away

The feasibility study revealed more than two possibilities.

Property strategy

Decision tree

300 SQM PROPERTY₱900K · ₱3,000/SQM

SECURE THE LAND₱900K

DEVELOP SILONG~₱6.5M

HOLD

LEASE

SELL

JV

DEVELOP LATER

LT₱680K NOI

HYBRID~₱1.0M NOI

ST₱1.32M NOI

What the Study Told Us

With hindsight, Silong may well have been capable of producing attractive returns under certain operating scenarios.

That does not mean constructing it immediately was obviously the correct decision.

Development required approximately seven times the capital needed to secure the underlying property. It also required the owner to take on construction risk and then operate a hospitality business through a market that would experience extraordinary tourism growth, a global pandemic, a destructive typhoon and another period of recovery.

The feasibility study did not need to predict those events. It needed to show how much capital was being committed, which assumptions mattered most, and what alternatives remained available if the owner chose not to build immediately.

This is why Silong remains useful even though it was never constructed.

It demonstrated that a property can be attractive while the timing, scale or operating model of its development is still unresolved.

From a Design Question to a Property Decision

Silong started with a relatively straightforward design question: How much could we fit on the property?

The first stage of the study answered that question. A six-unit serviced-apartment development was physically viable on the 300 sqm site. The compact loft typology worked, the supporting facilities could be accommodated, and the site could be organized around a viable operating program.

But answering one question raised another.

If six units could fit, would developing them make financial sense?

That shifted the study from site planning into feasibility. We tested the capital required to build the project, then compared different ways the same architecture could generate income. Long-term rental offered greater stability and lower operating intensity. Short-term accommodation offered considerably more revenue potential but introduced greater occupancy and operating risk. A hybrid model created another possible direction.

The study had moved beyond asking what could be designed. The next question became: Which operating model justified the capital required to develop it?

And that raised another question still.

The complete development required approximately ₱6.5 million under the working feasibility scenario, while acquiring the underlying property required only around ₱900,000. The owner therefore wasn't simply choosing whether or not to build six apartments. They were choosing between different levels of commitment to the same opportunity.

That reframed the problem again: Did the property need to be developed immediately to be worth acquiring?

The answer was no. Securing the land preserved the ability to hold, redesign, phase, lease, sell, enter into a joint venture, or develop later when the market and the owner's circumstances provided more information.

This progression is an early example of what we now describe as our Question-Driven Delivery Model™. Rather than treating the original brief as a fixed problem that architecture simply needs to solve, each stage of the work is allowed to challenge the assumptions behind the previous one.

The sequence for Silong looked something like this:

How much can we fit?

→ Six units are physically viable.
How much will it take to build?

→ Approximately ₱6.5 million under the working development scenario.
How could the property generate income?

→ Long-term, short-term and hybrid operations produce very different risk and return profiles.
How much occupancy does the short-term model actually need?

→ The project could begin competing with the long-term model at relatively modest short-term occupancy.
Does that mean we should build?

→ Not necessarily.
What are we giving up by committing the full capital now?

→ Liquidity, flexibility and the ability to respond to a changing market.
Do we need to build to participate in the opportunity?

→ No. Acquiring the land alone preserves the development option at a fraction of the initial capital commitment.

Study Notes

Silong Siargao was a theoretical architectural and property feasibility study. The project did not proceed. Construction figures, rental assumptions, occupancy scenarios, OPEX, NOI, payback calculations and land-value illustrations shown here are retrospective feasibility scenarios and not realized investment performance, construction quotations or property appraisals.

Historical tourism data should be accompanied on the published page by the corresponding Department of Tourism–Caraga / Philippine government citations. Contemporary Siargao property-price references should likewise be identified as indicative market observations rather than valuations of the theoretical project site.

Before You Develop the Idea, Validate the Opportunity

Silong began with a proposed project: six serviced apartments on a 300 sqm property. The design worked, but the feasibility study revealed that the more important decision was not simply whether the apartments could be built. It was whether developing them represented the best use of the property and the owner's capital at that point in time.

That meant comparing the proposed development against other possibilities: acquiring and holding the land, operating the units as long-term rentals, pursuing short-term serviced accommodation, combining both rental models, phasing the development, or waiting until the market provided better information.

This is the purpose of Opportunity Validation™.

Before committing to detailed design or construction, we test the assumptions behind the project. We examine what the property can support, what different development directions may require, how the numbers respond to changing assumptions, and whether the proposed concept is an opportunity worth pursuing.

The objective is not to prove that your original idea is right. It is to understand which opportunity is worth committing to before the expensive decisions begin.

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The Building Cost Is Not the Project Cost.

Silong's six units represented only part of the investment. Site development, support facilities, contingencies, and other requirements changed the amount of capital needed to make the property operational.

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