Philippine Real Estate News – October 2016

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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.

world-bank

from BusinessWorld.com :

World Bank sees ‘significant upside’ potential to Philippine Growth Outlook

THE PHILIPPINES will remain among East Asia and the Pacific’s fastest-growing economies despite lingering uncertainty abroad and over “the ultimate direction of macroeconomic policy” under the new administration that assumed office at end-June, the World Bank said yesterday.

In its latest Philippine Economic Update report, titled: “Outperforming the region and managing the transition,” the World Bank retained its Philippine gross domestic product (GDP) growth projections of 6.4% for this year — matching forecasts announced last week by the International Monetary Fund and Asian Development Bank — and 6.2% for 2017 that it issued in April. The World Bank also adopted a 6.2% projection for 2018.

The country’s economy grew 6.9% last semester, hovering just below the top end of the government’s 6-7% full-year target for 2016 and “enabling the Philippines to outperform regional peers such as China, Indonesia, Malaysia, Thailand and Vietnam,” the report read.

“The Philippines remains one of the fastest-growing economies in East Asia and the Pacific despite the weak global economy,” according to a press release that accompanied the launch of the report in Taguig City yesterday, adding that the economy may even top forecasts “if authorities can further ramp up spending on public infrastructure as planned.”

Inflation will continue to remain manageable, with the multilateral lender projecting the general increase in prices of widely used goods to fall in line with the central bank’s projections at least until 2018. Specifically, the World Bank expects inflation to speed up to 2.0% this year from an actual 1.4% last year, against the central bank’s 1.7% forecast and 2-4% target range for 2016. It then expects inflation to increase to 2.5% next year and further to 3.0% in 2018, against the central bank’s 2-4% annual target up to 2018.

LOCAL CONDITIONS FAVORABLE

Noting that “conditions for further growth are in place” due to strong domestic consumption and increasing state spending especially on infrastructure, Birgit Hansl, World Bank’s lead economist, said during yesterday’s report launch: “We see significant upside risk over the next two years.”

The government’s monetary and fiscal policies, the report noted further, “have effectively supported growth”.

Ms. Hansl added that the new administration’s 10-point socioeconomic agenda assured general continuity of predecessors’ reforms that had been instrumental in the country’s bagging investment grade from major debt raters since 2013.

“Many reforms are being unveiled, specifically on tax policy and administration, the tracking of government spending, security of land tenure, ease of doing business and restrictions on foreign participation,” she noted.

DEGREE OF UNCERTAINTY

But more remains be done to assure business, Ms. Hansl said, particularly in actually carrying through intended reforms.

“Despite these assurances… a degree of uncertainty remains regarding the ultimate direction of macroeconomic policy,” she noted.

“The short-term challenge is how to successfully manage the economic transition and providing the right signals to investors and business,” she added.

“However, there is a large chance that the government is able to address these challenges successfully and that would really mean… that our forecast… can be exceeded in the next two years.”

ELUSIVE GOAL
Still, the task of ensuring that economic expansion lifts even more people out of poverty remains a priority, the World Bank said, noting there is “a lot of potential to make growth more inclusive”.

Among major challenges to making growth inclusive are modernization of agriculture — that is widely estimated to contribute just a tenth to GDP but employs a third of the country’s work force and which, Ms. Hansl said, remains “a disappointing sector” — and generation of quality jobs, as unemployment has eased but underemployment, involving people who want more jobs to make ends meet, has barely moved.

The report outlined key tasks ahead as:

• swiftly complete transition to the new policy framework and dispel lingering uncertainty among investors about policy priorities of the new administration;

• deliver on revenue reform and public expenditure program by overcoming implementation obstacles in tax and customs administration, as well as in public investment management; as well as

• accelerate structural reforms that will promote more inclusive growth, particularly in terms of generating more and better jobs. — with input from JCVD

from BusinessWorld.com :
asean-pr

PHL fuels ASEAN factory activity in Q3

MANUFACTURING likely gave the Philippine economy a boost last quarter after the country’s factories expanded at their sharpest pace and raced past their Southeast Asian peers last month.

‘The overall improvement in operating conditions in the ASEAN manufacturing sector continued to be driven by strong growth rates in the Philippines and Vietnam, and to a lesser extent Indonesia…’ — BW File Photo

According to the Nikkei Philippines Manufacturing PMI, the country’s factories in September registered a seasonally adjusted purchasing manager’s index (PMI) of 57.5, suggesting they ramped up production at the close of the third quarter.

The manufacturing PMI consists of five sub-indices, with new orders having the biggest weight at 30%, followed by output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).

A PMI reading above 50 suggests improvement in business conditions, whereas a score below that threshold reflects deterioration.

The Philippines helped keep the Nikkei ASEAN Manufacturing PMI above the threshold at 50.5 in September, slightly higher than the 50.3 the month before.

Trailing the Philippines were Vietnam and Indonesia, with PMIs of 52.9 and 50.9, respectively. All other Southeast Asian countries with significant industrial sectors — Thailand, Malaysia, Singapore and Myanmar — suffered contractions (see chart).“The overall improvement in operating conditions in the ASEAN manufacturing sector continued to be driven by strong growth rates in the Philippines and Vietnam, and to a lesser extent Indonesia, while the other four monitored nations each reported a decline,” Alex Gill, economist at IHS Markit, said in a statement.

“Although this divergence leaves the headline growth figure vulnerable, further marked increases in new orders and employment in the Philippines and Vietnam mean both sectors look well-placed for sustained expansion in coming months, thereby helping to support the ASEAN PMI.”

KEY DRIVERS
Driving the increase in the Philippines’ PMI last month were new orders and output, which registered their steepest growth since IHS Markit began covering the country last January.

“All looks positive for goods-producing companies in the Philippines, with strong demand conditions leading to robust growth of both new orders and output,” Mr. Gill said, adding that some respondents cited “new contract wins” behind the surge.

Higher factory output led to additional hires, as survey respondents cited the need to expand production capacity to meet new orders, according to IHS Markit.

The expansion was in spite of higher input prices that respondents noted in the latest survey — something IHS Markit blamed on the depreciation of the peso.

From an average of P46.68 last August, the US dollar cost P47.42 a month later. In late September, the local currency plumbed to seven-year lows against the greenback as portfolio funds rotated back to the US amid rising political uncertainty in the Philippines and expectations the US Federal Reserve would deliver a fresh hike in interest rates.

“There are also risks that further portfolio capital outflows and another US Fed rate hike later this year could push the PHP further down against the USD,” Rajiv Biswas, IHS Markit chief economist for Asia-Pacific, said in an e-mail.

Besides the looming increase in the Fed’s policy rate, Mr. Biswas also cited rising commodity prices.

“With world oil, gas, coal and iron ore prices having risen in recent months, the upturn in prices for these major commodities is being reflected in some modest increases in wholesale price inflation and manufacturing input prices in the Philippines, after significant wholesale price deflation in 2015 when commodity prices slumped,” he said.

“The recent rebound of Brent crude oil prices is a significant factor, since oil and gas is an important component of input costs for some segments of manufacturing,” he added, citing the price support provided by OPEC oil ministers, who late last month announced a ceiling on production that begins next month.

MORE THAN 30% CONTRIBUTION
Despite the weaker peso, Philippine factory production is expected to peak, as manufacturers prepare for the Christmas shopping season.

In its most recent Consumer Expectations Survey, the Bangko Sentral ng Pilipinas (BSP) said households’ spending outlook remained positive for the fourth quarter, with buying intentions for big-ticket items improving in the year ahead.

Consumer spending accounts for about two-thirds of the Philippine economy, while manufacturing contributes nearly a fifth.

Manufacturing’s 7.2% growth helped drive Philippine economic expansion in the first half of this year. The country’s gross domestic product (GDP) grew by 6.9% year on year last semester, just below the top end of the government’s 6-7% full-year target.

“We may see manufacturing provide more than the 30% contribution to overall growth,” Nicholas Antonio T. Mapa, market research officer for Bank of the Philippine Islands, said separately.

He said the positive outlook for manufacturing received a boost from strong capital goods imports in the last eight months.

Average capacity utilization stood at 83.5% as of last July, which means manufacturers were close to capacity and so would require expansion to meet new orders.

“This bodes well for the manufacturing sector as corporates gear up for expansionary activity,” Mr. Mapa said.

IHS Markit’s Mr. Gill agreed: “Given the sector’s strong fundamentals, this trend looks set to continue next month.”

from Business Mirror correspondent, Cai Ordinario :

neda

‘Ban on Land Conversion to worsen housing mess’

THE implementation of a two-year ban on land conversion would keep millions of poor families homeless and delay the government’s infrastructure projects, according to the National Economic and Development Authority (Neda).

Socioeconomic Planning Secretary and Neda Director General Ernesto M. Pernia said the Neda has circulated a two-page position paper opposing its implementation to members of the President’s economic team.

Pernia said there is already a draft executive order  to create the two-year ban. However, this policy is being held in abeyance awaiting the opinion of the economic team.

“The economic team is against it. It’s not a good policy because it’s a blanket policy and there are many lands not suited for agriculture, so why ban these lands from being converted?” he said.

Pernia said Finance Secretary Carlos G. Dominguez III has already read the position paper and has expressed full support for the Neda’s position. He added that Budget Secretary Benjamin E. Diokno, who has yet to read the full position paper, also agreed with the Neda.

The Neda chief said he aims to have the position paper signed by the economic team this week before they all leave for Washington, D.C., to attend the International Monetary Fund-World Bank Fall Meeting.

“The Neda has circulated it to the departments of Finance, Trade and Industry [DTI], and Budget and Management. The purpose is to get them to sign, as well, so there will be more gravitas as far as the position is concerned,” Pernia said.

“Agrarian Reform Secretary[Rafael] Mariano is influential because he appeals to agrarian reform, poor farmers, small farmers and he has a big following also,” he added.

If the ban is implemented, Pernia said this will limit the ability of the government to carry out the relocation of informal-settler families (ISFs) and delay right-of-way acquisition for infrastructure projects.

Pernia said there is a need to address the 5.5 million worth housing backlog. Data from the Housing and Urban Development Coordinating Council (HUDCC) stated this includes 1.4 million ISFs.

HUDCC data showed of this number, around 584,425, or 28 percent, of ISFs are in Metro Manila, while 221,284 are in Region 4-A or Calabarzon. Some 117,670 ISFs are located in Region  3, or Central Luzon.

“Most of this backlog, housing backlog is for the poor, so this two-year ban is going to be antipoor, because it is going todelay our objective of providing housing to the poor,” Pernia said.

Earlier, Agriculture Secretary Emmanuel F. Piñol said he will not issue any permit for the conversion of agricultural lands into residential and commercial areas.

Piñol made the announcement to assure farmers that there is enough land for agricultural production, especially for rice.

A survey conducted by the government in 2008 found that an average of 9,000 hectares of farmlands devoted to rice all over the country are being converted to other uses or planted with other crops every year.

Exemptions

The Philippine Economic Zone Authority (Peza) said it is seeking to be exempted from the Department of Agrarian Reform’s (DAR) moratorium on land conversion for areas, which are being eyed as sites for additional economic zones.

Peza warned that the moratorium on land conversion could discourage foreigners from investing in the Philippines.

“[Peza is] working with the DAR closely through the DTI, to have some exceptions on that pronouncement as far as economic zones are concerned,” Peza Officer in Charge Deputy Director Justo Porifirio Yusingco said.

“If we don’t have new economic zones or new areas, we will have a problem where to bring the investors we’ve been inviting,” Yusingco added.

Earlier, the DAR announced that it is working on an executive order to impose a two-year ban on land conversion covering agricultural lands covered by various agrarian- reform programs.

Among land areas covered include those distributed since 1972 under a decree issued during martial law and under the 1988 Comprehensive Agrarian Reform Program.

As of April this year, there were 345 economic operating ecozones registered by Peza, encompassing manufacturing, information technology parks, agro-industrial, tourism and medical tourism economic zones/parks.

With a report from Catherine N. Pillas

from Philstar correspondent, Iris Gonzales :

okada

The Newest Casino resort at Entertainment City: Experience ultimate grandeur at Okada Manila

MANILA, Philippines – This is the much-awaited Okada Manila, the third casino resort to rise at the 100-hectare Entertainment City in Parañaque, a Las Vegas-style casino and leisure district developed by state gaming regulator Philippine Amusement and Gaming Corp. (Pagcor).

During a recent site tour for journalists, Okada Manila officials showcased the progress of the construction of the soon-to-be-completed casino resort.

Okada Manila president Steve Wolstenholme said they are all set to open before the end of the year.

“It’s now roughly 85 percent complete,” he said.

There are 19,000 workers on several shifts working 24/7, Okada Manila’s key executives said during the site visit.

Japanese casino mogul Kazuo Okada and Filipino businessman Antonio “Tonyboy” Cojuangco are partners in this world-class integrated resort.

The first phase of the project which will open by year-end consists of two wings and is designed with a gold exterior. For this phase alone, Okada Manila is pumping in $2.4 billion in investments.

These are the Pearl and Coral Wings which comprise 15 floors each. The Wings will house 993 rooms, ranging from 60 square meter deluxe suites to luxurious 1,400 sqm villas, with each room providing a view of Manila Bay or the resort’s fountain.

Aside from the two hotel wings, there would be a casino floor, nightclub and beach club, retail area, restaurants and an iconic fountain that will be one of the largest in the world.

The casino floor has over 26,000 sqm gaming area and up to 500 table games. It also has 3,000 electronic gaming machines and promises to offer a unique gaming environment and world–class entertainment for all guests to enjoy.

From its architecture to its interior design, every single detail was carefully planned and executed in order to bring to life chairman Okada’s vision, said Takahiro Usui, Okada Manila chief operating officer.

“Chairman (Okada) has been a long time believer in the potential of the Philippines. This project is a fulfillment of his dream and his biggest gift to the Filipinos yet,” Usui said.

The project is a fruit of collaboration effort between the best and the biggest design and architectural consultants from around the world led by Japanese firm Miurashin Architect + Associates.

A visit to the property, which is located past the Marina residential enclave at the end of Macapagal Blvd, one can’t help but notice Okada Manila’s hulking building and distinct exterior.

Indeed, its glass façade literally glistens in bright gold and stands out among the Manila Bay skyline.

The deluxe suites offer a view of the famed Manila Bay sunset and the iconic dancing water fountain.

Usui said the gold facade represents abundance, luxury and the hue of Manila Bay’s famed sunset.

A sky bridge which is a three-level structure that connects the two Y-shaped hotel wings is also another distinct feature of the hotel.

It is strategically located in the exact center of the building, giving guests a vantage point over Manila Bay and the integrated resort’s $30-million dancing water fountain.

During the site visit, Ivaylo Ivanov, vice president of hotel operations, said in jest: “You only have two choices: a breathtaking view of Manila Bay or the dancing water fountain.”

The sky bridge will house the Sky Casino and offer a private gaming haven exclusive to VIP guests.

Usui said the size of the property is really huge.

“The property’s size is incredible in scope. We do not want to focus on a single amenity in the property because we want to offer full range of products and services and be known as a complete travel destination,” Usui said.

The hotel will also be “a gourmet paradise” given its chairman’s love for food.

Indeed, Okada Manila will offer a feast of 21 food and beverage outlets serving international cuisine from casual to fine dining.

Also a major attraction in Manila’s nightlife is Okada Manila’s nightclub and beach club.

This 9,000 sqm entertainment venue will be enclosed in a climate controlled glass dome and will feature 33 cabanas and bungalows equipped with amenities such as private Jacuzzis, dining rooms, media and karaoke rooms.

“It’s going to be very exciting,” said Maxwell Zetlin, vice president for entertainment, during the site visit.

“At the centerpiece of the dome club will be Asia’s first kinetic chandelier with six rings that can create 10,000 special effects and project stunning 3D motion graphics. Meanwhile, its white sand indoor beach club will be the first in Southeast Asia and will rival the largest clubs in the world,” Okada Manila also said in a separate briefer.

Another attraction is Okada Manila’s spa, which is a hybrid urban escape and wellness retreat with a Wave Dream lounge designed to help guests master the art of tranquil relaxation.

Completing the whole project is a dancing fountain that promises to provide guests with a superb visual treat as it rivals the best in Las Vegas and Dubai.

It will be the first to implement a 360-degree immersive water projection in the world. The fountain size will be equivalent to 50 Olympic-size swimming pools and the lake will need 178,296,000 million glasses of champagne to fill it up, Okada Manila also said.

from Interaksyon’s correspondent,  Shyla Francisco, Bloomberg TV Philippines ;

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Outsourcing Industry: Business as usual, while answering questions of Anxious Investors

MANILA – It’s business as usual for the outsourcing industry, even if clients and investors are asking questions about the developments in the Philippines, in the wake of the Davao City bombing and the President’s anti-US statements.

Benedict Hernandez, president of the Contact Center Association of the Philippines, said clients started worrying about the country’s political environment when Duterte declared the state of national emergency after the bombing of the Davao night market.

The local industry has been able appease concerns of their clients overseas so far, Hernandez said.

Currently, the industry is not seeing threats to the business with Duterte’s anti-US sentiments, since there are no changes in government policies that may affect the sector.

This also explains why the industry is not threatened by the US elections in November.

Hernandez explained that there are still no protectionist measures that could prevent  US companies from hiring the services of the local BPO industry.

The outsourcing industry is the country’s second biggest source of dollar income next to OFW remittances.

Last year, it generated 1.2 million jobs and earned $21 billion versus total OFW remittances of $25.8 billion.

“The reality is, we haven’t seen protectionist measures that will force us companies to not operate in countries like the Philippines.  That is one we’re closely paying attention to but historically, [there’s] a lot of rhetoric during the campaign but no translation in campaign,” said Hernandez.

With the slew of anti-US remarks of President Duterte and issues of safety in the Philippines, he acknowledged that they have been asked questions on what’s going on in the Philipppines. “It’s an opportunity for us to clarify any impact on policy — there’s nothing. It’s business as usual for companies and employees,” he added.

Hernandez said they have not seen travel advisory changes among BPO companies and clients.

“It causes lots of questions and it’s an opportunity for us to clarify on the ground,” according to the CCAP head.

As for the peso, which hit 7-year lows this week, Hernadez said, “the trend has been pretty stable. The currency has been pretty stable over the years and recently is now weakening….In reality we’re export-oriented so a weaker peso is actually to our favor. When we convert our cost to find out what our price is, that [the weakening of the peso] becomes an advantage for us.”

In reality, he explained, “we’re not basing our business on the peso and US dollar. We just want a stable exchange rate and not something that fluctuates a lot.”

According to Monchito Ibrahim, consultant at the Department of Information Technology and Communications, “there has been no change in policy so far. In fact, as far as policies concerned, there’s been no change in policies whether it’s incentives policy. And we intend to actually maintain this kind of working relationship with industry leaders.”

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