Philippine Real Estate News – January 15, 2016

real estate news 15 picasa resizehere’s some “select” articles about Philippine Real Estate and Economy from various newspaper and online correspondents for your reference :
 from dealstreetasia.com’s correspondent, Tomas S. Noda III :

Philippines: Bank of Tokyo-Mitsubishi buys 20% stake in Security Bank for $774M

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Japan’s largest banking group the Bank of Tokyo-Mitsubishi UFJ Ltd (BTMU) has acquired a 20 per cent stake in Philippine private universal bank Security Bank Corp, investing up to $744 million (P36.9 billion).Security Bank disclosed on Thursday that its board of directors accepted the strategic partnership offer of BTMU which is acquiring 150,707,778 common shares of the Philippine bank at P245 per share, and also 200 million preferred shares priced at P0.10 apiece.The P36.9 billion fresh capital raised will increase Security Bank’s shareholder capital from P52.4 billion as of September 2015 to Php 89.3 billion on a pro-forma post-transaction basis.The transaction, expected to be completed within the first half of 2016, is seen to be the largest equity investment in a Philippine financial institution by a foreign investor.BTMU will become the second largest shareholder of Security Bank with 20 per cent of voting stock. The Dy Group will remain as the biggest shareholder of SECB with majority voting control.

BTMU is also scheduled to appoint two directors on Security Bank’s board. Security Bank will become an equity affiliate of BTMU.

Security Bank president and CEO Alfonso Salcedo Jr said, the additional capital will help them execute faster and with more scale in the strategy to build their retail banking business as a third business pillar alongside wholesale banking and financial markets.

“It will allow us to accelerate the expansion of our branch network to support retail market penetration as well as make inroads into the Japanese business sector,” Salcedo said.

Security Bank also looks forward to leverage on BTMU’s extensive relationship with Japanese corporates, global network and expertise to tap new niche markets.

“We are elated to have BTMU as a strategic shareholder and business partner. The transaction will position Security Bank as a large independent bank supporting the growth of the Philippine economy,” said Security Bank chairman of the board Alberto Villarosa.

A member of Mitsubishi UFJ Financial Group Inc (MUFG), BTMU is Japan’s premier bank, with a global network spanning more than 40 countries. Outside Japan, BTMU offers commercial and investment banking products and services to businesses, governments and individuals worldwide.

MUFG, meanwhile, is one of the world’s leading financial groups with total assets of JPY 286 trillion or $2.4 trillion as of March 31, 2015. Its services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management and leasing.

Security Bank is the sixth largest private domestic universal bank in the Philippines by total assets at P482 billion as of September 30, 2015.

Security Bank’s last trading price increased 7.33 per cent or P9.90 to close at P144.90

*** from Philippine Daily Inquirer’s correspondent, Tessa Salazar :

Chinese developers continue ‘economic invasion’ in key Philippine urban areas

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Last week, Inquirer Property revealed pundits’ forecast that the 2016 presidential and national elections would freeze any major real estate activity in the first two quarters of the year. So, with the country going bananas over the ballots in the year of the monkey, what other real estate activities are we to expect? Property experts continue their predictions:

6Mainland Chinese developers continue their “economic invasion” in key urban areas of the Philippines. “An interesting sideline to the current geopolitical conflict between China and the Philippines regarding the contested Spratly islands is the growing interest of mainland Chinese developers acquiring properties for development in Taguig, Makati and the Bay Area the past three years,” said Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business.

Soriano added that “China’s growth has considerably slowed down and has rattled investors, prompting mainland developers to look for growth areas in the Asean region. This opportunity will be a new driver for both new takeup and office inventory in 2017, but on the downside will also add new supply to the already crowded mid-market residential segment.”

Claro dG. Cordero Jr., Jones Lang LaSalle Philippines’ associate director and head for Research, Consulting and Valuation, said “the exodus of Chinese developers to the local property market may not be as successful, since the mid-market condominium segment has already reached a saturation point and even the local developers have been looking for new markets to serve, and are phasing their projects carefully.”

Cordero added that “this will prove challenging to foreign developers (not to mention the foreign ownership restriction), as they may be also faced with stiff competition from major local developers who also have the financial muscle to weed out further competition.”

Soriano said mainland-based Chinese developers have been buying properties and forming joint-venture deals in the country since China’s real estate has been stunted since 2013, thus continuing mainland China’s interest in the Philippines. This trend, however, is not unique to Manila, as Chinese mainlanders have also been seeking more investment opportunities in Jakarta and Singapore, for example.

Slower growth rate for office rents. Cordero said that office rents will still continue to grow, but at a slower rate than that of previous years.

Cordero said: “This is because of the huge amount of office supply expected to be completed in 2016 and 2017, estimated at 1.8 million square meters. Nevertheless, the still strong and strengthening take-up of business process outsourcing (BPO) companies (due to new locators and sizable expansion of existing ones) will likely be able to absorb this huge supply, such that the accelerated growth of office rents is expected to bounce back in two to three years.”

Soriano said that in 2015, the office sales market recorded strong performances with several large-scale transactions having been concluded. BPO companies are expected to continue to strongly prefer buildings for lease in the main central business districts (CBDs) this year. They will be the key drivers for new takeup and office acquisition in the next three years.

Online property portal Lamudi Philippines said that BPO companies will continue to buoy Metro Manila’s commercial real estate, citing that “experts do not foresee the supply of office space surpassing demand soon, meaning commercial

from Philippine Daily Inquirer’s correspondent, Amy R. Remo :

*** Ecozones to attract Japan SMEs

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The Osaka Prefectural Government of Japan will be endorsing the economic zones being managed by the Philippine Economic Zone Authority (Peza) as “suitable locations” for Japanese manufacturing companies seeking to expand overseas.

This was deemed significant as an endorsement from the governor would effectively attract more small- and medium-sized enterprises (SMEs) from Osaka—where a large number of Japanese manufacturing firms are located—to set up shop in the Philippines. This, in turn, will help the Philippines build up its support subsectors that will make local industries more competitive in the region.

According to Peza Director General Lilia G. de Lima, the endorsement formed part of the memorandum of understanding (MOU) she signed last Tuesday with Osaka Prefecture Governor Ichiro Matsui, who came in with 19 SMEs engaged in manufacturing activities in Japan.

“Osaka is very strong in manufacturing and so this MOU is good because it will encourage Japanese SMEs to come here. They can be potential suppliers to the existing Peza locators. Some (of the members of the Osaka business delegation) are into car parts manufacturing, electronics, and plating. We need these manufacturing companies for our support industries,” De Lima explained. “With this MOU, we also expect more investment missions coming from Osaka. Many of these Japanese SMEs don’t have an idea of what we have here and with this agreement, they will be able to realize that there are a lot of opportunities (in the Philippines).”

**** from dealstreetasia.com’s correspondent, Tomas S. Noda III

Philippines’ Tactiles breaks crowdfunding record, tagged a milestone in local startup community

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Electronics startup Tactiles has broken a record in crowdfunding campaigns launched by startup companies in the Philippines and was tagged as a key milestone for the local startup community.Tactiles ended its campaign on Saturday with an investment of  “109 per cent” raising $54,566 (P2.6 million) in fresh capital in its crowdfunding campaign via Indiegogo, the world’s largest crowdfunding platform based in San Francisco in California.Tactiles is the developer of iQube, a technology toy product targeted at helping kids, eight years old and above, to learn electronics in a simpler and fun-filled manner. It has already sold iQube units in the Philippines, Australia, and New Zealand.Tactiles co-founder Joshua de la Llana told DEALSTREETASIA the campaign is now the most funded one in Indiegogo for the Philippines.Also read: PH-based startup Tactiles launches crowdfunding campaign via Indiegogo

De La Llana said, only one in every 40 crowdfunding campaigns raises more than $20,000 in Indiegogo. Tactiles is now the third Philippine-based startup that launched a campaign in the platform, with the other two raising only up to $803. In the Kickstarter platform, which is the world’s largest funding platform for creative projects, a local startup was only able to raise up to $9,000.

“It’s something we had been preparing for more than a year. And the odds went in our favor,” De La Llana said. “In fact during the campaign, everything literally didn’t go according to plan. And it’s literally depressing to see that as we have a lot of weight on our shoulders from the people who believed in us, we had to push ourselves regardless of that. In the end we made it. It’s definitely satisfying.”

IdeaSpace Foundation executive director Diane Eustaquio said, the crowdfunding result is a milestone not only for Tactiles or IdeaSpace but for Philippine startups as well. Tactiles was part of IdeaSpace’s incubation and acceleration programme in the past.

“The success of Tactiles is good for validation of the global appeal for a Filipino innovation,” said IdeaSpace head of partnerhips Goldy Yancha.

De La Llana said they will use the funds to add more people into the team, and set up the facility, a manufacturing floor, to produce more iQubes and to formally introduce the product to the world.

“Now we are a team of five who are into engineering, design, operations, and we are looking into getting a software developer soon,” De La Llana said.

He added they are now facing a bigger challenge but they are happy about the new problem.

“We now have a bigger weight in our shoulders because now we have almost 230 parents, teachers and grandparents for 30 countries around the world who expect to get their hands on the iQube by June 2016. So our focus is on making sure we meet that commitment,” De La Llana added.

Touted as “a toy that teaches electronics” ? the iQube is a combination of hardware and software, such as individual cubes and a companion application called the iQube app. Each individual cube forms a different function within an electronic circuit, and the tactile design allows a child to connect the cubes however they like. By allowing experimentation, the iQube app provides instructions for complex circuits that will encourage higher-level learning.

In mid-2015, Massolution published that the crowdfunding industry will account for more funding than venture capital in 2016.

Research showed the investments made via crowdfunding reached $16 billion in 2014 and it was predicted that this would grow up to $34 billion by end 2015. The VC industry recorded an annual investment average of $30 billion since 2010.

*** from Philippine Daily Inquirer’s correspondent, Tessa R. Salazar :

Elections to affect real estate activity; oversupply in vertical residential segment

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AS THE PHILIPPINES “goes bananas” in an election year—in the year of the monkey at that—property experts see a number of challenges, and likely trends, flavoring and coloring the real estate industry in 2016. Here’s their fearless forecast:

  1. There will be an oversupply in the mid-market vertical residential segment.

“I expect 2016 to be the most challenging year for the residential property sector. A looming oversupply in the mid-market vertical residential segment in Metro Manila is developing, and developers should expect a slowdown by as much as 10 percent in the average annual take-up rate of 50,000 units. Several developers are already holding back sales of new projects until supply balances out in 2018,” said Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business, in an Inquirer Property interview.

Soriano said that with this oversupply scenario, “we will naturally anticipate vacancy rates to go up in 2016 to double digits in the Makati and Ortigas CBD (central business district) area.”

  1. The 2016 presidential elections will affect the market. Soriano said the presidential and national elections “is likewise expected to freeze any major real estate activity in the first two quarters of 2016. Naturally, investor sentiment will be on a wait-and-see attitude. This will not bode well for the property sector and the economy as a whole. Hopefully, after the elections, it will be followed by a possible uptick in transaction levels in the last two quarters of 2016,” said Soriano.
  1. Business process outsourcing (BPO) growth continues. BPO companies, according to property portal Lamudi Philippines, will continue to buoy Metro Manila’s commercial real estate.

“Experts do not foresee the supply of office space surpassing demand soon, meaning commercial properties (and offices in particular) remain a beneficial investment for 2016,” said Lamudi

Philippines in a statement.

Soriano said that in 2016, Grade-A office rents in prime areas is expected to increase 5 percent, given strong demand for office space and low vacancy rates. Meanwhile, rents in non-CBD areas may slightly drop by 5 percent due to available supply in Makati and Bonifacio Global City.

  1. Metro Manila land values will go up. Lamudi Philippines said that despite slower gross domestic product growth in 2015, land values still continue to appreciate, albeit at a slower pace.

Colliers International said that growth rates of land values in Metro Manila accelerated in the second quarter of 2015. In addition, land values in the Makati CBD, growing at only 0.85 percent during the first three months of the year, rebounded in the next three by growing at a rate of 2 percent. This raised the area’s average price to P452,704 per square meter. Values similarly rose in the business districts of Fort Bonifacio and Ortigas Center, increasing at 1.97 and 2.1 percent, respectively.

  1. Retail property market will face a slowdown. Soriano said “the challenging retail environment is likely to persist next year due to diminishing inbound tourist arrivals. We expect prime rents outside of the shopping centers to slide by 10 percent in 2016, while shopping mall spaces are expected to escalate.”

“We can also expect a decline in premium retail market rents due to the expected drop in tourist arrivals as a result of the national elections happening in the first half of 2016. The mass retail market is expected to remain resilient as domestic consumption continue to grow, fueled partly by election spending nationwide,” said Soriano.

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