Philippine Real Estate News – June 2018
Posted on Feb 23, 2018 in Blog, Newsletters
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 interaskyon.com written by Alanah Torralbo of Thomson Reuters Foundation :
Coal – Reliant Philippines struggles to power up Clean Energy :
LAMAO, Philippines — For Nestor Castro and the other residents of Lamao village, which sits near two coal-fired power plants and an oil refinery, the country’s shift to renewable energy cannot come soon enough.
Not only would it lessen the pollution in their village in the northern Philippines, it could also mean cheaper electricity, Castro said.
“Coal just adds to the pollution and we … have expensive electricity,” he told the Thomson Reuters Foundation.
But the country’s first tax hike on coal in 30 years, introduced in March, may signal a shift in the government’s attitude towards the fossil fuel, environmentalists say.
Today, the Philippines has some of the highest power generation charges in Southeast Asia according to the country’s energy agency.
Renewable energy costs are falling around the globe, but the Philippines, up to now, has shown few signs of moving away from coal, despite ratifying the Paris Agreement to curb climate change and passing laws pushing for a shift to renewable energy.
The 400 percent tax hike on imported coal – part of a wider package of tax reforms passed last year to help fund a major infrastructure project – could change that, environmental experts say.
“Globally, coal is a sunset industry,” Antonio La Viña, a former environment undersecretary and veteran climate negotiator, told the Thomson Reuters Foundation in a phone interview.
“It is just being propped up by subsidies, and is the only reason it is cheap in the Philippines. The coal tax signals to investors that they should invest in other (energy) sources because coal is no longer the preferred energy source in the country,” he added.
The Philippines imports 75 percent of its coal, mostly from Indonesia and Australia, according to the Philippines-based Institute for Climate and Sustainable Cities (ICSC).
Some officials say coal is needed to power the nation’s growth, including the government’s centerpiece push to build new roads, airports and mass transit systems.
“We need a continuous and stable supply of electricity, and coal is the most stable source of energy,” said Christine Danao, head of power, energy and electrification at the National Economic Development Authority.
“In terms of fuel, coal is still the cheapest. In the long run, the government will see what (renewable energy) technology will bring,” she told the Thomson Reuters Foundation.
Failing renewable costs
But the cost of electricity generated from solar and wind has plunged in recent years, and costs will be halved again by 2020 compared to 2017, according to predictions by the Abu Dhabi-based International Renewable Energy Agency.
Solar Philippines, Southeast Asia’s largest solar company, is offering to produce solar electricity for about 6 cents a kilowatt-hour for Meralco – the largest electrical distributor in the country – and other electricity companies, said Koji Bulahan, a spokesman for Solar Philippines.
That is about 40 percent less than Meralco charges on average for a kilowatt hour of power primarily generated from coal, according to the latest rates published on the company’s website.
A shift to renewable energy has been held back by the country’s major energy companies, said Glenis Balangue, a senior researcher at IBON Foundation, a think tank based in Quezon City.
“If our power generation policy still favours corporations that are only interested in their bottom line, we can never truly push for renewable energy,” Balangue said.
The high upfront costs of many forms of renewable energy – which require installation of expensive equipment, which then produces power at extremely low cost – can be a struggle for investors with short-term aims, or for risk-averse investors anxious about trying something new, experts say.
International investors also have already poured billions of dollars into the Philippines’ coal industry, helping it to thrive, climate activists said.
The Philippines government privatised the country’s power industry in 2001, saying the move would help bring more affordable and reliable electricity.
Coal, seen as a cheaper alternative to oil at the time, became the country’s energy of choice. And because many coal plants have a lifespan of 30 years or more, investors in those plants are still demanding a payback on investment.
Stranded assets
The Philippines, however, still has plans for more than 10,000 MW of new coal power in the pipeline, worth $20.8 billion, according to a study published by the ICSC and the Institute for Energy Economics And Financial Analysis last year.
But international efforts to address climate change – including a potential flight of investor capital from dirtier fuels and the rise of ever-cheaper renewable alternatives – could mean that coal investment will not deliver the expected returns, the study noted.
Worse, consumers may have to shoulder the losses from coal-fired power plants, the institute noted.
In Mindanao, in the southern Philippines, for example, power producers lost about $60 million* between 2014 and 2016 because of an excess capacity of coal and hydropower, according to ICSC.
Gerry Arances, head of the Center for Energy, Ecology and Development, a Manila-based think tank, said it was clear the government had not promoted “a level playing field for all kinds of energy sources, particularly on renewable energy”.
“We are locked into a coal-based energy system that is more expensive than solar,” Arances added.
Villagers like Castro say they cannot afford to put up their own solar panels, so they remain reliant on the main power grid for electricity.
Frederick Epistola, a retail seller of solar panels, said there is not much demand for solar panels among homeowners.
“The market is curious about shifting to solar power but they don’t want to shell out the capital expenses required to put up solar panels in their residences. It can still be expensive for the typical household,” he said. — Editing by Alex Whiting and Laurie Goering
here’s an article from businessmirror.com correspondent, VG Cabuag :
IRC changes name ; pivots as an infra, mass-transport firm :
IRC Properties Inc., previously a real-estate company, is pivoting into infrastructure and mass transport, after the company was able to bag original proponent status of its Makati intra-rail project.
In a disclosure to the Philippine Stock Exchange, the firm said its board approved the change of name of IRC to Philippine Infradev Holdings Inc.
IRC explained that Philippine Infradev will be the parent firm and will be a holding company to engage in infrastructure and real-estate development.
On Wednesday IRC and its international consortium partners were granted “original proponent status” for its proposed $3.7-billion Makati intracity rail-transport system.
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Its partners for the project are mostly Chinese firms, such as Greenland Holdings Group, Jiangsu Provincial Construction Group Co. Ltd., Holdings Ltd., Kwan On Holdings Ltd., Shanghai MinTu Investment Holdings and China Harbour Engineering Co. Ltd.
The IRC board also approved the change of name of wholly owned subsidiary Interport Development Corp. to Greater East Metro Development Corp. There will also be a change in directors and officers and increase in capitalization of IDC.
IRC was formerly called Interport Resources Corp., incorporated on February 24, 1975. It initially ventured in oil-exploration activities and drilled two wells in Southern Mindoro and the Sulu Sea areas in the 1970s before it cut down on exploration activities.
In 2013 the company changed its name to the present with its primary purpose to primarily acquire and sell real estate of all kinds or hold such properties for investment purposes.
It claims to own substantial landholdings in Binangonan, Rizal, and is engaged in mass-housing projects together with various property developers.
“The reactivated subsidiary Greater East will continue to expand the economic housing segment to help address the country’s housing shortage,” the company said.
The IRC board, likewise, authorized the incorporation of another wholly owned company to do mass-transportation projects, such as transportation, subway, ferry and bus, to be named Alternative Metro Transport System Inc. (AMTSI).
AMTSI aims to provide alternative solutions to decongest Metro Manila by developing or operating ferry, subway and electric vehicles providing green alternatives to Filipino commuters.
The IRC board also authorized its EVP Georgina Monsod to sign a letter of intent addressed to the Metropolitan Manila Development Authority for the rehabilitation and modernization of the Pasig River ferry service.
here’s an article from businessmirror.com.ph correspondent, Maria Stella F. Arnaldo :
Cruise Ship arrivals seen bringing 329,000 Visitors this year :
CRUISE arrivals in the Philippines have been unaffected by the six-month closure of Boracay Island, a major day-tour destination for passengers.
In an interview with the BusinessMirror, Department of Tourism Spokesman and Undersecretary for Tourism Development Planning Benito C. Bengzon Jr. said, “For 2018, we expect 190 cruise calls and 329,000 passengers. The growth has been quite phenomenal.”
In 2017 total cruise calls in the Philippines reached 140, with passengers at 195,751. This exceeded that year’s projection of 105 port calls with 117,000 passengers, by 63 percent. He said with Boracay closed until October 26, 2018, visiting cruise ships have been docking at Manila, Subic and Puerto Princesa.
“600 nautical miles is the ideal distance from the homeport to the next port of call outside it. Within the Philippines, cruise lines are looking for at least 200 to 300 nautical miles inter-port distances to form itineraries or multiple port calls,” he noted.
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From June 6 to 11, the Royal Caribbean’s MS Ovation of the Seas made a port call in Subic and Manila, carrying 4,700 mostly Chinese passengers from Hong Kong. The passengers were taken on a “Best of the Philippines” tour, which included day trips to Las Casas de Acuzar in Bataan, Intramuros in Manila and Tagaytay.
The DOT is targeting visitor arrivals via cruises to reach 456,164 passengers with 402 port calls by 2022, the last year of President Duterte’s term of office, from 47,098 visitor arrivals via 56 port calls in 2016.
The popular Star Cruises has been home-porting in Manila since 2017. Last March, it returned, offering five night cruises between the Philippines, Japan, and Taiwan aboard the SuperStar Virgo until May 9. This month, it also offered a five-night cruise between Manila, Kaohsiung, and Hong Kong, as well as a two-night cruise between Manila and Keelung.
Manila was also included in last year’s itinerary of Dream Cruises, the luxury cruise line of Star Cruises’ parent, Genting Cruise Lines, bringing passengers from Manila to Boracay and Hong Kong for a three- to five-night cruise. There are no itineraries planned this year, however.
The establishment of a cruise port terminal in Manila is seen increasing the chances of the Philippines to be seen as a major cruise destination.
This developed as Sureste Properties Inc., led by business tycoon Enrique K. Razon, is seeking all the necessary approvals and clearances to establish the Solaire Cruise and Yachting Center (SCYC) in Parañaque City. Among the approvals needed are from the Philippine Ports Authority and concerned local government units, according to lawyer Joy Bulauitan, assistant COO of the Tourism Infrastructure and Enterprise Zone Authority (Tieza).
The infrastructure arm of the DOT, Tieza is the lead agency responsible for the construction and development of the cruise-dedicated port in Manila.
“Our initial evaluation is that the Solaire project is qualified under Tieza,” Bulauitan said. “They just need to complete their documentary requirements.”
Sureste is the property holding company of Bloomberry Resorts Corp. (BRC), also led by Razon. BRC is the developer of Solaire Resort and Casino.
Total cost of the proposed SCYC is $308 million (roughly P16.63 billion), and will be implemented within 2 years to 10 years, a Tieza news statement said.
The project was presented last May to President Duterte, who didn’t pose any objection as long as the proponent secures the necessary permits, Tieza said.
The proposal includes marine and terminal facilities, homeport and port-of-call operations; an expanded harbor offering dining, shopping, entertainment and maritime recreation; and walkable esplanades and plazas.
“The impact of the proposal is envisioned on four fronts. First, it aims to be a catalyst for economic development. Second, it plans to bring home Filipinos who are working in cruise tourism and accelerate development of seafarer training in the Philippines. Third, it hopes to reduce pressure on airports. Lastly, it aspires to develop a Philippines-centric cruise industry with a domestic itinerary,” Tieza said.
Sureste is expected to submit the cruise terminal project for Tieza’s approval as a tourism enterprise zone (TEZ). As a TEZ, Sureste will be able to avail itself of fiscal and nonfiscal incentives.
While Tieza had initially eyed the cruise port terminal as rising in a property within the Cultural Center of the Philippines complex, specifically, beside the Philippine Senate in Pasay, Bulauitan said she was informed the SCYC will be in the area of Solaire Resort in Parañaque.
Tieza has invited bidders for consultancy services on the feasibility study for the construction of the cruise port and terminal. The feasibility study is aimed at crafting a master plan for the cruise port project and its detailed engineering design requirements.
here’s an article from philstar.com correspondent, Catherine Talavera :
Dormitels: An emerging battleground for developers
MANILA, Philippines — A new battleground is emerging in the local property sector as developers – from small startups to established giants – have taken more aggressive positions to corner a sizable share in a business seen to grow six-fold in two years.
A Cushman & Wakefield Philippines report said developers of the so-called dormitels – upscale dormitories with hotel-like accommodations – are expected to expand their combined bed capacity in the next two years to meet the growing demand among young professionals who prefer to stay in comfortable yet relatively inexpensive quarters near their central business district (CBD) offices.
Cushman & Wakefield analyst Alessandra Gaborni noted that dormitel capacity, estimated at 1,400 beds in the Bonifacio Global City (BGC) and Makati CBD area in 2017, “will expand to 5,300 beds by 2018 and to 10,200 beds by 2019.”
“What buoys up optimism among dormitel developers is this bit of information: Almost all the dormitel properties in the pipeline are leased out,” she said.
Gaborni said dormitel developers are targeting young professionals earning above-average salaries by developing affordable living spaces located near their places of work.
Gaborni cited the small land requirement, lower development costs and the shorter development period as some of the factors attracting developers to enter the dormitel business.
In addition, it also lures developers on the lookout for recurring income.
Among the big dormitel developers that have entered the market are MyTown of Philippine Urban Living Solutions wherein conglomerate SM Investment Corp. acquired a 61.2 percent stake in; Ayala Land with its 1,500-bed The Flats BGC at 5th Avenue; and Anchor Land with its 3,000-bed Cosmo Suites.
“With big developers diving into the same business, it is important for proponents to adequately pace their projects and avoid saturating the market quickly with the same offering,” Gaborni said.
It added that it is equally important for proponents to offer innovative products and find niche markets in order to assure project viability.
Moreover, the report identified BGC, Makati, Ortigas and the Bay Area as potential markets for these dormitel developments.
“These markets could benefit from an affordable, yet somewhat upscale, dorm experience,” the report said.
“For some young professionals with more selective tastes and needs, and who also long for privacy, the amenities offered by typical dormitories are inadequate,” it added.
“For a while this segment of the property market for young professionals remained unserved. That was true until new and small property developers discovered and offered a new concept in small-space urban dwelling through dormitel,” the study added.
The Cushman & Wakefield report noted that “the biggest driver for employees to move into dormitel buildings is the need to locate close to their workspaces.
“A Makati employee who lives in Quezon City would typically spend P3,000 to P4,000 every month to go to the office and go back to his/her home. Those living farther from Makati will spend more money—and time—for travel.
“With the worsening traffic in the metro, coupled with rising transportation costs, employees are better off allotting P4,000 to P5,000 for a space in these dorm buildings. From their dorms, it will take them something like a 20-minute walk, or an P8 tricycle ride, to get to their offices in BGC,” Cushman & Wakefield said.
According to the report, a dormitel tenant still rents a bunk bed in a room of two to four people, but he/she enjoys the luxury of an en suite bathroom, an individual work desk, a locked cabinet, and a kitchenette usually equipped with a mini fridge and a microwave. Like those staying in modern hotels, tenants gain access to rooms and buildings via RFID cards or biometrics.
In the report, Cushman & Wakefield listed some of the existing and upcoming dormitel projects.
MyTown, the trailblazer in the business, rents out 800 beds spread over its three existing locations: MyTown Paris, MyTown London, and the 653-bed MyTown New York. Its aggressive pipeline of at least 5,000 additional beds across 13 buildings within the next two years suggests a stellar performance.
Property newcomer Point Blue—which markets their 10- to 14-sqm single-occupancy rooms as micro-studios—has one operating building with a 69-person capacity. It aims to add six more buildings with an average capacity of 69 to 155 rooms from 2018 to 2019. By 2020, Point Blue will construct a total of 20 buildings with about 2,000 units.
Another local developer, DEI Properties, is operating two locations offering almost 300 bed spaces under their “iDorm at the Fort” project in the outskirts of BGC. Within the year, DEI Properties, is looking to open three more dormitel projects with 500 additional beds within the same area.
Other players in the BGC-Makati area include MySpace BGC, which offer 97 rooms with one- to four-person configurations, on top of a budget hotel component. BGC Hostel and Dorm, primarily a backpackers’ destination in Makati, offers bed spaces in their eight-person dorm rooms.
Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. It is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services, global occupier services, investment and asset management, project and development services, tenant representation, and valuation and advisory.
here’s an article from malayan.com.ph correspondent, JP Lopez :
Boracay soft opening seen in September
PARTS of Boracay Island in Malay, Aklan could be reopened to tourists by first week of September, an official of Department of Interior and Local Governments official told senators yesterday.
DILG Undersecretary Epimaco Densing, an official of inter-agency task force tasked to oversee Boracay’s rehabilitation, said the “soft opening” of Boracay could start after several conditions are met, like the dismantling of all establishments that violate restrictions on easement and half of structures built on wetlands. The requirements for the soft opening will be submitted to the inter-agency Boracay Task Force for approval, he said.
Asked by Senate minority leader Franklin Drilon when this will be, Densing said, “At least first week of September.”
Densing also said 80 to 90 percent of establishments and houses of informal settlers that encroached on protected areas in the island, such as shorelines, wet and forest lands, have been demolished.
“Hopefully before the opening, the demolition has been completed,” Densing said.
The target date for reopening the island resort is October 26.
President Duterte ordered in April the closure of Boracay for six months after he described the water pollution there as “cesspool.”
Drilon also said a single body that will take over the development and management of Boracay Island similar to the Subic Bay Metropolitan Authority should be created, to which Sen. Cynthia Villar agreed.
Villar chairs the committee on environment and natural resources which is spearheading the inquiry into the Boracay rehabilitation.
“Yes, the bill filed by Sen. Drilon will be brought to the technical working group. This is not a new concept like Subic Bay is managed by one body, Clark is managed by one body. There is something like that in Palawan, Batanes, in Intramuros, Rizal Park, so it can be done,” Villar said after the hearing.
Drilon is author of Senate Bill 1765 (An Act Creating the Boracay Island Council). The bill provides for the creation of the Boracay Island Council composed of representatives of government agencies, local government units and the private sector which “shall take over the management, development, regulation, protection and maintenance of the island, including its coastal resources and marine biodiversity.
Drilon also pressed for the continuation of the demolition of what he called the “mother of all the violators in Boracay,” referring to the controversial West Cove resort.
“This resort must be demolished because this is the symbol of the abuses done on Boracay. To project that we are serious in the reforms that we are doing in Boracay, West Cove, which is the mother of all the violators, must be demolished,” Drilon said.
Drilon asked the committee to subpoena Boracay West Cove resort owner Crisostomo Aquino to the next hearing, as he wondered why the resort was able to operate without a locational clearance, and sanitary, fire safety and business permits.
Here’s an article from manilastandardtoday.com corresondent, Jennifer B. Garcia
ISM bares share sale to Uy, others worth Php 2.5M Billion
ISM Communications Corp. is raising at least P2.5 billion through a private placement to a number of individuals, including Davao-based businessman Dennis Uy.
ISM Communications said in a disclosure to the stock exchange its board authorized the executive committee to issue 841.945 million treasury shares and the remaining unissued shares of 883.730 million through a private placement at a minimum price of P1.45 apiece.
“One of the investors who has committed to participate in the private placement is Mr. Dennis A. Uy, the founder of the Udenna Group of Companies,” ISM Communications said.
The offering price of P1.45 per share is equivalent to a 20-percent discount to the 60-day volume weighted average price of ISM Communications.
ISM Communications said it planned to use the proceeds from the issuance to fund the investment opportunities currently being pursued by management.
The group of former trade minister Roberto Ongpin, whose nephew Eric Recto currently sits as chairman and chief executive of ISM Communications, had recently been forming the alliance with Uy, a known supporter of President Rodrigo Duterte.
Uy was recently been elected the director in two of Ongpin-led firms—Atok Bing Wedge Inc. and Alphaland Corp.
Ongpin earlier was tagged by President Duterte as one of the oligarchs in the country that his administration wanted to destroy.
Uy owns several listed companies, namely Chelsea Logistics Holdings Inc., Phoenix Petroleum Philippines Inc., 2GO Group Inc. and Philippine H2O Ventures Corp.
ISM was originally incorporated as Itogon-Suyoc Mines Inc. to engage in the mining business.
In 2002, the stockholders of ISM approved a restructuring plan for the company, which involved the change in corporate name to its present name and in the primary purpose to engage in the business of telecommunications, multimedia and information technology.
On November 11, 2016, the Securities and Exchange Commission approved the amendment of the articles of incorporation of ISM to reflect its primary purpose as a holding company.
Share price of ISM Communications on Friday climbed 13.4 percent to P2.36 per share.
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robert
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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