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Go overweight on Philippines, Indonesia: Investor cnbc-logo-3.png by CNBC Videos 4:52 mins

Philippines is a perfect example of a current account surplus economy, says Rahul Chadha from Mirae Asset Global Investments (Hong Kong).

 

> http://finance.yahoo.com/video/overweight-philippines-indonesia-investor-011000027.html

 

"current account surplus economy"

 

Yep. That's one of the reasons I have invested there

 

(Here's something that was being said on CNBC a year ago - Makati's boom is about the Traffic):

 

Overall, "the market is very polarized," said Alexander Karolik Shlaen, an economist and CEO of Panache Management, a luxury brands and real estate investment advisor.

"[in the luxury segment], competition is so tough, they need to sell high-end stories," he said. For example, the Azure condominium in Paranaque city, southeast of the capital Manila, is offering a beach club house designed by Paris Hilton, while a Trump Tower is going up in Manila's Makati area.

<p>Philippines central bank: No need to hike rates</p> <p>Easing inflation and growth being one of the fastest in the region justify the central bank&#039;s decision to keep its key interest rate steady, says Amando Tetangco, Governor of Bangko Sentral ng Pilipinas.</p>

"But if you go to the periphery, it's underbuilt," Shlaen added, saying he sees a lot of demand there, both for end-users and foreign investors. "There are not enough condos in the provinces, while Manila is saturated," he said.

Not overdone

Not everyone thinks Manila's condo market can be written off as overdone.

While the city's luxury properties can be priced on par with nearby Singapore, "it's not a development which embodies the whole Philippine property market," Jalil Rasheed, investment director at Invesco, said in an interview in December, noting a Philippine developer is one of the larger exposures in his fund.

Manila's condo boom has one key driver: traffic, Rasheed said. The congestion in Manila -- likely the world's most densely populated city-- is legendary, with a character in Dan Brown's novel "Inferno" calling the city "the gates of hell" in part because of the six-hour traffic jams.

With workers pouring into the growing business process outsourcing (BPO) industry in Makati, "people want to live closer [to work] in small units, 300-500 square feet. That's really booming because it's affordable," Rasheed said.

Slowdown coming?

But some expect the market will face a significant slowdown.

"The best days for residential are likely over," Macquarie said in a note in December, citing rising condo inventory of almost two times annual sales and a high sales base after "unprecedented" project launches.

Tracts of land are also selling at record-high prices, likely denting future projects' profitability, it said, adding demand may also take a hit if developers try to pass costs on to buyers and renters.

==

> http://www.cnbc.com/2015/01/05/is-philippine-property-getting-bubbly.html

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CAN BALANCE be maintained? Maybe

 

To be completed in the next five years:

 

2016 - 2017 : 1.8million sqm / 10 = 180,000 jobs

Next 5 years : 106.0 k condos = 1.70 workers / condo

 

Setting sights on the growth outlook for the Philippine property sector in 2016 17 February 2016

 

While the economy is expected to perform better in 2016, the possibility of repatriation and loss of job security in Middle East countries (where the economies are being severely affected by the record low oil prices) led Bangko Sentral ng Pilipinas to cut growth estimates for remittances coming from overseas-based Filipinos (OFs) from 5% to 4% this year.

 

/ Those overseas workers who return will look for new jobs in the Philippines, and they may find them.

Instead of renting out their condos in Manila, they may live in them, and walk or commute to new jobs .

It is possible. It is conceivable. This will not be a huge factor (maybe 5-10% max.) but something to watch

- DrB /

On the supply side, the large completions in the commercial and residential (at least in the mid-end segment) sectors is expected to clip the growth in rents and capital values. In Metro Manila, approximately 1.8 million sqm of new office space may come on stream in 2016 and 2017, and over 106,000 residential condominium units are expected to complete over the next five years.

Despite these challenges, the overall growth outlook for the local property sector in 2016 remains promising. The continual expansion of the O&O sector is expected to fully absorb the new supply in just a little over three years. The employment generated by this growth should mitigate the softening growth of OF remittances, while the increase in income levels is expected to support retail consumption and buoy the demand for residential condominium developments going forward.

In Metro Manila, approximately 1.8 million sqm of new office space may come on stream in 2016 and 2017, and over 106,000 residential condominium units are expected to complete over the next five years.

==

- See more at: http://www.jllapsites.com/research/setting-sights-on-the-growth-outlook-for-the-philippine-property-sector-in-2016/#sthash.ZlCVunm1.dpuf

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  • 1 month later...
Property boom in second-biggest Philippine city hits snag
Financial Times-8 Mar 2016
Cebu, the second-biggest city in the Philippines, enjoyed a property ...
Property prices have risen 5 to 10 per cent a year over the past five years ...
Philippine%20House%20Price%20Index%20vs%
2/
Why investor interest in the Philippines is rising
OPP.Today-13 Mar 2016
... Philippines real estate is rising, new data from the leading property website, ...

Leading Manila broker, Phil. Property Expert, Inc, says although prices were lower more than a decade ago – in 2004, the average price per square metre of a prime three-bedroom condo in Makati Central Business District was only about ₱65,000, towards the end of 2015, it’s close to ₱150,000 – now is still a great time to buy.

“The Philippines is still underdeveloped for the most part. And as a developing country, there is still a great opportunity for progress, the room for growth is still very wide. Especially with the recently concluded ASEAN integration, which opens up the Philippines into the whole of Southeast Asia for better and less-restricted trade activities.

“There’s a good reason why everyone in the industry is very upbeat right now. More opportunities are opening up to the people right here in our country, which means more income for them. This consequently means more buying power and elevated standard of living. And we know that having a roof above our heads is one of our basic needs. Real estate prices are only going to rise in the coming years and decades.”


Read more at http://www.opp.today/why-investor-interest-in-the-philippines-is-rising/#hSq0Ei020QKmLAlK.99
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Useful Detail for those thinking of Renting or Buying in Makati

 

One of the key factors to consider when Renting or Buying is AFFORDABILITY.

 

Makati_graph2015E_zps7pzznoe8.jpg

> see Database on : http://tinyurl.com/PHP-makati

Gains for ---- : q4-2004 : q4-2007: q4-2015 : '04 >'15 : Ave.% / '07>'15 : Ave.%

Makati Condo : P67,840 : P95,000 : 151,000 : +122.6%: 1.84% / +58.95%: 1.56%
Makati Rent-- : P ??? /m : P 539/m : P 883/m : + N./A + : + n/a +/ +63.82%: 1.58%
Price Inflation- : 100.00 i : 115.95 i : 164.50 i : + 64.0% : 1.13% / +41.44%: 1.09%
===========

 

The more rapid increase in property prices, than price inflation has been aided by falling interest rates.

philippines-bank-average-lendng-rates.gi

 

Affordability of the RENT to the tenant is a major issue driving Yields & Investment Returns

And also, what sort of Tenant or Buyer the Condo for are looking at is targeting.

 

LET's START : by looking at the Lower End ... the Mass Demand for all those small flats under construction...

With so many offices in the BPO / Call Centre field, it is important to know how much income workers in that sector learn

 

Average and Median Monthly Salary Comparison in Philippines in Customer Service and Call Center
Maximum: 183,333 PHP
Average: 31,647 PHP
Median : 22,000 PHP
Minimum : 8,000 PHP

========

> http://www.salaryexplorer.com/salary-survey.php?loc=171&loctype=1&jobtype=1&job=19

 

The median for Makati (alone) should be higher than that PHP 22,000 for the Philippines as a whole.

And the Makati Median may be at or above the Average of 31,647 PHP

 

If we assume P 30,000 is an average salary for Makati-based call center workers

- then 2X workers sharing, may be able to afford a Php 20,000 studio (1/3 of their combined salary).

And the better-paid workers may be able to afford a better or larger flat.

 

Studios above P20-25,000 per month would require more than two people, or better paying jobs

 

But I think this shows that as long as the BPI job market in Makati remains strong and growing,

you are not going to see many decent condos - including studios renting below Php 20,000 per month.

=

> from the Makati Tips thread: http://www.greenenergyinvestors.com/index.php?showtopic=20614

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Three Articles (taken together) suggest that ALI may have big plans for the Tutuban area
.
DEALSTREETASIA - ‎21 hours ago‎
In three separate business developments in the Philippines, Ayala Land Inc has sold bonds worth $172.4 million, while Roxas Holdings Inc seeks to raise over $26 million via stock rights offer, and Vista Land & Lifescapes Inc has forayed into the hotel ...
. . .
As part of Ayala Land’s P50-billion debt securities program, proceeds from the offering will primarily be used to finance the company’s corporate requirements and capital expenditures, including the redevelopment of the site of Intercontinental Hotel in Makati City into a transport hub with retail and office components and other similar projects, The Standard added.
2/
August 14, 2015:

Ayala Land Inc (ALI) plans to secure a controlling stake in diversified conglomerate Prime Orion Philippines Inc (POPI) for $121 million (P5.6 billion).

ALI earlier informed the stock exchange that it has entered into an agreement with POPI, to subscribe to 2.5 billion common shares of stock in POPI, which translates in to 51.36 per cent stake, for a total consideration of P5.6 billion, subject to certain terms and conditions.

POPI has diversified interests in industries such as non-life insurance, real estate and property management, manufacturing, distribution, land title services, including information technology consulting services.

 

300px-Tutubanmall.jpg

 

POPI owns the retail complex Tutuban Center in Manila through its wholly owned subsidiary Tutuban Properties Inc. It has a gross leasable area of about 60,000 square meters.

It also currently holds interests in other local companies such as Lepanto Ceramics Inc, FLT Prime Insurance Corporation, OMI Land Title Services, Orion Property Development Inc, IT company Orion Solutions Inc, and Orion Maxis Inc (which serves as sales and marketing affiliate for the distribution of Lepanto Tiles by Lepanto Ceramics).

“This acquisition is aligned with ALI’s thrust of expanding its leasing business,” said ALI senior vice president chief finance officer and compliance officer Jaime Ysmael.

 

3/

Tutuban Center may become Manila's busiest transfer station
news.abs-cbn.com/.../tutuban-center-may-become-manilas-busiest-transf...
Mar 20, 2015 - MANILA – Prime Orion is pursuing plans to expand leasable space in Tutuban Center as competition gets tighter in Manila's famous shopping ...

 

Yuen Po Seng, president and chief executive of Prime Orion, said around 40,000 square meters (sqm) of leasable space will be added to the complex in the next two to three years.

“With new development coming in, we will probably be having another 40,000 sqm leasable area in the next two to three years. This short term vision would maybe even double revenues we have in Tutuban itself...Right now, we have about 60,000 sqm leasable space,” Seng told ANC on Friday.

 

Seng said the expansion will allow the company to take advantage of the growing population in the area, which is the site for the proposed common station of the North-South commuter rail and the Light Rail Transit-Line 2 (LRT-2).

.

Tutuban gets about 1 million visitors every month, but the new railway line is expected to bring an additional 400,000 people per day.

"The DOTC has made some recent announcements that it is establishing the North-South commuter rail. What's exciting is that it will intersect with LRT-2 on Recto. And they are intersecting right where Tutuban is, so right where we are is going to be a major transfer station, the likes of Hong Kong and Japan where you have massive people criss-crossing. The consultants were saying that there could be as much as 400,000 people on a daily basis," Seng said.

 

> New thread on PNR & Tutuban :

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PH external debt rises to $77.5 billion as of end-2015

Despite the increase, key external debt indicators remain at comfortable levels at the close of the year, says the BSP

dollars-pesos-20150812_D6173B8FEAE9404E8

MANILA, Philippines – The country's external debt increased by $1.9 billion or 2.5% in the 4th quarter of 2015, attributed to net borrowing of $1.8 billion mainly by private banks and firms to finance projects.

The outstanding Philippine external debt stood at $77.5 billion as of end-2015, up from the end-September 2015 level of $75.6 billion, said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr in a statement on Monday, March 21.

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

Despite the increase, the BSP pointed out that on a year-on-year basis, the debt stock declined by $200 million from the $77.7 billion figure for 2014.

This was due to increased investments in Philippine debt papers of $1.8 billion by residents, the majority of which came from banks.

Another factor was the $456 million negative foreign exchange revaluation adjustments due to the strengthening of the US dollar in 2015. This was on the view of US economic recovery expectations following a US Federal Reserve interest rate hike, the BSP said.

"A stronger dollar results in a lower debt figure expressed in US dollar terms," Tetangco explained.

The BSP noted, however, that the full downward impact on debt stock of these factors was partly negated by around $2 billion, because of net availments (excess of drawings over debt payments) and the previous periods' audit adjustments.

External debt at comfortable levels

Tetangco also said "key external debt indicators remained at comfortable levels at the close of the year."

Gross international reserves stood at $80.7 billion as of end-2015 and represented cover of 5.3 times for short-term debt under the original maturity concept.

The external debt ratio improved from 22.5% in 2014 to 21.9% by year-end as a result of the country's sustained economic growth.

The ratio is a key solvency indicator which looks at total outstanding debt expressed as a percentage the country's gross national income (GNI) or total annual aggregate output.

The debt service ratio (DSR) improved to 5.3% in December 2015 from 5.6% in September 2015 and 6.3% in December 2014 due to a larger decline in payments vis-à-vis receipts.

==

> http://www.rappler.com/business/economy-watch/126637-philippines-external-debt-2015

 

OFW remittances rise to $2.2B in January 2016

Despite concerns in the Middle East, remittances remain resilient on the back of sustained demand, says the Bangko Sentral ng Pilipinas

 

MANILA, Philippines – Money sent home by Filipinos overseas increased at the start of the year despite global volatility and slowing economies in the Middle East.

Personal remittances by overseas Filipinos grew by 3.2% year-on-year in January 2016 to reach $2.2 billion, said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr in a statement on Tuesday, March 15.

These remittance flows consisted primarily of transfers from land-based overseas Filipino workers (OFWs) with work contracts of one year or more, amounting to $1.7 billion, as well as compensation of sea-based workers and land-based workers with short-term contracts (excluding their expenditures abroad), which reached $500 million.

Similarly, cash remittances channeled through banks amounted to $2 billion in January 2016, rising by 3.4% from the level posted a year ago.

Cash remittances from both land-based ($1.6 billion) and sea-based ($447 million) workers expanded by 3% and 4.6% year-on-year, respectively.

More than three-fourths of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, Canada, Singapore, the United Kingdom, Hong Kong, Qatar, and Japan.

==

> http://www.rappler.com/business/economy-watch/125934-ofw-remittances-january-2016

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  • 4 weeks later...

SEA countries, best positioned in downturn

Southeast Asia's resilience vs global headwinds cited - Business World, Manila, 4/19/2016
ECONOMIES in Southeast Asia and select neighbors should be able to sustain growth momentum this year despsite dampened global growth prospects, as local fiscal conditions provide sufficient buffers against external shocks

(headline story) -

Notes

=====
+ per Malaysian central bank governor, Zeti Akhtar Aziz, at 33rd meeting of IMF finance committee
+ global issues include: lower productivity growth in advanced countries, tighter global liquidity
+ SEA monetary authorities have "remained vigilant" and strengthen policy frameworks
+ ASEAN-5, composed of Indonesia, Malaysia, Philippines, Thailand, and Vietnam, have retained growth projections at between 4.8% and 5.1% for this year and next, with robust domestic demand, and a recovery in exports seen driving growth in 2017. Meantime, global growth has been downgraded to 3.2% for this year, and 3.5% fro next
+ The IMF has a growth forecast for Phillipines of 6% in 2016, and 6.2% in 2017

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More Manufacturing, and better Ease of Business coming in PH

 

Unlike other SEA countries, PH is less export-driven with only 34 percent of GDP from 1993-2013 coming from exports

 

FDI / Foreign Direct Investment in 2013 / source Business Mirror, pg B4: 4/22/2016

 

Country---- US$ Mn's-- - Electr.Cost

Singapore : $ 64 billion :

Indonesia- : $ 19 billion :

Malaysia-- : $ 12 billion : 12 cents, Kuala Lumpur

Thailand-- : $ 7.4 billion : 11 cents, Bangkok

Philippines: $900 million : 25 cents, Manila

Hong Kong: --------------- : 19 cents

China, mainland --------- : 7 cents

 

Oxford Economic estimates 5.5 percent annual growth from 2013 to 2030, as trends like the relocation of manufacturing from higher wage China to Philiipines and Vietnam continue.

In addition to being a low wage country, PH also has a 100 million population on consumers, with many entering the middle class.

 

+ Average wages are now $3,344, or double the value of ten years ago.

+ There has been industrial peace under the Aquino administration

+ the old twin drawbacks of high energy prices, and relatively high taxes are being addressed (though slowly), and corruption is diminishing

 

PH wants to improve its ease of doing business. It has already dropped from the #148 position (higher is harder), to #103rd,

and is now aiming to make it into the best 1/2, at position # 63 or better, by the end of 2016

 

To open a new business, there were:

+ in 2015, 16 steps, that could be completed in 29 days

+ in 2016, this was reduced to six steps in 8 days, and the aim is for:

+ in 2017, three steps in three days

 

Tax assessments and payments are also being simplified, including through the use of online payments

 

(from Business Mirror, Apr. 22. 2016)

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  • 3 weeks later...
This real estate fund would rather invest in the Philippines than China
PUBLISHED : Tuesday, 12 January, 2016

 

Fogle said the company has not made any investment in China as it has not been able to find assets that can yield attractive returns in the past two years.

BPE is an independent alternative investment adviser that operates a pan-Asian investment programme based out of Hong Kong. It has over 120 staff across seven offices in Hong Kong, Shanghai, Beijing, Mumbai, Singapore, Jakarta and Tokyo.

 

Its wariness over China apart, BPE sees good prospect in other countries.

“We have confidence in the Philippines. The country is changing dramatically and the middle class is growing rapidly,” said Fogle.

 

b800e916-b834-11e5-9ce7-2395197ababe_486

 

The nation’s gross domestic product expanded six per cent in the July-September quarter from a year earlier after rising a revised 5.8 per cent in the second quarter.

With strong demand of four million square feet of office space each year, the Philippines is a solid market for many big and multinational companies, said Fogle.

“Office occupancy of high-quality buildings is just 10 to 20 per cent of that in Central,” said Fogle.

==

> MORE : http://www.scmp.com/property/hong-kong-china/article/1899912/real-estate-fund-would-rather-invest-philippines-china

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Comparison - From Colliers Quarterly Report

 

Office
(q4-'15)
A total of 484,092 sq m of net useable area of office space was
completed in 2015. This includes seven new buildings in Fort
Bonifacio that were completed during the fourth quarter. While
vacancy rates in areas without any recent completions remained
low, the recent completions in Fort Bonifacio led to an increase
in vacancy of 6.7%. An annualized growth in rental rates of 7.0%
for all areas was observed, with Makati premium offoce buildings
rising the highest with a 10.4% increase for 2015.
(q1-'16)

coming

 

Residential
Three new condominium buildings with 1,581 new units were
completed in the major business districts of Metro Manila.
Amid rising inventory levels, vacancy rates for residential
condominiums continued to rise in all major districts, with Makati
CBD overall vacancies rising to 8.9%. Nevertheless, rental rate
growth still increased albeit at a more modest pace of 1.1% during

the fourth quarter; Rockwell Center s

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MANILA : Up 9.5% y-o-y to reach PHP 157,364 per sqm
“Developers hold new launches to address supply overhang.”
Claro dG. Cordero, Jr., Head of Research, Philippines

RESIDENTIAL STAGE IN CYCLE
For 2011 to 2015, completions are year-end annual. For 2016, completions are as at 1Q16, while future supply is from 2Q16 to 4Q16.
Physical Indicators / Arrows indicate 12-month outlook

SUSTAINED DEMAND FROM EXPATRIATES

Expatriate employees of the offshoring and outsourcing (O&O) sector, high-income individuals and households drove demand for the luxury residential condominium leasing market in Makati CBD and Bonifacio Global City (BGC).

Investment demand was supported by the favourable economic performance coupled with stable interest rates. Net absorption remained robust in 1Q16 at 1,369 units, although this was lower than the 2,075 units recorded in 4Q15.

THREE DEVELOPMENTS COMPLETE IN 1Q16
The Lerato Tower 1 and Alphaland Makati Place in Makati CBD and Park West in BGC were the three developments completed in 1Q16, adding 1,805 units to total existing stock. The average vacancy rate was recorded at 7.5%, up 70 bps q-o-q.

No new launches of high-end residential projects were observed in 1Q16. Nonetheless, a record amount of new residential supply is slated to complete in 2016, and in particular, eight residential developments with a consolidated total of around 2,500 units are expected to complete in 2Q16.

 

RENT AND CAPITAL VALUE GROWTH ON THE SLOWDOWN
Rents maintained an upward trend but rose at a slower pace, recording a 0.8% q-o-q and 3.6% y-o-y increase to PHP 775 per sqm per month. Meanwhile, capital values increased faster than rents, rising by 1.5% q-o-q and 9.5% y-o-y to reach PHP 157,364 per sqm. Consequently, investment yields declined 4 bps q-o-q and 34 bps y-o-y.

Pre-sales in high-end residential developments remained robust on the back of continued investor interest and favourable economic performance and outlook.

OUTLOOK: GROWTH IN RESIDENTIAL MARKET EXPECTED TO SOFTEN
It has been observed that property developers are slowing new residential project launches in the middle- to high-end segments this year in order to address an overhang in residential supply. The incoming addition to residential stock will likely put further upward pressure on vacancy rates.

Demand for mid-end products by overseas Filipino workers in the Middle East may slow if oil prices remain low. Nevertheless, demand for high-end/luxury residential products should still register steady growth in the next 12 months, as the economy is poised to perform better than last year, according to forecasts
==
> pg. 55: http://www.ap.jll.com/asia-pacific/en-gb/Research/asia-pacific-property-digest-1q-2016.pdf?2714d016-1ce7-4fd6-b77b-bb09ed19e1d9

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Duterte vows economic growth outside of 'dead' Philippine capital

 

Lack of opportunities around the rest of the Philippines have for decades made Manila a magnet for people seeking a better life, but millions have instead been forced to live miserable existences in mega-slums.

  • Posted 26 May 2016
i-have-to-create-more.jpg
"I have to create more jobs but Manila is already saturated," Rodrigo Duterte told reporters in the southern city of Davao. (Photo: AFP/Manman Dejeto)

DAVAO: Incoming Philippine president Rodrigo Duterte pledged on Thursday (May 26) to spread economic activity beyond the overpopulated capital of Manila, calling it a "dead" city overrun by shantytowns.

 

Duterte said he would create new jobs by setting up economic zones outside of Manila to spread the wealth beyond the sprawling metropolis of about 15 million people, and that he would not allow any more factories to be built in the capital.

"I have to create more jobs but Manila is already saturated," Duterte told reporters in the southern city of Davao, which he has ruled as mayor for most of the past two decades.

"If there are any investors coming in, I will tell them I will not allow factories anymore in Manila, not only because it is a dead city but because I have to build a new environment for the people."

==

> http://www.channelnewsasia.com/news/business/international/duterte-vows-economic/2818868.html

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Decentralising Outsourcing

 

The rise of the business process outsourcing (BPO) industry in the country has dictated the design of these larger buildings. When call centres and other off-shoring companies began arriving in the Philippines at the turn of the millennium, they originally moved into cheaper office space, in which a single floor – the “floor plate” – would typically be 900 sq metres. Now office towers are built with a floor plate of 2000 sq metres without columns to accommodate the needs of BPO companies.

 

The country’s BPO industry now requires an additional 6m square feet a year. “This has created three times the demand for commercial space than in Singapore and Tokyo,” Rick Santos, chairman of CBRE Philippines told the local media. These buildings typically house between 15 and 20 tenants, which together may employ up to 12,000 employees. When a multinational – such as Accenture, AIG or Procter & Gamble – leases a floor in these high-rise offices, 80% of the floor will typically be occupied by BPO operations and the remaining 20% by the offices of managers and other staff. Many BPO tenants in Manila now plan to expand to other urban centres, with Cebu City the top choice. Convergys’ call centres have led the way with operations in Baguio, Cebu, Clark and Davao.

 

In an attempt to discourage migration to Manila, the government is encouraging decentralisation with an initiative called Next Wave Cities. However, three quarters of BPO operations are still located in the Manila area. “High-density developments are natural to areas like Metro Manila, given high property prices,” Manuel Paolo Villar, president and CEO of integrated property developer Vista Land, told OBG. “As a result, Metro Manila will inevitably only continue the trend of vertical construction, as more people prefer the convenience of being close to the economic centres.” Indeed, newcomers to the Philippines still generally start operations in Manila and then grow organically, sometimes spreading to several cities but locating close to transport hubs like the Manila Metro Rail Transit System. Although Philippine BPOs attract the most international attention, demand for other kinds of office space may be more pressing. “Demand has quadrupled in three years but we can only triple our business.

 

It’s a landlord’s market,” said Lars Wittig, Philippines country manager of Regus, which operates serviced offices in 120 countries. The company rents large office spaces, often on 10-year leases, and then sublets work stations.

==

> Longer Article: http://www.oxfordbusinessgroup.com/overview/taking-stock-after-half-decade-rapid-growth-developers-are-looking-prevent-oversupply

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Manila vs. Hong Kong Cost of Living

 

The biggest savings is on Rent (at May 2016):

 

You would need around 98,175.82₱ (16,303.25HK$) in Manila to maintain the same standard of life that you can have with 46,000.00HK$ in Hong Kong (assuming you rent in both cities).

 

Indices Difference information.png

Consumer Prices in Manila are-------------------: / 48.66% lower than in Hong Kong (index: 40.96)

Consumer Prices Including Rent in Manila are: / 64.34% lower (Index: 29.07)

Rent Prices in Manila are--------------- P 23.0k / 80.91% lower (1 BR, city centre)

Restaurant Prices in Manila are--------- P 150.0 / 52.18% lower (inexpensive meal)

Groceries Prices in Manila are----------- P 142.5 / 54.42% lower (chicken breasts)

Local Purchasing Power in Manila is-------------: / 49.02% lower (Index: 47.52)

==

> http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Hong+Kong&country2=Philippines&city1=Hong+Kong&city2=Manila&tracking=getDispatchComparison

 

Lower office rents and Lower salaries (than many neighboring countries) are spurring growth,\

especially in the BPO area (call centers):

 

Manila ‘still in the fast lane’ – property advisor

January 29, 2016

GLOBAL property advisor Cushman and Wakefield has described Manila as “still in the fast lane,” on the back of low inflation and what it calls sustained policy accommodation.

“The Philippines is on track to record another year of enviable growth,” the property consultancy firm said in its Asia Pacific Outlook Report for 2016. “The government continues to make strides in improving business conditions and addressing corruption,”
Cushman and Wakefield expects the business process outsourcing (BPO) sector to continue propelling the Philippine economy to stay as one of Asia’s strongest performers.

The property advisor cited estimates by the IT and Business Process Association of the Philippines (IBPAP) that the BPO industry would have 1.3 million full-time employees in 2016.

At the same time, it said accelerated implementation of public-private partnership projects and spending related to the May 2016 presidential election would induce growth in the country’s economy.

As for the country’s property market, Cushman and Wakefield noted record low levels of office space vacancies, which remained at 3.4 percent as of yearend 2015.

But the company foresees a slower rental growth this year due to upcoming supply of new developments, especially in the emerging Bonifacio Global City, where the bulk of the new office space supply will be place

===

> http://www.manilatimes.net/manila-still-in-the-fast-lane-property-advisor/242060/

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// INFLATION Data recorded in post #258, see below //

 

PHILIPPINES Debt is low compared to other Asian countries

 

Debtopia.png

 

Non-Japan Asian Private Debt Is Number 1!

southeast-777x400.jpg

Posted By: The Corner 3rd May 2016

 

UBS | Non-Japan Asian private debt is now the highest in the world for any major region and is climbing toward 170% of GDP. As we have argued in our Debtopia thesis since 2013, rising leverage will increasingly result in diminishing marginal benefits to economies and profits when debt becomes excessive. Figure 1 demonstrates this perfectly. Also, please note it’s not just China. True China is high, but so are Korea, Taiwan, Thailand, Malaysia, Hong Kong, and Singapore. Private debt levels range from a “low” of 150% of GDP to a high of 222% for those economies. The outliers remain the Philippines, Indonesia and India.

Debtopia-300x188.png

 

Historically, few individual economies have seen private sector debt rise above 240% of GDP before reversing course. Ireland is the only significant economy we know of where private debt sailed well past 240% before deleveraging. Perhaps this is the good news as this implies non -Japan Asian private debt can go higher, especially if Tao Wang’s work on Chinese debt proves correct. However, when you step back and judge Asian economies, market by market, most of them appear poised for domestic -debt related problems – sluggish economic growth, a rise in NPLs, and a tough profit environment. It is more common for debt-related problems to materialize well before debt reaches 240% of GDP according to international experience.

 

Debt is the problem, not the solution. Relying on debt growing faster than economies to stabilize economic growth can only succeed in kicking the can down the road; i.e., delaying deleveraging and capacity consolidation. We think markets know this and we’ve long passed the time where more debt is greeted with cheers from investors. Indeed rising debt service in the face of falling interest rates has been a critical difference between non-Japan Asia and DM equity performance according to work done by our colleagues in strategy. This will likely remain true as long as debt continues to grow faster than GDP for the region.

==

> http://thecorner.eu/world-economy/non-japan-asian-private-debt-is-number-1/54060/

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3 golden growth opportunities for the Philippine real estate sector in 2016

By Property Report on January 28, 2016
.

What’s next for the country’s property industry?

Metro-Manila_TheStandard.com_.ph_.jpg?re

Metro Manila | Image credit: TheStandard.com.ph

 

Given the upward trend witnessed in the Philippines’ real estate sector in the past 12 months, industry experts are optimistic that the growth will be sustained this year.

The country’s thriving capital, Manila, saw major investment from global capitalists in 2015, according to auditing and advisory firm BDO’s Asian Real Estate report, placing it in the same league neighbouring hub Bangkok.

 

While the ongoing economic slowdown in China may or may not pose a threat to the real estate sectors in emerging Southeast Asian markets, there are many growth areas where a property market like the Philippines can show off its strengths.

 

1. BPO sector creates a new breed of condo dwellers

According to the Thomson Reuters Foundation, real estate loans hit a record high of PHP1.23 trillion (USD25.69 billion) in Q3 2015, per data from the Bangko Sentral ng Pilipinas. It reflects a growing confidence in the sector, as well as the tremendous support given by the banking and lending industries in the Philippines.

Many first-time buyers or renters would require real estate loans (such as for the deposit), but the big change now is that young workers in the business process outsourcing (BPO) sector are qualifying for such loans.

 

Rick Santos, chairman and CEO of property advisory firm CBRE Philippines, said the new breed of condo dwellers are not confined in Metro Manila. “From Clark up north to Davao City down south, the playing field is becoming more exciting especially for the BPO sector which will sustain the momentum and drive for the coming years.”

 

2. Low-cost housing segment helps drive the industry

Andy Mañalac, chairman of the National Real Estate Association (NREA), told TheStandard.com.ph that major developers are now dabbling in the low-cost and socialised housing segment.

More projects should be expected in this segment in 2016, according to Mañalac, and some developers might even cut back on high-end and luxury developments.

“The demand is so big and still growing that it will be very difficult for them to catch up even with their combined production. However, buyers’ financing for these will be another story,” he commented.

 

3. Change is good

With the ASEAN Economic Community now in effect, the Philippines will be in a much better position to lead in the region’s growth by allowing certain changes, beginning with infrastructure.

National Economic and Development Authority (NEDA) chief Arsenio Balicasan told TheStandard.com.ph: “There is a constant need for the infrastructure system to keep up with rising demands in the fast-growing economy, especially these days as new property investments flood the market.”

Balicasan noted that the weak infrastructure squanders the full potential of Philippine real estate and continues to hound the industry. He also added that more transparency in the market and possible ownership policy changes could help increase investments in the country.

With the announcement this week that Korean firm Hyundia Rotem has won the bid to supply trains for the long-delayed MRT-7 subway project, hopes are up that more infrastructure projects that can impact the property sector can finally see the light of day.

 

Watch out for our report on low-cost housing shortage in the Philippines in the February/March 2016 issue of Property Report magazine

==

> http://www.property-report.com/3-golden-growth-opportunities-for-the-philippine-real-estate-sector/

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1Q 2016 | Philippines Research & Forecast Report

Office sector drives property market growth.

==

> http://www.colliers.com/en-gb/philippines/insights

 

Demand
BPO demand to continue rising at double digit rates, while residential condo demand will grow steadily in step with a growing economy. Retail may become more challenging as a sharp increase in new shopping center space is anticipated in 2016

Supply
Office supply forecasted by the end of 2016 has slipped, but 2016 will still see an all-time high in new supply. Residential condo and retail stock will also rise at elevated rates.

Rent
Colliers projects office rents to increase at the same historical growth rates given the pace of demand. Retail rents are also seen to grow steadily. However, condo rents have begun to slide amid a record number of completions this year.

Office
Vacancies fell further despite the completion of seven buildings during the first quarter of 2016, which added some 156,000 sq m of office space in Metro Manila. With an estimated 640,000 sq m of new office space expected to be completed this year, a slight increase in office space vacancy across the major business districts of Metro Manila is anticipated. The increase, however, will be tempered by steady demand for office space fueled by BPO companies.

Residential
Only three residential projects were completed in Metro Manila during the first three months of the year, all located in Fort Bonifacio. For the rest of the year, Colliers expects that an additional 11,700 units will be delivered in the major CBDs, with half of the new units located in Fort Bonifacio. With the delivery of these new units over the next 12 months, rental rates in the major districts are expected to decline.

Land values to grow between 5% and 7% in the next twelve months
Land Values
Source: Colliers International Philippines Research
Land values in major business districts continue to increase. Land values in Makati CBD averaged PHP523,000 per sq m during the first quarter of 2016, up by 4.6% QoQ. This is slower than the 7.9% growth recorded in the fourth quarter of 2015. Land values also accelerated in Alabang, Fort Bonifacio, and Ortigas.
The value of land in Fort Bonifacio averaged PHP445,000 per sq m, up by 6.7% QoQ. The value of Alabang lots recorded the fastest growth at 4.6% to PHP123,000 per sq m from PHP117,946 in the previous quarter. Prices in Ortigas Center averaged PHP189,000, up by 5.3% QoQ, up from 4% growth posted in the previous quarter.

==

> more

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  • 4 weeks later...

Makati's advantages: Megaworld reveals more facts, more figures

(in the advert for San Antonio Residence in today's Manila Bulletin)

Living in Makati...

+ can deliver savings: On Time, and Fuel
"Every ten minutes you leave your car idle, you are losing between 0.1 and 0.6 liters of fuel . And if fuel costs Php 41 a liter, that's Php 24.60 per hour. If you multiple that by the extra 700 hours that commuters spend in traffic, that translates to at least 17,220 wasted on fuel alone! Those living in Makati can avoid wasting that much money

+ money spent on an owner-occupied condo is not wasted on rent
+ the owner of a Makati condo will have more time to spend on other pursuits, including family

 

(I got some good ideas about ownership of condos under construction from a Megaworld agent, JM, whom I met recently):

 

+ JM also raised an interesting point that I have not thought concerning the coming market correction. He said there are far more jobs than condos in Makati, so it is now and will remain "short" of housing despite the high deliveries over the next few years. I agree will this, but I still anticipate a drop in rents and maybe a fall in prices as new supply is absorbed and vacancy rates may jump for 2-3 years. JM thinks that time and the pace of investment will aid absorbsion simply because people working in Makati are gaining wealth, and shifting their investments into Makati condos, partly because they have been encouraged to invest by the arguments of developers. More people employed in Makati, have a share of their growing wealth in Makati flats, and so a rising number of people will be able to afford to live in Makati rather than commuting. JM believes they will move in and/or have family to move in, rather than deserting their investments. To JM, it really matters WHO OWNS the Makati Condos, and why they bought them. They are mostly in the hands the hands of committed and responsible investors with jobs in Makati (this comes from a guy who did a lot of selling to the buyers)

 

+ To put this another way, the number of Condos in Makati is scheduled to rise from 19,340 at the end of 2015 to 27,520 by the end of 2018 - that's a rather huge +42% increase. At the same time, there will a tiny <2% rise in Makati office space. This sounds alarming, and I have written about the discrepancy. However the new condos will mostly be in the hands of people who have a use for the condos, and want to live in them, or have friends or family who plan to live in them because they work nearby. Over the 3 years, there will be a jump in the wealth of Makati workers which is held as Makati condo because they were convinced to make the investment because they wanted to avoid long commutes and traffic jams. This voluntary deployment of people's rising wealth into condos will help to lend stability to the market - more so, than if all those new condos were simply owned by people with no employment connection to Makati. (These are my words, based on a conversation I had with JM.)

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  • 4 weeks later...

Spend more, Save more, More efficiently - in the Philippines

The Philippines New president announced his plans in his first State Of the Nation Address, and they were a bighit.

The borrowing cost on 7-year Philippines Treasury notes showed an impressive drop of 44.5 basis points from 3.461 to 3.016 on P 44.7 billion. These lower costs are a vote of confidence in Roderick Duterte and his polices, which are being accepted as pro-business. One of the main areas of focus is to improve the country's inefficient infrastructure. The capital city of Manila is choked with traffic jams, and these will be addressed by taking some temporary emergency powers in the hands of the state, to make some dramatic changes, and on improving the rail infrastructure.

New trains will be ordered, and new rail lines built. There is also a plan to privatize the public transit system.

This has been a long time in coming, and these projects have the potential to boost the efficiency of the Philippines economy, at a time when it is experiencing rapid growth. Increased global confidence in the country and lower interest rates will help assure the country can get the capital it need to boost infrastructure spending.

If the lower rates spill over into the property sector, it should help boost demand at a time, when there is a large amount of new properties scheduled for completion in Makati and BGC over the next 2-3 years
- Makati Prime

 

Side Comment:

I can recall a friend in the Philippines saying how much he hated the Slogan: "It's more fun in the Philippines."

That's not a good slogan, he said, what we need to aim for is not more fun, but lower crime and greater efficiency.

Maybe it is finally happening, I say as I think about this news

==== ====

 

SSC thread : Philippines Real Estate, Housing and Construction

 

The mods have been moving around many posts.

Some of the very BEST POSTS from the Gentry thread, have been moved to the thread above

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Hi

 

You have a good website.

I just think they are going to underestimate the growth of Manila. I mean -- the city is growing at a rate of 28 new entrants every hour,

so that"s about 250K new inhabitants every year, and i feel this is too conservative, because other waves are coming: the large number of tourists which

will grow spectacularly in the years ahead -- baby boomers after age 53 (car sales peak), their main expenditure is travel and leisure -- , the huge number of

economic immigrants that will inevitably enter PH, and the overseas Filipinos who will return because of economic conditions which are deteriorating in their host country,

so my guess is that they should be plan for 350K new entrants in MM every year, not the 250K. I believe MM is the fastest growing metropolis in Asia, so they

have to plan ahead.

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The problem is, there are not enough good jobs.

 

The average call center work makes P 22,000 per month.

If two share (P 22k x 2 = P 44k), they can barely afford P 15,000 rent on an unfurnished P 2.5 - 3 million flat,

 

And nowadays the prices of many Studio and 1 BR flats are pushing above that, and even beyond the P 3.2 Million VAT threshold.

 

Lower taxes might help, but it looks like the market is getting hit right now with a Supply glut

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I am sorry for my previous post, something went wrong.

 

It all depends on the direction of interest rates. USA GPD Growth was revised down significantly last friday,

so if lower rates spill over into PH, and interest rates drop a further 2-3 pct then affordability

rises and more people will be able to buy those units. So all units will get filled, there won't be

any ghost cities and all your worries will disappear.

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  • 2 weeks later...

7.2% Growth prediction

 

NEDA Confident GDP to grow 7% in Q2 - Manila Times

 

"significantly better than the second quarter of 2015" (when growth was just 5.8 percent)

 

"The government spent P147.2 billion on infrastructure and other capital outlays in the first four months of 2016"

 

Growth should continue into the second half, despite a waning of election-related spending

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