Philippine Real Estate News – May 2016

real estate news 44 pr

hello everyone,

here’s some select articles about Philippine Real Estate and our economy from various newspaper correspondents that matters for your reference.

from Philippine Daily Inquirer’s correspondent, Miguel R. Camus :

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SMC to revive $10-B airport project

PLANS TO TAP MVP, AYALA, SM GROUP AS PARTNERS

CONGLOMERATE San Miguel Corp. (SMC) will revive its massive Manila Bay international airport proposal to the incoming Duterte administration to solve air congestion and signal the Philippines is serious about boosting tourism and trade.

SMC president Ramon S. Ang said the plan would showcase a world-class international airport, earlier estimated to cost $10 billion but could be built for less, as well as a possible, unprecedented alliance with the country’s biggest conglomerates that would include Manuel V. Pangilinan’s group, Henry Sy’s SM Group and Zobel-led Ayala Corp.

SMC’s proposed airport would eventually replace the old Ninoy Aquino International Airport in Manila that is now operating beyond its intended capacity. The new airport would sit on 1,600 hectares of mainly reclaimed land in Manila Bay and was proposed two years ago to the outgoing Aquino administration.

SMC was careful not to offer to build the project due to the current administration’s bias against unsolicited proposals and instead shared plans for a potential public bidding. Even then, the project never materialized.

“I’m being invited to propose again,” Ang told the Inquirer. “So I’ll do this and will ask them to call for a public bidding. I’ll present all the designs.”

“If San Miguel is allowed to do the airport I will invite Manny Pangilinan, and Ayala and Shoemart (SM Group). All of them are welcome to be partners,” Ang added. “But as the major partner, I will invite Manny Pangilnan.”

In the last two years, the Department of Transportation and Communications tapped the Japan International Cooperation Agency (Jica) to find a suitable location for a new international gateway. Transportation Secretary Joseph Abaya said on Friday that a Jica-backed feasibility study for Sangley Point in Cavite was still being finalized.

These new locations are being explored because the existing alternative, the Clark International Airport in Pampanga province, was deemed too far for most Metro Manila residents since it lacked efficient mass transportation access.

“There’s really no other choice,” Ang said. He said Sangley could cost up to $20 billion to build, while SMC’s Manila Bay airport would require an equity of about $2 billion to $3 billion.

“We have experience to do the reclamation. We have dredging machines, everything is complete,” Ang added.

San Miguel already operates the Caticlan Airport near Boracy Island. In 2014, it made an unsuccessful bid for the Mactan Cebu International Airport with partner Incheon Airport of South Korea. Pangilinan-led Metro Pacific Investments Corp., the SM group and Ayala also bid for the Cebu Airport public-private partnership (PPP) project that was eventually won by Filipino company Megawide Construction Corp. and India’s GMR Infrastructure.

Jose Ma. K. Lim, president of Metro Pacific, said they were open to SMC’s offer. “We have expressed interest in bidding for airports so if the government decision is to adopt RSA’s (Ang’s) proposal, we would consider it,” Lim said in a text message.

from Manila Standard’s correspondent, Mayvelin U Caraballo :

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PH Economic Growth seen at 6.1%-7.6%

Philippine economic growth likely accelerated in the first quarter of 2016 compared with the same period a year earlier, as a rebound in manufacturing and strong domestic consumption should have more than offset weaker exports and agricultural losses due to El Niño, analysts polled by The Manila Times said.

Gross domestic product (GDP) may have expanded by 6.1 percent to 7.6 percent in the January to March period, they said, up from the 5 percent recorded a year earlier.

Growth was recorded at 6.3 percent in the previous three-month period. Official first-quarter GDP data is scheduled to be released this Thursday by the Philippine Statistics Authority (PSA).

The government has set a GDP growth target range of 6.8 percent to 7.8 percent this year, higher than the 5.8 percent full-year growth in 2015.

Analysts’ estimates
ANZ Research economist for Asean and Pacific Eugenia Victorino was the most optimistic among the analysts polled, estimating GDP growth at 7.6 percent in the first three months of the year, boosted by faster than expected growth in private consumption and improved factory output in the first quarter.

“Import growth remained robust indicating the persistence of an above-trend rise in household consumption. This was also complemented by the surge in the growth of industrial production,” she said.

Banking giant HSBC offered a forecast of 7.4 percent for the quarter but did not offer any explanation.

The private think tank of investment bank First Metro Investments Corp., (FMIC) and the University of Asia and the Pacific (UA&P) said GDP likely grew by more than 7 percent in the three months to March, driven by higher electricity rates, expansion in manufacturing output and a jump in capital goods imports.

“The Philippine economy should have easily expanded by more than 7 percent in the first quarter of 2016, despite a possible 5 percent decline in agriculture due to the El Nin?o drought,” it said.

Bank of the Philippine Islands associate economist Nicholas Antonio Mapa, meanwhile, estimated a 6.9-percent expansion for the first quarter on strong domestic consumption on low interest rates and inflation.

“Investments are expected to deliver growth as car sales have been strong although real estate sales have slowed. Government spending also picked up, which is seen to offset the poor performance of the trade sector,” Mapa said.

Joey Cuyegkeng, senior economist at ING Bank Manila, forecast GDP for the three-month period to come in at 6.6 percent, as manufacturing indicators exhibit buoyant industrial activity while government spending is outstripping spending growth during the period.

“Election spending is also a boost to the economy. Structural inflows together with a weaker USD/PHP average in first quarter add to spending power. Private sector investments are expected to remain strong,” he said.

Cuyegkeng noted that these indicators would more than offset contraction in agriculture production, which El Niño has badly affected.

Ateneo de Manila economist Alvin Ang expects GDP growth in the first three months to have risen to 6.4 percent “due to better government spending and manufacturing performance.”

Gundy Cahyadi, Singapore-based DBS economist, forecast January to March growth of 6.1 percent, supported by domestic demand.

“As long as consumption and investment growth stays strong, we remain optimistic that GDP growth will return to 6 percent this year. That there has been a frontloading of investments before this year elections seems to have caused the spike in imports in first-quarter 2016. And imports of capital goods are still growing strong, indicative of sustained growth in domestic investments,” he said.

Moody’s Analytics said growth could have hit 6.2 percent in the quarter ending March, leaving the Philippines with the best-performing economy in Southeast Asia.

“Unlike its regional counterparts, the Philippine economy has overcome the negative effects from slowing global demand. Although the archipelago’s exports have been falling, private consumption and investment activity are expected to remain strong,” it said.

The main driver will be domestic demand, which has been resilient in the face of external weakness, and consumption and investment activity should grow strongly. Exports will be weak on account of soft global conditions, it added.

Offering the same forecast is Standard Chartered Bank economist Jeff Ng, who said the second-round effects of government spending may also have boosted investment and household consumption.

“Three factors are likely to cushion external headwinds from goods exports this year: services exports, domestic growth, and room for fiscal support. Household consumption will likely be supported by solid labor-market fundamentals and elections-related spending,” he said.

Providing the least optimistic view is Metrobank Research, which said the Philippines likely grew by just 6.1 percent in the March quarter.

“Growth drivers will be still solid consumption spending (amid low inflation and interest rates), sustained pickup in government (on the back of election spending), steady services sector, and rebound in the manufacturing subsector,” it said.

The main drag to GDP is expected to still be external trade amid the slump in exports during the quarter, it said.

“Exports were largely affected by the stronger US dollar and the weak demand from some of the Philippines’ major trading partners, especially China. On the supply side, the agricultural sector is seen to remain in the red amid the impact of El Nin?o on crop production,” it added.

from Business World Online correspondent, Christine J. S. Castaneda,

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Factory Output up 9th straight month

PHILIPPINE factories ramped up production for the ninth straight month in March, led by the double-digit growth in 10 out of the 20 major sectors.

In its latest Monthly Integrated Survey of Selected Industries (MISSI), the Philippine Statistics Authority (PSA) said the volume of production index (VoPI) — a measure of factory output — rose by 7.8% year on year in March. However, this was slower than the 14.9% recorded in the same month last year and the 11.2% posted in February this yearLast March’s turnout marks the ninth straight month that industrial output stayed in positive territory.

“We attribute first quarter growth to robust manufacturing production that was supported by strong household spending and sound macroeconomic fundamentals,” Socioeconomic Planning Secretary Emmanuel F. Esguerra said in a statement.

Nicholas Antonio T. Mapa, associate economist at the Bank of the Philippine Islands (BPI), said VoPI for the month “…is reflected in the recent slump in the export sector, a troublesome trend but one that can be expected given the depressed global demand.”

“If export orders wane, we can expect factories to slow down on their production levels,” he added.

In a separate report today, the PSA said manufactured exports, which comprised 87.3% of total exports, contracted by 11.1% last March.

According to the MISSI report, the 10 sectors that exhibited two-digit growth were tobacco products, non-metallic mineral products, machinery except electrical, wood and wood products, fabricated metal products, basic metals, paper and paper products, food manufacturing, rubber and plastic products, and electrical machinery.

Sectors that contracted last March were petroleum products, footwear and wearing apparel, transport equipment, miscellaneous manufactures, textiles, leather products, beverages, and printing.

While the drop “may be partly due to base effects as the highest monthly production growth was recorded in March last year, the reasons behind the lower production also varies per industry,” Remrick E. Patagan, research director at the Institute for Development and Econometric Analysis (IDEA), Inc., said.

“[T]he performance of textiles and transport equipment is mirrored by weak external trade data at the start of the year. Petrochemicals may be struggling under the current low oil price environment,” Mr. Patagan said.

As for the decline in printing amid campaign period, BPI’s Mr. Mapa said that this could be “attributed to the lower reliance on posters and flyers as candidates took the battle to the internet.”

Capacity utilization — the extent by which industry resources are used in the production of goods — averaged 83.4% for March, with 11 of the 20 major industries operating at capacities of 80% and above.

“The positive performance of the manufacturing sector is expected to continue and drive higher growth in the first semester of the year,” Mr. Esguerra, who is also director-general of the National Economic and Development Authority, said.

“The buoyant domestic demand, stable inflation, low power rates, and continued decline in world crude oil prices will continue to support the growth of the sector, and at the same time, will help cushion the effect of slow global economic growth,” he added.

In the fourth quarter of 2015, manufacturing contributed 20.5% of gross domestic product (GDP), which is the amount of final goods and services produced in the country and as such measures its economic output. For the entire 2016, the government is aiming for GDP growth of 6.8%-7.8%.

IDEA’s Mr. Patagan expects “manufacturing’s gross value added growing at around 6% in the first quarter on the back of steady demand partly boosted by election-related activities and a lift from growing exports in key sectors.”

“Growth rates are seen steadily inching down for the rest of the year towards a full-year average of least 5%,” Mr. Patagan said.

Sergio Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc., said manufacturing after the elections will likely normalize and will take its cue from exports.

from Rappler.com :

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BSP, JP Morgan optimistic about PH Growth under President Duterte

‘We would expect that the economy will continue to be stable and the macro economy will continue to attract confidence of the markets,’ says the BSP

ECONOMIC OPTIMISM. The business community has so far reacted positively to the prospect of Rodrigo Duterte taking over the reins of government. File photo by Alecs Ongcal/Rappler

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) and global investment bank giant JP Morgan expect the Philippines to continue its economic momentum under president-elect Rodrigo Duterte.

BSP Deputy Governor Diwa Guinigundo said an annual 7%-8% GDP growth for the Philippines is “doable” despite the change in leadership set to be official on June 30.

“We would expect that the economy will continue to be stable and the macro economy will continue to attract confidence of the markets,” Guinigundo said.

The BSP’s Monetary Board kept interest rates unchanged for 13 straight policy setting meetings since October 2014 on Thursday, May 13, as inflation remained within the BSP’s target range of 2%-4%.

The central bank also kept its inflation forecast at 2.1% for this year and 3.1% in 2017.

The BSP target echoes that of the targets set by the Duterte camp. On Thursday, the latter said it is eyeing 7-8% economic growth as it aggressively pursues poverty alleviation.

“If we want to reduce the poverty rate, we need higher growth,” said Duterte spokesman Peter Laviña.

Former agriculture secretary and Duterte transition team member Carlos Dominguez III pointed out that the market’s positive reaction to the election bodes well for growth.

“We are very encouraged by the reaction of the stock market to the election of [incoming] President Duterte. In the last 3 days, the stock market has gone up in value by 5%,” he said, adding that the peso also strengthened against the dollar.

The president-elect’s team has moved quickly since the elections, most notably releasing at 8 point economic agenda which highlights Duterte’s intention to maintain the current macroeconomic policies and infrastructure spending while reforming tax.

Duterte has also signaled that he is willing to consider lifting constitutional restrictions on foreign ownership.

Absence of drastic shifts encouraging

These developments were viewed positively by banking giant JP Morgan. It said that both the financial and equities market welcomed the economic agenda of the incoming administration in its latest Asia Pacific Equity Research.

“We believe that financial markets will welcome the explicit commitment of the incoming administration in keeping the current macro-economic policies, particularly its focus on infrastructure,” the investment bank said.

“The absence of any drastic shifts is encouraging, in our view. The focus on grassroots development is also laudable, as inclusive growth has been a persistent problem of the economy. It also helps that the new government is cognizant of the need to maintain fiscal discipline despite its goal of making income tax more progressive,” JP Morgan added.

The bank cautioned, however, that “the appointment of a capable and experienced cabinet and economic team, and eventually, the ability to execute, are the next milestones to watch for.” – Rappler.com

from Philippine Star correspondent, Estela de la Paz :

Climate change shaping future of Philippine companies

MANILA, Philippines – A new way of doing business is now in the offing with businesses recognizing climate change adaptation as an integral part of planning and operations.

Much has been said and written about climate change, its dire effects and how it is affecting our daily lives. However, adapting to ­this “new normal” is still the challenge as there is a dearth of information on climate change adaptation. Thus, it seems the missing link is in the translation of the science of adaptation into more practical uses for business and everyday living.

At the Oscar M. Lopez (OML) Center, continuous work is being done not only to come up with science-based solutions on climate change adaptation but to also bridge the gap between sciences and how this can help businesses and people in their daily lives.

“If successful adaptation is to happen, we will need mechanisms and institutions that help catalyze action, knowledge exchange, and collaboration among players amidst a changing planet. No one has all the answers and we need to help each other as we make our way through the fog of climate change. The OML Center is just one such foundation that can help bridge the many gaps that may exist,” Federico R. Lopez, chairman of OML Center said during the break-out sessions of the Climate Reality Project held in Manila recently.

The OML Center was formed in 2012 by the various subsidiaries of First Philippine Holdings in honor of the patriarch of the Lopez Group, Oscar M. Lopez for his keen interest in preserving and protecting the environment.

He is a staunch believer that “environmentalism in business” can work.

This philosophy is being applied primarily in its power generation business through its subsidiary First Gen Corp. First Gen’s power plants are spread across the country and have been using mainly clean and renewable energy fuels such as natural gas, geothermal, hydro, wind and recently, solar energy. One of its subsidiaries is the world’s largest integrated geothermal company, Energy Development Corp. (EDC).

Given the changing weather patterns, frequency of super typhoons, and other similar catastrophic weather-related incidents, the role of the OML Center and the search for science-based solutions to climate change adaptation is now essential not only for the general public but even for businesses as well.

“As a businessman, I found it essential to engage with the scientific community so we can jointly make sense of what’s going on, demystify it, and make the lessons more accessible to the general public so that policies as well as everyday decisions and actions are guided properly,” Lopez said.

According to Marianne Quebral, executive director of the OML Center, one of the studies the OML Center recently funded is a study establishing a common reference to calculate the losses and damages incurred due to climate change. An example would be how agricultural losses due to flooding or drought will be calculated. Having a recognized common framework will be helpful for business planning and insurance purposes. To date, there is no specific or common reference to calculate such losses. Each area usually has its own system for calculating the cost of the damages brought about by typhoons or extreme weather patterns.

This led to the OML Center funding the Asia Pacific Network for Global Change Research (APN) research study called “Assessing the linkages between climate change adaptation (CCA), disaster risk reduction (DRR), and Loss and Damage (L&D):” This study highlights the state of loss and damage assessment system in the Philippines – its process, players, and gaps. It will propose a loss and damage framework for the Philippines and provide recommendations for the improvement of the system once the study is completed.

Aside from this, the OML Center has given grants to various school institutions and has partnered with government agencies such as the Department of Science and Technology (DOST), PAGASA and international agencies like the National Aeronautics and Space Administration (NASA) of the US and Japan Aerospace Exploration Agency (JAXA) in order to come up with science-based solutions to help the public cope with climate change.

Lopez said EDC and the OML Center are supporting some of the work being done locally by the NASA and JAXA through a project called the Total Carbon Column Observation Network (TCCON).

The JAXA is operating a network of monitoring stations around the world in an effort to understand atmospheric processes taking place globally. It hopes to address the big gap in understanding what’s happening around the Philippines and the Pacific atmospherically. This could give a clue on why typhoons have been intensifying as in the case of Typhoon Haiyan and the changing weather patterns as well. The lack of information has limited global carbon cycle and weather prediction models. Hopefully, the knowledge gained from project will help improve the accuracy of weather forecasting and climate modeling in the near future. EDC is hosting a station right in the Burgos Wind Farm while the OML Center is lending support to this project.

According to Quebral, one of the more practical results from these tie-ups and grants is a mobile weather application called “Weather Up!.” This app is now available in Apple App Store and Google Play for free.

Gerry Bagtasa, Weather UP! developer said that “unlike any other weather app available, Weather UP! shows highly localized weather forecasts that extend to five days in advance, and updated with the latest available weather data four times a day. ”

Weather UP! is a user-friendly app that provides a five-day extended forecast. It  also provides information  such as heat index, relative humidity, rain, wind speed, and wind direction which are useful not only for the general public but also for advance planning of businesses.  For enhanced accuracy, the app allows its users to participate in weather forecasting through quick submission of local weather observations. This mobile app is a product of a project called Weather and Hazard Alert and Tracking System for Urban Areas in the Philippines (WHATSUP) funded by the OML Center and a collaborative research program of different institutes and departments of the University of the Philippines (UP) Diliman.

Quebral said the OML Center is committed to translating the science into more practical uses for the next five years. This will be done through its Translations, Communications and Partnership Unit.

“In order for the OML Center’s research to benefit a greater public, the OML Center has initiated a program to translate the science into actionable adaptation solutions.  To this end, the Center has created an Innovations and Translations program that will strengthen its investment in science research so that fisher folk, farmers, school children, local government units and other groups will benefit from it.  Putting a human face to the climate change research of the OML Center is of paramount importance to us as we look at the next five years,” Quebral said.

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Robert G. Sarmiento Properties
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