DATA : Peso // Makati Property Price Data, News & Comments

[drbubb]

Excellent!

 

More data from the 5th Asia Pacific Real Estate investment summit...

FYI.

 

https://www.5apreisp.com/copy-of-pillars

 

The presentation I opened first was:

Asia Pacific Real Estate Investment Summit - Colliers International

Market Overview, March 2017 - xx

> https://media.wix.com/ugd/d3b88a_77c598289276488aa6b5953570969f3c.pdf

 

NOTES

======

Source of Intra-Asian Flows : 2012 vs 2016

Asian property

+ investments in 2012 = USD 36 Bn

+ investments in 2016 = USD 75 Bn

"Hong Kong" remains as the top source / (I presume that includes some China)

Mainland Chinese investors have been investing heavily outside Asia

(40% of Asia-to-global investments in 2016) but less active within the region (20% of intra-regional flows in 2016) .

Chinese interest is set to shift to Asia.

Chinese investments accounted for only 11% of Asia-to-Asia capital flow in 2012; this surged to 20% last year.

==

Metro-manila Office Stock, Vacancies :

Location : -Sq.m : change : Vlg : Vsm = vacancies, large & small spaces
MakatiCBD: 3.21mn : + 0.3% : 1 % : 1 % /
Mak.Fringe: --------- : -------- : 13%: 19% /
Ortigas---- : 1.58mn : + 1.0% : 1 % : 1 % /
Ort.Fringe : ---------- : -------- : 3 % : 4 % /
B.G.C.----- : 1.54mn : + 21 % : 3 % : 1 % /
QuezonCity: 854 K : + 12 % : 14% : 18% /
Alabang--- : 483 K : + 13 % : 6 % : 8 % /
Manila Bay : 331 K : + 20 % : 1 % : 1 % /
Mandaluy.- : 304 K : + 0 % :

On the Office side, supply rose by just over 5% in 2016, and take-up was just below 7%.

The numbers for 2017, are estimated to be : about +9% and 7%

What surprised me was how much Office space was vacant on the Makati Fringe, when the Makati.CBD

Office vacancy rate was so low

Makati's Condo Supply Glut should ease after 2017-18
-
UNITS---- : --Stock-- : Estimated completions--------- : Next3yr : + Pct. :
Location: End 2016 : -2017- + pct. : -2018 : -2019 : End2019
BGC / Fort : 24,275 // 8,566: +35.3% : 3,858 : 3,022 / 39,721 : + 63.6%
Makati CBD: 21,633 // 4,784: +22.1% : 1,072 : 0,598 / 28,087 : + 29.8%
Ortigas -----: 16,250 // 1,489: +9.16% : 0,782 : 0,570 / 19,091 : + 17.5%
Manila Bay : 8,864 // 5,507: +62.1% : 8,531 : 2,614 / 25,516 : + 188.%
Rockwell--- : 4,159 // 0,346: +8.32% : 0,492 : 0,269 / 5,266 : + 26.6%
=========
Top5 Areas : 75,181 / 20,694: +27.5%: 14,735: 7,073/ 117,683: + 56.5%
Other GrM. : 15,603 // 2,198: +14.1%: 0,824: 0,632 / 19,257 : + 23.4%
Gtr. Manila : 90,784 / 22,890: +25.2%: 15,559: 7,705/ 136,940: + 50.0%

Those thinking of investing in the Manila Bay, should think carefully about how they will use the property.

If they plan live there, fine. But if they plan to rent it out, they may find it challenging to land a good tenant,

paying what they expected when they made the investment. An 188% rise in supply in just 3 years may

not be easy to absorb.

The BGC rise of almost 64% is also big, but BGC landlords will benefit from the big jump in Offices,

which will bring new jobs to the area. BGC's biggest challenge may be transportation, since the rush

hour traffic jams, which are already bad - taking like one hour from BGC to Makati, may become truly epic.

. . .

Residential Opportunities flagged by Colliers:
+ 6.6 million foreign visitors (+11% in 2016) are fueling demand for AirBNB spaces
+ 18 million domestic tourists are driving demand for short term leases of condos
+ So far, the estimated 1 million OFW's who make short term visits are not big users of AirBNB

+ Demand for luxury condos remains strong, and some building claim 90-95% vacancies
(However, if you observe lights at night, many wealthy "owner occupiers" may spend most of their time in other locations

- this confirmed by a friend with a unit in TRAG.)

+ (Smaller) condos in fringe areas, may be at least 10-15% cheaper (to rent) and can serve as halfway houses for those with long commutes

[drbubb]

(In answer to a Question on the PH Bubble thread):

 

Is there a "massive built up of private debt" in PH?

 

No!

Philippines Public debt, owed externally, is falling - as a Percentage of GDP.

 

I think that private debt in the PH banking system is growing at about 15-20% per annum, which is almost double the nominal growth of 8-10%.

If i find a chart of private debt, i will post it here

=======================

 

Household debt - US and several Asian countries (but not PH)

 

 

Malaysia might have a problem (2013 data) -especially since oil prices have dropped by 2/3rds in USD terms

 

 

Old data (2013); and it shows PH Household Debt down at 6%, up from 5% in 2010

 

A minority of Filipinos even have bank accounts, and so it is not easy for most citizens to borrow at all.

Perhaps increasing sophistication explains who bank lending is climbing so fast.

 

Philippines Household Debt | Economic Indicators - CEIC

In the latest reports, Philippines's Household Debt accounted for 8.8 % of the country's Nominal GDP in Dec 2016.

Money Supply M2 in Philippines increased ...

==

> https://www.ceicdata.com/en/indicator/philippines/household-debt

==
Compare with other countries:
Country tot'l 2013 / Govt.: HseHD : Total-2016

Japan------- : ???? / 250% + 62% = 312%

USA--------- : 123% / 104% + 79% = 183%
Singapore - : 105% / 105% + 62% = 167%
Euro Area-- : ????? / 91 % + 59% = 150%
Malaysia---- : 140% / 53 % + 89% = 142%
OECD aver. : 134% /
Thailand--- : ? 53% / 44 % + 71% = 115%
Hong Kong : ????? / 32 % + 67% = 99 %

China, PRC : ????? / 44 % + 43% = 87 %
Philippines : ??? / 42 % + 9 % = 51 %
Indonesia-- : 38 % / 27 % + 17% = 44 %

==========
> http://www.tradingeconomics.com/hong-kong/indicators

[Euro Chocozone Buyer]

https://dailyreckoning.com/euro-stronger-think/

From James Richards.

 

So it is possible IMO that the EurPhp will move higher to 58-60 area which is the late 2013-2014 highs.

 

 

Excerpts

This brings the total to 19 member countries. I expect other countries will join in the years ahead, including Scotland, Croatia, and the Czech Republic.Since the European sovereign debt crisis emerged in early 2010, not a single member country has left the euro

 

investors who look past the negative publicity can reap huge gains as the euro positions itself for a major rally starting this summer.

[drbubb]

Strong Resistance at near 55

 

My view on the EUR is it has rallied to about 55 PHP per EUR

 

EUR -inPHP ... update

 

And I expect there to be strong resistance near these levels.

If it can punch through 55-56, the EUR could go much higher, like 62 or more

 

Full disclosure: i now hold June EUR puts (actually FXE puts), and I am slightly in profit.

[drbubb]

"World class" Foster-designed building

Another high-end prestige project announced -

 

....would be “the most beautiful building ever in the Philippines.”

Sy had announced in a press briefing after the stockholders’ meeting that SM Prime—now one of the largest property developers in Southeast Asia—would enter the upscale residential property development business this year.

The “best architect in the world,” referring to famous British architect Norman Foster, has been hired to do the project, Sy said. “He normally makes one or two buildings per city but no more than that,” he added.

Foster was responsible for the redevelopment of Berlin’s Reichstag alongside other iconic structures around the world like New York City’s Hearst Tower, London’s City Hall and Millennium Bridge and Hong Kong International Airport.

In the Philippines, the luxury building will rise on a 3,500-hectare idle land that has been jointly owned by the Ty and Sy families since the 1980s. It will be a 50-50 venture with the Ty group, Sy said.

Read more: https://business.inquirer.net/228653/beautiful-skyscraper-ph-set#ixzz4fxsbw8dM

[stagflation]

"In the Philippines, the luxury building will rise on a 3,500-hectare idle land that has been jointly owned by the Ty and Sy families since the 1980s. It will be a 50-50 venture with the Ty group, Sy said.t

 

Read more: https://business.inquirer.net/228653/beautiful-skyscraper-ph-set#ixzz4fvfKCZyu

Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook"

 

Is that lot really 3500 hectares? That sounds way too big a plot, 3500*10,000 = 35,000,000 sqm land area? Am I missing something here?

[drbubb]

Good catch.

That's obviously wrong.

Should be 3.5 hectares = 3500 sqm.

Have been looking at 5000 and 11000 sqm sites on the new Chino Roces / Magallanes thread

[stagflation]

Back of the envelope calculations

270m (4.5m per floor for high ceilings) = 60 floors

180 flats = 3 flats per floor

5,000,000,000 for 180 flats = 27,000,000 pesos per flat

 

3500 sqm lot *33% building floor plate = 1166 sqm

In other words 350-400sqm units gross area per unit for 27,000,000 construction cost.

The construction costs seems a bit too cheap for a very high end luxury project. I can't imagine a project like this being sold for anything below 300,000php per sqm I.e 100,000,000mn + ticket size

I wonder what the price tag on the land area is and whether 5bn pesos really is a true reflection of the building costs.

 

If they are, time to pile into the developers stocks

[drbubb]

I started a new thread on Ultra Luxury buildings, and will include your numbers

 

> Is Manila becoming "World Class"?

 

You are not the only one who is expecting prices in the region on P 100mn, or $2 million per unit

[Euro Chocozone Buyer]

Colliers 1Q 2017 -- a snapshot

 

"""

In the residential sector, luxury three-bedroom condominium units remain in demand amid rising vacancies in the low to mid-level condominiums. Residential capital values continue to rise as rents are slowly declining """

 

http://www.colliers.com/-/media/files/apac/asia/collierscmis_marketsnapshots_q117.pdf

[Euro Chocozone Buyer]

Here s another link where you can see the price to income ratio for property markets around the globe.

 

USA is the big surprise here. It is relatively cheap -- on a price to income ratio -- compared with the rest of the world.

USA 3.26 Canada 6.40 Belgium 6.90 Germany 7.46 Norway 7.90 Holland 8.52 Australia 9.24 UK 10 France 11.58 Sweden 11.77 Italy 12.39 Switzerland 14

(But that is just a broad average I guess; it is more expensive in the big cities and relatively cheap in the countryside in USA I guess)

 

Asian countries Malaysia 9.53 South Korea 12.38 Philippines 16.91 Indonesia 21 Singapore 21.60 China 23.29 Thailand 24.43 VNM 26 HK 36.15

 

USA housing is extremely affordable, and HK housing is extremely unaffordable. That is the message here.

 

https://www.numbeo.com/property-investment/rankings_by_country.jsp

[Euro Chocozone Buyer]

https://www.numbeo.com/property-investment/gmaps_rankings_country.jsp?indexToShow=getAffordabilityIndex&title=2017

 

Yes this is confirmed by the affordibility index...

 

Time to take to the USA?????????????

[Euro Chocozone Buyer]

Rental price data based on Lamudi ads

 

http://www.lamudi.com.ph/journal/price-guide-condos-rent-metro-manila-2017/

 

(following image added in edit, by DrB.):

[drbubb]

https://www.numbeo.com/property-investment/gmaps_rankings_country.jsp?indexToShow=getAffordabilityIndex&title=2017

 

Yes this is confirmed by the affordibility index...

 

Time to take to the USA?????????????

 

Have a look at the Philadelphia / East Coast section of this website

> http://www.greenenergyinvestors.com/index.php?showforum=51

 

I am earning a guaranteed 11% PRE-TAX (!!!) return on my three houses in Philly.

The money comes rolling into my bank account, net of management costs, on the 25th of every month

 

The Gross Rental return is about 15%, which is miles better than the 3-4% in Hong Kong, and 7-8% in the PH.

[Euro Chocozone Buyer]

Hi

 

 

The 4Q report from JLL is just out. (on may 3rd)

For 4Q 2016 they say rents and capital values continued to rise.

So this report clearly contradicts Collliers... I still believe Colliers to be more correct on this,

What JLL states in this report -- and how they get and analyze the data -- is a big question mark for me.

 

http://www.ap.jll.com/asia-pacific/en-gb/research/872/philippine-property-digest-4q16#.WQ3q2NSLTGg

 

"""

On another note, the Philippine peso depreciation in 4Q16 is likely to continue in 2017. This scenario increases the spending power of OF families for residential units, which would support demand for residential units. Further, by end-2017, the BSP forecasts stable growth of OF remittances

"""

 

They also expect remittances to rise. For 2017 and beyond -- this will be very difficult to achieve IMO

as USA is already in a recession and I am afraid it will get a lot worse.

Look at auto sales/retail bankruptcies/stagnant wage growth and other indicators in USA.

And I also expect the USD to weaken against all currencies as the FED will panic and launch

another round of QE later this year. This is why the USD is suddenly out of favor.

The market no longer believes the Yellen Fed and her promise of rising rates.

 

So this will have a major effect on the preselling market. Existing owners need not fear

too much as most of them can always convert their units into hotel rooms and

get a higher yield thru short term rentals.

inflation is now already running at 3.4pct and that is lot and it will help to stabilize prices

as new contruction becomes increasingly more expensive.

 

http://www.philstar.com/business/2017/05/06/1697026/inflation-steady-3.4-april-bsp-keep-rates-unchanged

 

The USA jobs report was a disaster according to David Krantzler.

http://investmentresearchdynamics.com/another-fraudulent-jobs-report/

[Euro Chocozone Buyer]

So who is telling the truth?????????

 

Bangko Sentral ng Filipinas OR Colliers OR JLL????????

 

http://www.bsp.gov.ph/statistics/keystat/rrepi.htm

 

According the the Phil Central Bank property prices for condominium units declined in the NCR from 3Q2016 to 4Q2016. (122.17 to 119.80)

But according to Colliers the average square meter price for condiminium units in Makati increased. from 3Q2016 to 4Q2016

(Capital values increasing from PHP176200 to PHP1803000 from 3Q2016 to 4Q2016) (For all 3 main CBD they recorded 2.2, 2.2 and 1.1pct growth)

http://www.colliers.com/-/media/files/marketing%20reports/4q2016_colliers_quarterly_residential.pdf

 

 

And according to Colliers the rental rate dropped 3Q to 4Q 2016 but according to JLL the rental rates increased 3Q to 4Q 2016.

 

 

So what is one to make out of this? I am a little confused by all these conflicting reports.

 

I am tempted to believe that the index of the Philippine Central Bank is the most correct one... They probably included the price movements in the secondary

market in their index, and Colliers and certainly JLL hardly study the secondary market.

JLL s report is highly doubtful, IMO.

 

HELP me out please

 

The difference is 4pct. BSP recorded a 2pct decline and Coll/JLL recorded a 2pct rise.

[drbubb]

Colliers focuses on luxury 3BR flats in the CBD's and the BSP index may be broader.

Not sure what JLL looks at.

I will have a look at the details later, to update my data

=====================

Meantime:

I see a widening price gap between new properties, especially on the high end, and (falling) prices in the secondary market. I think rents are falling across the board, and I am hearing that in anecdotal reports as well

 

(I also had this discussion via a chat):

 

xx coming xx

[drbubb]

DATA - from MDS, a sometimes poster here

===================

Hi guys, try to check if you can open this link:

https://neo.ubs.com/shared/d1waL0PS39f9JGp
It's the latest UBS proprietary database analysis of online property in Asia (incl metro Manila),

it looks at trends of

1. Inventory,

2. avg days on market,

3. property discount/premium relative to first asking price,

4 avg asking price per sqm
==

(From DrB: this site should also be noted):

#MakatiCondo

is the newest condo broker website data base based at Makati City., it is specifically designed to list all Condo for rent and for sale listed here at #makaticondo. this is the place where you can find the best condominium unit offered for sale and for rent. in Makati area

.#MakatiCondo : http://www.makaticondo.com.ph/

[drbubb]

EXCELLENT Report - from MDS and UBS !

 

Summary

=======

UBS's View, 25 April 2017

: Manila, PH :

Launches in Metro Manila declined 12% in 2016 but take-up improved (+25%) according to Colliers, resulting in a decline in inventory levels from a peak of 2.6 years to 1.7 years. We expect the developers to respond with a pick-up in
launches and capex this year. Residential supply is forecast by Colliers to grow by 54% over the next five years, putting downward pressure on rental rates. A decline in rental yields from 6% to 5% may put into question the ability of
residential prices to hold in 2018. In fact, we probably will see in the next few quarters some more discounts given in secondary market sale transactions. Metro Manila is increasingly becoming a buyers and renters market.
While secondary market is becoming a buyers/rentes market, the primary market's low inventory levels and new launches could attract preselling buyers willing to wait a few years before getting their units.
The secondary market remains thin with prices often 25% below primary, but buyers can get better financing and payment terms for primary property. In the primary market, developers can offer zero interest terms for down
-payments, which can be spread throughout the construction period of at least 3 years. As
new units complete, we think there would be prolonged softness in pricing and rents in the secondary market.

.

: HK : We assume three Fed rate hikes in each of 2017 and 2018, in line with our US economists' revised view. We have assumed the Fed hikes are passed through into higher HK mortgage rates... We estimate absorbing two further hikes ... Our multivariate regression model suggests HK residential price growth of +1% in 2017 and -3.4% in 2018. We note our country team is more conservative, assuming Hong Kong residential prices decline 5-7% in 2017..

.

: Singapore residential prices have fallen 11.7% from their Q3'13 peak.
We expect the downtrend in Singapore residential prices to continue, given rising interest rates, elevated vacancy rates and slower economic growth. Our multivariate regression model ... is pointing towards a 4.5% fall in Singapore residential prices in 2017, fairly close to our country team's estimate of a 6% drop.

.

: Bangkok, TH :

We expect 2017 to be a better year than last for Thai property given more favourable demand-supply dynamics in the condo segment. House prices are expected to rise moderately on the back of land price appreciation and an increase in the proportion of new condo launches in the high-end segment; ... a short-term strategy employed by a number of big developers to navigate through rising rejection rates in the low-end segment. In 2017, we expect moderately positive house prices growth for the primary market, given rising land prices, and an increase in the proportion of new condo launches in the high-end segment: 85% of the buyers are Thais and the remaining 15% are foreigners. For the secondary market, we expect prices to be flat. In Bangkok there can be a ~30% price difference between primary and secondary pricing, with local consumers strongly favouring primary over secondary property for purchase.

[Euro Chocozone Buyer]

http://www.bworldonline.com/content.php?section=Finance&title=real-estate-price-growth-slows&id=143146

 

The BSP real estate price index is based upon the data of loans gathered by its member banks.

About 70pct of all loans went to new construction, according to this article,

so that means that 30pct of loans are probably to related to the secondary market.

 

Also, and according to lamudi data, most local Filipinos only buy studio and 1Br units,

very few Filipinos have the purchasing power to buy 2Br and 3br units, so most of these

buyers are foreign or half-foreign, and a large number of those people probably pay cash.

And the cash buyers are not included in the BSP index

 

So I think the prices in the secondary market collapsed by around 5pct in 4Q2016 and that is the only

significant index that somehow tracks the secondary market.

For the (entire real estate) market to break out, the BSP index must confirm the JLL/Colliers (residential RE) indexes,

and that is not happening yet, and is unlikely to do so in the next 2-3 years as the recession gains ground in USA.

 

Combine a 5pct market decline with a 3.5pct inflation rate, and investors in Real estate assets have lost

around 8 to 9pct in purchasing power this last quarter, as the secondary market is not keeping up with inflation.

 

This is probably a more realistic assessment of the market than all the bull talk from the sell side community.

All the price increases that the developers announce only benefit themselves, not us.

[drbubb]

THIS was posted on AXP:

 

The biggest concern is the rising vacancy rate for Residential, which at Q4-2016 Colliers pegged at 10% for Metro Manila (and 13% for the Makati CBD) and projects to be rising through 2017 as we see peak completions this year. Fortunately, demand remains high, and leasing of the new space is high too, but not as high as this year's record completions.

.

On the OFFICE side, vacancies are far, far lower. Colliers expected vacancies to "hover between 4.0 and 4.5% in the next twelve months" for Metro Manila. And with very low Office completions, they estimated Makati CBD office vacancies at - under 1% and falling%! :
"Colliers believes that both tenants and developers must brace themselves for a probable increase in rents across the various submarkets" for Office Space,

==
> Q4-2016 Market Reports: http://www.colliers.com/en-gb/philippines/insights

[Euro Chocozone Buyer]

Hi

 

http://www.bsp.gov.ph/publications/media.asp?id=4077

 

Isn't the BSP Real Estate Price index a better indication of what's really happening in the PH property market???

 

Highlights from the link:

 

The RREPI is computed as weighted chain-linked index based on the average appraised value per square meter weighted by the share of floor area of housing units

• About 7 out of 10 residential real estate loans granted were for the purchase of new housing units;

From this we can deduce that 30pct of all real estate loans are for the purchase of existing housing units (the secondary market).

If you use COLLIERS INDEX then it looks like the uptick which you mentioned for 4Q2016 is NOT representative of the whole market,

It's time to use this new index as the benchmark IMO

[Euro Chocozone Buyer]

Another "fraudulent" market report from Colliers is now out. ("fraudent is what David Kranler would call it if it is misleading)

 

Well it appears the primary market indexes have risen again, and Makati CBD residential prices appear to have risen 3pct during 1Q2017,

maybe the index -- which only benefits the builders btw -- has risen to a new all time high???

 

http://www.colliers.com/-/media/files/marketing%20reports/1q2017_residential_market_report.pdf

 

It would be better if this rise in the primary index -- the developers index -- was confirmed by a rise in the secondary index -- the broader market --

the index compiled by the BSP. Because a rise in the BSP benefits us while a rise in the Colliers index benefits "them".

[drbubb]

Hi

 

http://www.bsp.gov.ph/publications/media.asp?id=4077

 

Isn't the BSP Real Estate Price index a better indication of what's really happening in the PH property market???

If you use COLLIERS INDEX then it looks like the uptick which you mentioned for 4Q2016 is NOT representative of the whole market,

It's time to use this new index as the benchmark IMO

 

I used to prefer the Colliers index, mainly because it was centered on Makati.

But now, I think it is highly distorted, by including all the expensive new property.

.

Residential Real Estate Price Index

(Q1 2014=100)

AREA : Q1'15 : Q2'15 : Q3'15: Q4'15 : Q1'16 :

Overall : 105.6 : 109.7 : 110.4 : 113.1 : 115.2 :

NCR--- : 106.3 : 115.0 : 116.3 : 116.9 : 116.6 :

AONCR: 104.4 : 104.6 : 105.4 : 109.6 : 114.2 :

Chg.YoY

Overall : ----- : 12.8% : +4.3% : +5.1% : +9.2% :

NCR--- : ----- : 17.9% : +8.6% : +6.3% : +9.7% :

Chg.QoQ

Overall : ----- : +3.9% : +0.7%: +2.4% : +1.9% :

NCR--- : ----- : +8.2% : +1.1% : +0.5% : - 0.2% :

=========

 

Did average prices for NCR peak out Q3'2015 ?

We may not be able to see clearly for another quarter or two

 

The Govt may be more reliable, but...

===

+ It is very BROAD - it is for the whole NCR

+ It is very late, coming out almost 12 months after the fact

[drbubb]

Colliers Q1-2017 report is out now

 

EXCERPTS

"Colliers sees about 22,000 additional units being completed this year in the major business districts, with the Manila Bay Area accounting for two-thirds of the new supply.
While rents in major CBDs are declining, prices continue to grow albeit at a slower pace. The demand for luxury units is stable and this encourages affordable and mid-income developers to pursue high-end projects especially in the Manila Bay Area, where the demand for luxury projects has spilled over. Colliers encourages developers with significant ready-for- occupancy (RFO) units to lease out the units either individually or as shared units as long as the leasing schemes conform with the developers' market
positioning and do not lead to a deterioration of the units' perceived value.
2
Rental rates for premium three-bedroom units in Makati CBD declined by 1.7% to PHP823 (USD16.5) per sq m a month from PHP837 (USD16.7) per sq m in 4Q 2016. The drop was slightly faster than the 1.4% decline recorded in 4Q. We expect the rental decline to ease to between 1.3% and 1.5% over the next 12 months."

==

> http://www.colliers.com/-/media/files/marketing%20reports/1q2017-residential_market_report.pdf