Philippine Real Estate News – March 2017

real estate news p

hello everyone,

Here’s some select articles about Philippine Real Estate and our Economy from various newspaper correspondents that matters for your reference.  Take note that these articles when assessed actually guides us locally what direction the economy is going, what kind of issues our government is going through and generally, and how this affects our real estate market.  News directly affects investors / businessmen on their assessment of what business decision to make, this could be from the stock market ( which is a good barometer ) to daily activities ( hiring of workers, construction supply chain, and other economic variables.

here’s an article from rappler.com correspondent, Jun Malig :

House conducts inquiry into sale of Pampanga’s Paskuhan Village

paskuhan-village

PASKUHAN VILLAGE. The once lively Paskuhan Village (Philippine Christmas Village) is now a desolate 9.3-hectare property owned but has yet to be developed by the Premier Central, Incorporated.

The Committee on Good Government and Public Accountability seeks to establish if the sale of Hilaga, popularly known as Paskuhan Village, was legally valid and if proper procurement procedures were put into place.

PAMPANGA, Philippines – A committee of the House of Representatives started on Tuesday, February 28, its investigation into the sale by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) of a 9.3-hectare property in this province to a private corporation.

The Committee on Good Government and Public Accountability sought to establish if the sale of Hilaga, popularly known as Paskuhan Village, was legally valid. It also sought to check if proper procurement procedures were adopted, based on the resolution filed last January 3 by Pampanga 3rd District Representative Aurelio Gonzales.

Premier Central, Incorporated (PCI) representative Jeffrey Lim signed a deed of absolute sale with former TIEZA chief operating officer Mark Lapid on May 4, 2015 after paying P939.6 million for the property.

Three other private companies – SM Development Corporation (SMDC), SM Prime Holdings Inc, and SEJ North Premier Holding Corporation – purchased the bid documents for the TIEZA property but did not participate in the bidding that set the amount of the minimum bid at P817.7 million.

In the House Resolution no. 654 Gonzales filed, he erroneously referred to the buyer of Paskuhan Village as “SM Development Corporation.” He also repeatedly mentioned SMDC during the committee hearing on the matter without anybody correcting him.

The solon’s resolution echoed former Pampanga 1st District Representative Joseller Guiao’s House Resolution no. 1898 in February 2016 that asked the House Committee on Tourism “to conduct an inquiry, in aid of legislation, into the circumstances surrounding the sale of Paskuhan Village in Pampanga by the TIEZA to SMDC.”

Both Guiao and Gonzales stated in their resolutions that the 9.3-hectare property was donated by the late Jesus Lazatin to the government to be the site of a Christmas theme park that would showcase Pampanga’s giant lanterns and be devoted to tourist and cultural activities.

A TIEZA document shows that its forerunner, the Philippine Tourism Authority (PTA), bought the property from Lazatin for P4.4 million in the 4th quarter of 1989 through two deeds of absolute sale.

However, Guiao said that “a huge cloud of doubt hangs above the reported sale” of the prime property by Lazatin to PTA, saying that the heirs of Lazatin “are supposedly not aware of the existence of a deed of sale to TIEZA’s predecessor, the PTA.”

Guiao said Paskuhan Village, the original site of the annual Ligligan Parul (Giant Lantern Festival) before the event was transferred to nearby malls, is part of Pampanga’s symbol and legacy.

On December 4, 2014, 5 months before the sale of Paskuhan Village to PCI, the provincial government of Pampanga offered to buy the property or to take over its administration and operation from TIEZA, which had been incurring several millions of pesos in losses from operating and maintaining the estate.

Lawyer Guiller Asido, current chief operating officer of TIEZA, said the sale of Paskuhan Village was made in the best interest of the government, based on the recommendation of its privatization consultant.

He said a government entity like TIEZA should not be in the business of managing businesses that are being subsidized by the government and that the money generated from the sale was more than what TIEZA had wanted for the property.

The House committee, led by Representative Johnny Ty Pimentel, also learned during the first hearing that Paskuhan Village is still under the name of the PTA with updated real property tax payment.

Lawyer Jethro Sabariaga, Bureau of Internal Revenue (BIR) director in Central Luzon, said PCI had paid only the P14 million documentary tax stamp and that the capital gains tax for related to the sale of the property remains unpaid.

He disclosed that while the capital gains tax is normally the liability of the seller, in this case TIEZA, it was the PCI that applied for exemption in paying the said tax.

Asido explained that under TIEZA’s deed of absolute sale with PCI, it is the latter that should pay the capital gains tax.

He quoted term and condition no. 3, paragraph C of the deed that states: “The vendee (buyer) shall be solely responsible and liable for all other taxes and expenses relating to the transfer of the title of the property and its subsequent transfer and registration” that include but not limited to “documentary stamp tax, real property taxes commencing on January 1, 2015, transfer tax and registration fee and other expenses, whether national or local.”

But legislators pointed out that under term and condition no. 2, section F of the deed, it is clearly stated that TIEZA, as the vendor (seller) “shall be solely responsible for the payment of Capital Gains Taxes, if any, for the transfer of the property.”

The House Committee on Good Government and Public Accountability asked the Register of Deeds in the City of San Fernando here to refrain from transferring the ownership of Paskuhan Village from PTA to PCI, pending the conclusion of the congressional inquiry into the sale of the property.

The Paskuhan Village was inaugurated on December 11, 1990 by the late President Corazon C. Aquino.

The centerpiece of the theme park is the center building shaped like a Pampanga Christmas lantern when viewed from above. It has a plenary hall, an administrative building, 4 merchandise halls, 3 swimming pools, playground, 600-person amphitheater, fishing and boating lagoon, museum, multi-purpose hall, food court, garden for music performance, and a parking lot for 200 vehicles.

Documents show that as of June 30, 2010, the theme park has total liabilities and equity of some P68.1 million.

The number of people visiting Paskuhan Village began to dwindle in 2001 after SM City Pampanga and the Robinsons Starmills malls began operating several hundred meters away from the Christmas theme park.

In the same year, the annual Ligligan Parul was also transferred from Paskuhan to SM City Pampanga, before the event was eventually transferred by the city government and its co-organizers to Robinsons Starmalls.

here’s an article from Philippine Daily Inquirer correspondent, Ben O. De Vera :

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12 projects pitched for China financing

 

Priorities are the $3.01-B south line of North-South Railway and $374-M New Centennial Water Source-Kaliwa dam

With its economic pivot to China, the Philippines does not have to worry anymore for a steady source of financing for 12 projects worth a total of $4.4 billion even if the United States, a long-time ally, implements a policy shift under the Trump administration, the country’s chief economist said.

The two priority projects to be pitched for Chinese financing are the $3.01-billion south line of the North-South Railway and the $374.03-million New Centennial Water Source-Kaliwa dam project in Quezon province, Socioeconomic Planning Secretary Ernesto M. Pernia said.

“We will start with the bigger projects,” he added.

The 653-kilometer south line of the North-South Railway Project, which will cover commuter railway operations between Tutuban in Manila and Calamba, Laguna, and long-haul railway operations between Tutuban and Legazpi City in Albay, is poised to be the biggest public-private partnership (PPP) project to date.

According to Pernia, the Duterte administration wants to sustain robust economic growth by ramping up infrastructure spending, whose share to the gross domestic product (GDP) was programmed to rise to more than 7 percent by 2022.

“The infrastructure spending boost will be the major driver of growth moving forward. Funding for infrastructure will not be dependent on the US; we’re going to get it from our neighbors, especially China and Japan,” according to Pernia, who heads state planning agency National Economic and Development Authority.

In a statement Friday, the Department of Finance said that besides the railway and dam projects, the $53.6-million Chico River pump irrigation project in Cagayan and Kalinga provinces would also undergo China’s loan application process, as these three projects were already given the go-ahead by the Neda Board chaired by President Duterte and by the Investment Coordination Committee.

“The Philippine government will apply the three priority projects for loan financing under the $3.4-billion assistance made available by the Export-Import Bank of China (China EXIM) to the Philippines, of which $2 billion represents new commitments,” Finance Secretary Carlos G. Dominguez III said.

“These projects aim to raise the productivity of small farmers, improve transportation and logistics services in underserved areas of Luzon, and ensure a steady water supply to Metro Manila,” Dominguez said.

During the meetings last Monday and Tuesday between Philippine economic managers and Chinese officials in Beijing, the Philippine side also submitted nine projects worth a total of $1 billion seeking feasibility study support.

These include the Agus 3 hydroelectric plant; Ambal-Simuay sub-basin of the Mindanao River basin flood control and river protection project; Camarines Sur expressway; Davao City expressway; Dinagat (Leyte)-Surigao link bridge; Luzon-Samar link bridge; North Luzon Expressway east project; Panay Guimaras-Negros Island bridges, and the Pasacao-Balatan tourism coastal development program.

“The Philippine government has submitted the relevant documents and materials to Chinese officials to speed up the assessment process for these nine projects,” Dominguez said.

In all, the economic managers presented to officials in China a total of 40 “small and large” infrastructure projects for possible financing during the two-day mission.

In a chance interview Friday, Dominguez told reporters that both the Philippine and Chinese sides wanted to ensure that the infrastructure projects to be funded will be worth it.

“The Chinese and the Philippine governments want to make sure that the funds they are providing from their taxpayers are benefiting the Filipino public. We have to make sure that the contracts are protected both sides, and that we assure the Chinese that the taxpayers’ money are not wasted. Both of us are trying to develop a system that achieve that,” according to Dominguez.

“With the Chinese, this is really the first time, more or less, that they are going into big-ticket projects [in the Philippines], so we just want to make sure first that our priorities are aligned with their priorities and that our systems are also aligned. As in any start of a relationship, you have to lay the good foundation for the relationship to move quickly,” he added.

here’s an article from Business Mirror correspondent, Roderick Abad :

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Pres. Duterte to sign PHL Coffee Road Map next week–Official

AFTER a series of consultations with industry stakeholders, the long-awaited Philippine Coffee Industry Roadmap 2017-2022 will finally be signed on March 7 at the Malacañan Palace, an official of the Department of Trade and Industry (DTI) said on Thursday.

DTI-Cordillera Administrative Region (CAR) Regional Director Myrna P. Pablo said no less than President Duterte will witness the signing by the secretaries of the DTI and the Department of Agriculture, together with industry stakeholders.

“Thank God, after three years, it will be signed for immediate implementation. The road map is a product of tears, sweat and everything that we always disagree [with and] to agree in the end,” she told the BusinessMirror on the sidelines of the news briefing for the ongoing Philippine Restaurant, Cafe and Bar Expo (Philresca) at the World Trade Center in Pasay City.

“For me, it should be the milestone of the private sector, not the government, since it is just an enabler to create an environment of good investment for the coffee sector,” Pablo added.

The road map takes into account the industry’s current condition. It seeks to bridge the various gaps in the supply chain to make the local coffee industry more competitive.

“We are bringing in together everybody in the chain that should be able to get a fair share of profit of what they did relative to the coffee industry,” Pablo noted.

While demand for coffee in the Philippines has been growing, she said its annual production has been declining consistently.

Based on data from the International Coffee Organization, coffee consumption in the country increased by 8.8 percent from 2014 to 2015.

“If you notice, the so-called Second Wave Coffee, wherein various coffee chains like Starbucks, and other brands have mushroomed almost everywhere. So we see that there is really a strong demand for coffee. Even kids are into coffee drinking because there are now concoctions prepared especially for them by the baristas,” she said.

However, domestic production has been declining by 3.5 percent annually over the past 10 years, according to data from the Philippine Statistics Authority (PSA).

Currently, government data showed that an average of 37,000 metric tons (MT) of coffee are harvested annually from 117,454 hectares.

Among the factors that have contributed to the decline in national coffee production are the lack of productive trees, and poor farming methods.

Pablo noted that in Vietnam, a hectare of land is usually planted with around 2,000 to 3,000 coffee trees, unlike in the Philippines, where only 300 coffee seedlings are being planted per hectare.

Under the road map, the government is targeting to increase coffee production to 214,626 MT by 2022. One of the strategies being eyed by the government to achieve this is the creation of the Philippine Coffee Council, a private sector-led body with government support up to the provincial level.

here’s an article from Business World correspondent, J. C. Lim :

china philippines

Chinese firms eyeing Philippine Investments

FIVE Chinese firms have expressed interest in exploring opportunities in the Philippines’ aviation, oil downstream, renewable energy, iron and steel, and shipbuilding/ship repair industries, according to the Board of Investments (BoI).

In a statement, the BoI said the companies from China, one of the Philippines’ biggest trading partners, presented letters of intent (LOI) to the agency on Friday.

These companies were the Aviation Industry Corporation of China (AVIC) International Aero-development Corp.; Liaoning Bora Enterprise Group Co., Ltd.; Huili Investment Fund Management Co., Ltd.; Dalian Wanyang Heavy Industries Co., Ltd.,;and YiDingTai (YDT) International.

AVIC International, a large state-owned enterprise that manufactures helicopters, aircraft and aviation products, is exploring opportunities in industrial cooperation for aerospace parts manufacturing, aviation maintenance and training.

It also plans to coordinate with local partners for parts manufacturing, maintenance-repair-overhaul (MRO) facilities, and other industrial sectors.

Liaoning Bora Enterprise Group Co., Ltd. and its Philippine partner, meanwhile, agreed on a joint venture in the construction and operation of an oil storage terminal, refinery projects, and allied industries in the Philippines, among others, worth $3 billion.

On the other hand, Dalian Wanyang, in partnership with the Philippine government and the private sector, is conducting feasibility studies for a 4,000-5,000-metric ton waste-to energy-facility that can generate up to 312 megawatts of power using solid waste as raw materials, with preliminary results ready by the end of the month. The company aims to invest in two sites of waste-to-energy facilities in the Philippines using gasification technology worth $2.8 billion and employing at least 4,500 workers by 2022.

Meanwhile, Dalian Wanyang’s affiliate YDT International is also conducting feasibility studies to invest in the development of a shipbuilding and ship repair (SBSR) facility with a local firm — a project worth $1.5 billion which will employ at least 2,000 people by 2022.

As for Huili Investment Fund Management, the firm is setting up an integrated steel mill to support the Philippines’ bid to be a major producer of high-quality and safe steel products by 2030. The company’s two-phased project which targets a production of 3 million metric tons of rolled steel. It is worth $3 billion and will employ at least 6,000 by 2022.

“China remains a strong investments partner of the Philippines, and we are positive that these LOIs will sustain the level of interests and open up more business opportunities for the Chinese investors,” Trade Secretary and BoI Chairman Ramon M. Lopez said in the statement.

Trade Undersecretary for Industry Development and BOI Managing Head Ceferino S. Rodolfo said these projects are deemed “to further spur industrial development across the regions of the country including those in the countryside.”

Approved inflows from China from the country’s investment promotion agencies reached P1.52 billion in 2016. Meanwhile, data from the Philippine Statistics Authority showed bilateral trade between the Philippines and China reached $21.2 billion in 2016, accounting for 15.4% of the country’s total trade.

here’s an  article from Philstar.com corrrespondent, Catherine Talavera :

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Philippines needs more Industrial Parks

MANILA, Philippines –  Property developers should put up more industrial parks in the country to capitalize on the manufacturing deals forged by foreign investors, a real estate services firm said.

In a statement, Colliers International Philippines said it sees more manufacturing investments flowing into the country over the medium term given the investment pledges made by foreign businessmen during President Duterte’s visit to Japan and China in October last year.

Colliers cited commitments made by car manufacturers such as Toyota and Mitsubishi to expand their assembly operations in the Philippines as one of the anticipated investments that would generate demand for industrial spaces.

“More manufacturing investments should result in greater demand for industrial space and facilities particularly in the Cavite-Laguna-Batangas corridor, the country’s main industrial hub,” Colliers said.

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The Cavite-Laguna-Batangas region accounted for 28 percent of the P93.3 billion total investment pledges in the first nine months of 2016, according to data from the Philippine Economic Zone Authority (PEZA).

Majority of these investments are intended for manufacturing projects.

“This indicates that the Cavite-Laguna-Batangas region should expect more manufacturing investments in the medium term,” Colliers said.

Colliers noted the rise in demand for industrial spaces in the Cavite- Laguna-Batangas corridor in the second half of 2016 as well as the decline in vacancy rates to 9.5 percent from the 10.1 percent recorded in the previous six months.

“The decline in vacancy is not surprising as major manufacturing investors continue to gravitate toward the Cavite-Laguna-Batangas area due to its proximity to the country’s capital, availability of adequately-skilled labor force, relatively cheaper wages, and improving infrastructure,” Colliers said.

The real estate services firm added the planned revival of a rail cargo between Manila port and an inland container terminal facility in Laguna is crucial in funneling more manufacturing investments to the Cavite-Laguna Batangas area.

Colliers said developers should take advantage of this opportunity by developing more industrial spaces.

In addition, the government should release concrete and consistent policies on the grant of incentives to industrial park developers and their locators, in order to entice more firms to develop these industrial spaces.

Colliers said interest for industrial park development in Central Luzon particularly in the Clark area has also been increasing.

here’s an article from ABS-CBN News :

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MANILA – President Rodrigo Duterte is set to sign an executive order suspending the conversion of agricultural lands, the Department of Agrarian Reform said Thursday.

The moratorium will allow government to assess the conversion of some 210,000 hectares of agricultural land for other purposes, Secretary Rafael Mariano told DZMM. The approvals for which spanned nearly two decades.

“Iyung pinakahuling version po niya, hinihingi po doon na magpairal ng dalawang taon na hindi po muna tatanggap ang DAR at aaksyon sa mga land conversion applications,” he said.

(The latest version of the EO mandates DAR to stop accepting and taking action on land conversion applications for 2 years.)

Duterte is studying proposed exceptions to the moratorium, including the reclassification of farmlands for social housing, eco-tourism, and industrialism, Mariano said.

Under law, landowners must convert farmlands within 5 years of securing the DAR’s approval. If the deadline is not met, the land’s reclassification may be revoked and the estate may be distributed to farmer beneficiaries.

“Malaki po iyung ipinapakitang data na iyun. Kaya sana, iyung 2-taon na moratorium, mabigyan kami ng pagkakataon na mabilisang imbentaryuhin,” he said.

(Our data shows a vast measure of farmlands was approved for conversion. We hope the 2-year moratorium will allow us to conduct a quick inventory.)

here’s an article from inquirer.net correspondent, Miguel Camus :

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JG Summit, Filinvest pitch to improve struggling Clark Airport

The Gokongwei and Gotianun families are teaming up to modernize and operate Clark International Airport, a Pampanga province gateway that has struggled to lure passenger traffic despite being an alternative to Manila’s Ninoy Aquino International Airport (Naia).

Roberto Lim, undersecretary for aviation at the Department of Transportation (DOTr), told reporters on Thursday that Gokongwei-led JG Summit Holdings Inc. and the Gotianun family’s Filinvest Group made an almost P187-billion unsolicited proposal to the government early this year.

Lim said the proposal called for a 50-year concession period and mainly involved increasing capacity at Clark Airport from about 4 million passengers annually to 36 million passengers via several phases.

Megawide Construction Corp. and partner GMR Infrastructure of India, which jointly operate the Mactan Cebu International Airport, said they had also submitted an unsolicited proposal to the Duterte administration in July last year.

A Megawide spokesperson said Thursday they would clarify the status of their proposal with the DOTr.

Lim spoke to reporters on the sidelines of an event led by the Philippine Chamber of Commerce and Industry. The forum was to collect private sector feedback on the possible location for a new international airport serving the greater capital region.

The forum was held in response to worries that limitations at Naia, operating well beyond its designed capacity, was crimping the country’s growth potential in the areas of tourism and trade.

Clark is currently underutitlized. Its difficulty in drawing airline operators and passengers stemmed from the fact that it lacked a mass transit link to Metro Manila.

The Duterte administration promised to build a new railway connection, but this would take years to implement and complete.

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robert
Robert G. Sarmiento Properties
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