Philippine Real Estate News – June 2018

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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 correspondent, Elijah Joseph C Tubayan  :

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PHILIPPINE manufacturing activity saw “solid improvement” in May, picking up for the third straight month on growing demand despite “intensified” cost pressures passed on to customers via higher prices, according to the latest monthly tracking IHS Market conducted for Nikkei, Inc.

The Philippines’ Purchasing Managers’ Index (PMI) rose to 53.7 in May from 52.7 in April, marking the highest reading for the year, so far.

The PMI consists of five subindices, namely: new orders, which has the biggest weight at 30%, output (25%), employment (20%), suppliers’ delivery times (15%) and stock of items (10%). It is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial firms.

A reading of 50 separates those above that mark signaling expansion from the preceding month, from those below it denoting contraction.

”Growth in the Philippines manufacturing economy gained pace in the middle of the second quarter as demand conditions improved further. New business expansion picked up noticeably, encouraging factories to scale up production. Increased demand lifted purchasing activity which, in turn, boosted inventories,” the report read.

”Survey data showed further signs of improvement in client demand in the wake of the tax reform measures, which were put into effect at the start of the year. New business inflows grew at the fastest rate since November last year, even as export sales growth cooled.”

In the face of increased demand, firms ramped up production, resulting in the fastest output growth in five months.

However the report noted that the rise in input costs “intensified” last month, due to “supply shortages, a weaker peso, higher global commodity prices and tax reforms.”

“As a result, firms raised selling prices again, with the rate of increase remaining solid, reflecting efforts to pass on higher costs to their customers,” it said.

Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN) that is the first of up to five such system tweaks in the pipeline, slashed personal income tax rates and sought to offset the expected foregone revenues by hiking or adding taxes on several items and removing the value added tax exemption of various sectors when the law took effect on Jan. 1.

Some economists have blamed the TRAIN for pushing monthly inflation beyond the central bank’s 2-4% full-year target range in March (4.3%) and April (4.5%).

Bernard Aw, principal economist at IHS Markit, said in the report that improved demand showed that the “adverse impact caused by the new tax reforms has clearly subsided.”

However he added that inflation may still remain elevated, which will “raise expectations for another rate hike in June,” following the Bangko Sentral ng Pilipinas’ (BSP) 25-basis point hike last May 10 that was the first increase in nearly four years. The central bank’s Monetary Board is scheduled to review policy next on June 21.

The BSP said on Thursday that consumer prices likely picked up by 4.6-5.4% last month, surpassing April’s pace that was itself the fastest in more than five years.

Mr. Aw added that rising inflation pressures may take a toll on firms’ profit margins.

“PMI data showed firms raising selling prices at a slower rate in May amid rising costs, suggesting that companies may have a threshold of the extent to which their customers can bear higher prices without affecting demand. The good news is that improving demand conditions permitted firms to share some of the higher costs with their customers,” he said.

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., said in an e-mail on Friday that manufacturing’s continued improvement despite higher costs was a result of 2017’s record $10.049-billion foreign direct investments (FDIs). Such capital inflows, he explained, “fundamentally led to increased manufacturing activities, especially once some of these FDIs become completed/online”.

He added that consumers’ purchasing power remained strong, “resulting in higher consumer spending (which accounts for about 70% of the Philippine economy), especially on consumer-related industries that may have benefitted in terms of higher demand, sales, income, as well as increased production/manufacturing activities.”

Mr. Ricafort also noted that increased government spending, particularly on infrastructure, has supported manufacturing activities as well as the growth of the real estate and construction industry. Latest available data from the Budget department show overall state spending grew 29% year-on-year to P1.033 trillion while infrastructure and other capital outlays surged 47.5% to P222.7 billion in the four months to April.

Security Bank Corp. economist Angelo B. Taningco said in a separate e-mail that it was local inflation that led to softer exports of manufactured goods last month.

“I think the weakness in export orders was largely induced by domestic inflation increasing more than inflation in the export markets, leading foreign buyers to prefer less of Philippine manufactured products,” he said in an e-mail.

The latest Philippines PMI report noted that increase in hiring “remained fractional” in May despite higher sales, noting even “reports of staff cuts to reduce costs”.

Still, the report noted that business confidence about output in the next 12 months remained elevated, as majority of respondents surveyed said they are confident of faster output growth in the coming months due to product launches, new outlets, higher sales forecasts, promotional activity and increased productivity.

here’s an article from correspondent, Lawrence Agcaoili :

A Moody's sign on the 7 World Trade Center tower is photographed in New York August 2, 2011. Behind all too many of market moves in government debt of late has been a report from one of the major credit ratings agencies. Standard & Poor's is the biggest and arguably the most influential, fast followed by Moody's Investor Service and then their smaller rival, Fitch Ratings. In national capitals, they are alternately villified by politicians or held out as just arbiters for denouncing government profligacy. REUTERS/Mike Segar (UNITED STATES - Tags: BUSINESS POLITICS)


MANILA, Philippines — Moody’s Investors Service expects the Philippines to garner the most support from ongoing tax reforms in the medium term.

In a report titled “Tax base broadening most likely to be effective in countries with strong tax administration,” the debt watcher said tax reforms are most likely to expand revenue bases in fast-growing economies with strengthening expenditure and debt management.

Moody’s said the Philippines has the strongest probability of effective tax reform in terms of direct tax revenue mobilization, indirect revenue mobilization as well as tax administration and compliance.

President Duterte signed Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law last December, slashing personal income tax rate but raising excise taxes on motor vehicles, oil, and sweetened beverages. The law took effect last Jan. 1.

Moody’s said tax base broadening alone is unlikely to boost fiscal strength in many economies and should be accompanied by fiscal deficit reduction, including measures that effectively manage expenditure growth.

The rating agency said tax administration and compliance is likely to be most effective in the Philippines, India, Indonesia, and Thailand.

It added reforms to direct taxes are not limited to the Philippines after it overhauled its personal income tax rate structure as part of the government’s comprehensive tax reform program.

According to Moody’s, the Philippines stands out as having both comparably fast high real gross domestic product (GDP) growth rate and being the only country that has seen a material decline in its debt burden.

The Philippine economy grew by 6.8 percent in the first quarter from the revised 6.5 percent in the fourth quarter of last year.

Economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) have set a GDP growth target of between seven and eight percent this year from 6.7 percent last year.

Moody’s said countries with higher and increasing institutional strengths such as the Philippines, India, and Indonesia appear to have greater scope for tax reforms to result in higher tax revenue collections.

The first package of the country’s comprehensive tax reform program (CTRP) is a key feature of the Duterte administration’s 10-point socioeconomic agenda.

The second phase targets the corporate sector through a lower corporate tax rate of 25 percent from 30 percent, on top of providing additional tax incentives for the business process outsourcing sector (BPO), which has been an important engine for economic growth over the last few years.

here’s an article from correspondent VG Cabuag :

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ROCKWELL Land Corp., the property-development arm of the Lopez Group, said it is spending between P14 billion and P15 billion in capital expenditures (capex) this year, the bulk of which will be spent on landbanking as it wants to achieve certain ratio as against its assets.

Ellen V. Almodiel, the company’s chief finance officer, said the capex for this year includes between P4 billion and P5 billion allocated for landbanking, as the company needs to achieve its target ratio of land bank as against its earnings before interest, taxes depreciation and amortization (Ebitda).

Last year the company spent P14 billion in capex, but most of that was to finish its projects.

At the moment, Alomodiel said its landbank stands at around 50 hectares, or 3 percent. It targets a ratio of 12 percent landbank of its Ebitda during one year to two years, which translates to about 64 hectares.

“We will use internally generated funds for our capex,” Almodiel said. “Our main focus is in two years to three years to make Rockwell be known with our stakeholders. We are expanding.”

At 100 percent of its Ebitda translates to about 284 hectares. Almodiel said the company needs to increase its landbank by around 220 hectares through next year.

“Aside from properties we will be closing in Metro Manila, we are currently in advanced discussions for mixed-use projects in both the North and South of the Metro. We are very excited about this growth, as it will allow us to introduce different products and share the Rockwell lifestyle to new markets,” Rockwell Senior Vice President for Business Development Davy Tan said.

Rockwell on Wednesday also announced the launch of The Arton’s second tower this June, the company’s first premium high-rise development in Quezon City. It launched the first tower last year.

“Our venture into the Quezon City area surprised us with robust sales. Riding on this success, we will officially open inventory for Arton North this June with different sizes per unit type to cater to different market profiles,” Rockwell Land President and CEO Nestor Padilla said.

The P15.6-billion, three-tower project is a joint venture with Japan’s largest real-estate company, Mitsui Fudosan Inc. It features an 80:20 landscape to building ratio.

The entire project is scheduled to be completed by 2023.

Rockwell is also set to launch its first resort development in Mactan, Cebu.

“We remain to be on the move with our newest development in Punta Engaño boasting of beachfront living. The 5.3-hectare property will have over 200 residential units and a hotel that will serve the growing tourism industry,” Padilla said.

Already gaining high interest, the P6.2-billion new Rockwell project for sale is scheduled to launch during the third quarter this year.

here’s an article from correspondent, Rina Chandran :



TAGUM CITY, Philippines (Thomson Reuters Foundation) – A dozen bamboo and tarpaulin tents are pitched on the pavement, festooned with washing and banners – the department in charge of agrarian reform in Tagum City is sporting a new facade.

Inside the tents there are hammocks, boxes of groceries and cooking vessels, presenting a tranquillity that belies the urgent appeals on banners demanding land for peasants, and an end to the killing of farmers on the island of Mindanao.

Peasant farmers and leaders in the camp say they want genuine reform, as the government’s agrarian reform programme, known as CARP and enacted in 1988, has failed.

“Thirty years after the law was passed, land has not been given to peasant farmers who have tilled the land for generations,” said Lito Lao, chairperson of the agricultural workers’ union in Mindanao, known by its Tagalog acronym UMA.

“Instead, farmers are getting killed for demanding their right to land, and dummy beneficiaries have been settled by landlords on land meant for the landless,” he said.

CARP, signed into law by then president Corazon Aquino, was initially set for 10 years, with an aim to distribute about 7.8 million hectares of land – roughly the size of Portugal – to reduce inequality and help alleviate poverty.

In 1998, the programme was extended by another 10 years. In 2009, Gloria Arroyo, who was president, unveiled CARPER, adding an Extension with Reforms to CARP and a deadline of 2014.

Of a total area of 5.4 million hectares that fell under CARP’s scope, the government has distributed 4.8 million hectares as of December 2017, according to a spokesman for the Department of Agrarian Reform (DAR).

Activists say officials accepted thousands of fraudulent claims, and that about 44 percent of land distributed is public, requiring farmers pay to an amortisation fee they say is excessive.


Land reform has long been a contentious issue in the Philippines, where a lasting legacy of Spanish colonial rule was a concentration of ownership among a wealthy few.

Large corporations came to control the bulk of farm land for plantations of coconuts, bananas and pineapples.

Matters came to a head in 1987, when the military attacked peasants marching in Manila, killing more than a dozen.

Enacted the following year, CARP allowed land owners to retain up to five hectares, in addition to three hectares for each heir. The state would acquire the remainder for distribution among the landless.

But inaccurate and missing land titles slowed acquisitions, according to DAR. Landowners filed petitions for exemptions, or installed fraudulent beneficiaries on their land, activists say.

“Landlords and corporations who own large holdings are a powerful lobby, so acquisition of private lands fell well below target,” said Marlon Manuel, an advisor to the legal advocacy group Namati.

“Where land was distributed, there were no other services like funding or marketing. The farmers had little experience in managing land, and many of them ended up leasing or selling the land and finding themselves landless again,” he said.

An official at the provincial DAR office in Tagum City said all qualified beneficiaries had been identified, and that distribution is still underway.

“There is a procedure to become an Agricultural Reform Beneficiary (ARB), and we believe it is nearly perfect. Those who say they did not receive land – perhaps they did not qualify,” Jocelyn Seno said in an interview in her office.

“As for those who say fake ARBs have been installed in land holdings, there are legal options open to them, and it is up to them to prove they are fake. We have installed ARBs after identification and verification, and we stand by the process.”


Protests by farmers have sometimes erupted into violent clashes with private security forces of landlords who refused to honour titles issued by DAR, activists say.

Hundreds of farmers have also been arrested, and at least 114 have been killed amid a rural crackdown since President Rodrigo Duterte took office in 2016, according to rights groups.

The Department of Justice did not respond to e-mails seeking comment on attacks on farmers.

“Many of them have been waiting for years, if not decades, for land promised to them by the government. They have no choice but to mobilise and fight – and sometimes occupy public lands,” said Hanimay Suazo of the Peasant Movement of the Philippines.

“Not only have they not got land, they have been arrested on trumped up charges and are at risk of attacks by armed forces, as well as the private security forces of landlords.”

Suazo and other farmer leaders have lobbied for years for the adoption of the Genuine Agrarian Reform Bill, which they say addresses the inadequacies of CARP and CARPER.

The bill is with the Congress, “and no deliberation has been conducted to date”, the DAR spokesman said.

In Tagum City, after two attempts to settle farmers in a banana plantation failed because of resistance from the corporate landowner, DAR officials last year settled 159 farmers on 145 hectares of land.

About 15 of those farmers formed a collective by pooling their land to grow bananas, vegetables and mushrooms.

Rights groups are encouraging this model, saying it gives farmers more bargaining power with buyers, and greater protection from large land owners.

“We were all tenant farmers before and did not have a say,” said Franklin Consejo, taking a break in a bamboo shelter.

“Now we decide what to grow, whom to sell to, and what to do with the money,” he said. “It’s a good feeling.”

That sense of well-being does not extend to the farmers camped outside the DAR office in Tagum City.

“We will be here until DAR distributes land to all landless farmers,” said Lao, of the UMA.

“(If) the government doesn’t implement genuine land reform, there is no option but to protest and wage revolution,” he said.

here’s an article from correspondents, Jessica Fenol and Joel Guinto :

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The DoubleDragon Plaza in the Manila Bay area is shown in this photo taken on May 22, 2018. Property prices in the commercial area have gone up due to Chinese demand. Mark Demayo, ABS-CBN News

MANILA – A short taxi ride from one of the world’s oldest Chinatowns, a new Chinese enclave is emerging, one that is driving up property prices while serving as a testament to warmer ties between Manila and Beijing.

Prices in the Manila Bay area jumped 8 percent in the first 3 months of 2018, underscoring demand from offshore gaming firms that employ Chinese nationals to answer queries from the Mainland.

The increase is more than double compared to Makati, Ortigas and Fort Bonifacio and is a bright spot in an industry that is faced with plateauing demand from business process outsourcing companies, data showed.

“The entire Bay Area has benefited substantially from Chinese investments,” DoubleDragon Properties chief investment officer Hannah Yulo told ABS-CBN News.

Offshore gaming operations account for 60 percent of DoubleDragon’s leasable space in the area, where it was able to increase rates by as much as 27 percent, Yulo said.

For 6 months, from October 2017 to to March this year, Megaworld disclosed 40,000 square meters in leases to offshore gaming. This compares to the 80,000 square meters that was built over 21 months from the start of 2016, its senior vice president, Jericho Go, told ABS-CBN News.


Manila Bay is home to DoubleDragon Plaza, an imposing white structure with red, yellow and green accents, and SM Mall of Asia, one of the world’s largest shopping malls that is owned by the country’s richest man, Henry Sy.

It also houses Entertainment City, a glittering strip of billion-dollar casino resorts that the government hopes would lure Chinese high rollers away from Las Vegas, Singapore and Macau.

Until the rise of the Mall of Asia complex, the area that sits on reclaimed land was known mainly for the Cultural Center of the Philippines, the Senate offices at the GSIS building and the US and Japanese embassies.

Philippine Offshore Gaming Operators or POGOs took up 35 percent of office space in 2017, Colliers data showed. Over 50 such companies have licenses to operate  from the Philippine Amusement and Gaming Corp, according to the regulator.

“It’s a positive thing because it’s extending to other property sectors like residential,” Colliers International Manila director Dom Frederick Andaya told ABS-CBN News.

Manila’s Chinatown is shown in this file photo. Property prices in the commercial area have gone up due to Chinese demand. Jonathan Cellona, ABS-CBN News


The government has flagged a slowdown in office space demand from outsourcing firms, highlighting the need for the industry to shift to higher skills as companies automate tasks and look to artificial intelligence.

Office space take-up from BPOs grew 39 percent in 2017, from 65 percent in 2016, data from Leechiu Property Consultants showed.

Offshore or online gaming grew 412 percent during the same period, tripling its share of the entire portfolio to 30 percent from 9 percent in 2016, data showed.

Chinese investors also want to move things fast, said senior director for Research and Consultancy Jan Custodio of property consultancy firm Santos Knight Frank.

“In terms of rates, they’re quite flexible in terms of negotiating, which is why the space take-up has been quick,” he said.

Santos Knight Frank CEO Rick Santos said he was “optimistic” over the Chinese investments but the boom should benefit both the Philippines and China.

“It’s a mutually beneficial relationship and I think it can be done that way,” he told ABS-CBN News.

“There will be continued demand for multinational business. As long as investors have an opportunity in making a fair return of investments,” he said.


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Robert G. Sarmiento Properties
Professional Affiliation :
Philippine Association of Real Estate Boards
Member, City of Taguig Real Estate Board 2016 – 2018
Real Estate Broker’s Association of the Philippines 2000 – 2015
President, Greenhills Chapter 2008, 2009
Philippine Association of Real Estate Boards
San Juan Mandaluyong Chapter 1998 -1999
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