Philippine Real Estate News – January 2017

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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 and market we are heading.  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 bworld.com thru bloomberg :

Image by Ashley Roach/fullframe.com.au

Airports to Toll roads top picks amid boom in Infrastructure

MANILA’S Metro Pacific Investments Corp., Indonesia’s PT Krakatau Steel and Airports of Thailand Pcl. are among the top investor picks as Southeast Asian governments embark on programs to boost roads, rail, ports and power plants.

Philippine President Rodrigo R. Duterte is promising P8 trillion ($160 billion) of spending over his six-year term, while Thailand’s military-led government plans to list an infrastructure fund on the stock exchange in March. Indonesia has set aside almost 10% more to spend on projects this year and Malaysia is pushing ahead with plans including a high-speed rail line from Kuala Lumpur to Singapore.

Thailand and the Philippines are likely to see the biggest increase in infrastructure spending over the next few years, while in Indonesia and Malaysia, budgetary constraints may mean the rhetoric of politicians translates into comparatively little extra outlay, Capital Economics Ltd. said in a Jan. 16 research note.

Below are some selections from fund managers and analysts across the region:

INDONESIA
Within Southeast Asia, Old Mutual Global Investors favors Indonesia, said Joshua Crabb, head of Asian equities in Hong Kong. The Jakarta Composite Index is cheap and President Joko Widodo’s improved political standing will give him some firepower to push ahead with his infrastructure plans, despite perceived fiscal constraints, he said. Mr. Crabb said he liked Krakatau Steel. While acknowledging the budgetary risk, Jemmy Paul, investment director at PT Sucorinvest Asset Management in Jakarta, said many Indonesian infrastructure-related firms have received capital injections from the government and have good revenue outlooks. PT Adhi Karya, PT Pembangunan Perumahan and PT Waskita Beton Precast are among his top construction picks, along with toll road operator PT Jasa Marga. Krakatau Steel is also interesting as prices are on the rise due to stronger demand from projects, Mr. Paul said. Earnings growth for Indonesian construction companies will still be there, but investors should emphasize cash flow and look for companies with stronger balance sheets, said Jeffrosenberg Tan, a director at PT Sinarmas Sekuritas in Jakarta. The condition of the state budget will be critical this year, he said, adding that he prefers Pembangunan Perumahan and Adhi Karya.

THAILAND
The 2016-2020 infrastructure rollout in Thailand should benefit from the longevity of the military government and high public and private sector participation, said Maria Lapiz, co-head of research at Maybank Kim Eng Securities (Thailand) Pcl in Bangkok. She said she likes the high cash flow of Airports of Thailand and telecommunications company Advanced Info Service Pcl. Sino Thai Engineering & Construction Pcl. is also attractive, said Lapiz. The Thai government will provide 10 billion baht ($283 million) for its Future Fund, which it expects to grow to as much as 50 billion baht with money from private investors, pension funds, insurers and sovereign wealth funds. It’s an attractive investment alternative, but more details and pricing are needed before deciding to invest in the fund, said Yingyong Nilasena, the Bangkok-based chief investment officer of Government Pension Fund, which oversees around $22 billion of assets.

PHILIPPINES
Infrastructure will be least vulnerable to the headwinds of a strengthening dollar and rising US interest rates, said Frederico Ocampo, chief investment officer at BDO Unibank, Inc. in Manila. Metro Pacific — which is involved in water, toll roads and electricity generation and distribution and is looking at bidding for airport projects — and Megawide Construction Corp. are among the best bets, he said. Metro Pacific is also the top infrastructure pick of Karen Hizon, an analyst at UBS Securities Philippines, Inc. in Manila. Some exposure should also go to construction company DMCI Holdings, Inc., cement firms will be a good play, while banks and property companies will also benefit, she said. Eduardo Francisco, president of BDO Capital & Investment Corp. in Manila, said his company was looking at structuring new debt instruments for infrastructure, but is waiting for rules to govern such issuance. The challenge for marketing the debt would be the absence of cash flow in the initial years of projects, he said.

MALAYSIA
Construction stocks will provide the biggest opportunity among shares in Malaysia this year, said Ang Kok Heng, chief investment officer at Phillip Capital Management Bhd. in Kuala Lumpur, whose Phillip Master Equity Growth Fund has beaten 94% of its peers over the last five years. He said he favors mid-cap stocks like George Kent Malaysia Bhd., Hock Seng Lee Bhd. and Kimlun Corp. as they have better return potential, especially when they win large contracts relative to their size. Some 96 billion ringgit ($22 billion) of new and ongoing infrastructure contracts will be awarded over 2017 and 2018, Loong Chee Wei, an analyst at Affin Hwang Investment Bank Bhd. in Kuala Lumpur, wrote in a Jan. 16 note. Loong maintained an overweight call on Malaysia’s construction sector and his top buys are Gamuda Bhd., Sunway Construction Group Bhd., WCT Holdings Bhd. and Gabungan AQRS Bhd. — Bloomberg

here’s an article from bworldonline.com correspondent, Keith Richard D. Mariano :
property appreciation 2PR

PHL property market seen to attract more investors from China, Russia

THE PHILIPPINES’ move to forge alliances with more countries supports the expansion of the property market, particularly the residential and industrial segments, according to a property consultancy.

In a media briefing, Santos Knight Frank, Inc. forecast a continued expansion in the real estate sector on the back of a growing business process outsourcing (BPO) industry, strong overseas remittances, infrastructure development, sustain investment inflows and favorable demographics.

“The economic fundamentals that have positioned the country on a prime spot in global investments remain extremely strong,” Rick M. Santos, chairman and chief executive officer of Santos Knight Frank, said in the briefing in Makati City on Wednesday.

The residential and industrial segments of the property market, in particular, will supposedly receive a boost from the availability of more funding sources, as the Philippines strengthens relations with other countries.

“As the Philippines forges new international alliances and attracts a wide net of investors, we see investors from China. Also, we’re in talks with other European countries and Russian investors are coming in,” Mr. Santos said.

The new alliances present news sources of funding, in addition to the United States and other traditional investors, especially for the residential and industrial segments of the property market, Mr. Santos noted.

This year, the residential segment is expected to grow further on sustained investor interest, growing investments from overseas Filipino workers (OFWs), robust BPO sector and inflow of millennial work force.

The industrial segment, meanwhile, will benefit from the steady increase in consumer spending that actually prompted manufacturing firms to expand their operations and storage facilities last year.

“In the long run, there will be sustained consumer confidence backed by strong consumption pattern and increased disposable income,” read a report distributed by Santos Knight Frank to reporters on Wednesday.

“The manufacturing sector will remain one of the significant drivers of GDP (gross domestic product) uptrend. In relation to this, it is expected that demand for manufacturing, warehouses and industrial lots will be strong, with economic zones a full occupancy.”

Companies have been searching for warehouses and manufacturing sites in known industrial locations, including Central and North Luzon, Santos Knight Frank noted.

Meanwhile, the office segment will continue to propel the real estate market forward, as the strengthening of the dollar against the peso makes doing business in the Philippines even less costly, according to the property consultancy.

“We’re very optimistic about the BPOs especially with the dollar strengthening [against] the peso. That’s also fueled demand in the BPO sector,” Mr. Santos said.

In 2016, overall vacancy in the National Capital Region further narrowed to 1.36%, as the completion of office buildings faced delays brought upon by the lack of skilled labor in the construction side.

Accordingly, more than 1.6 million square meters (sq.m.) of office supply, in terms of gross leasable area, will become available in the market within the year, according to Santos Knight Frank.

Mr. Santos has engaged in property consultancy in the Philippines for more than two decades now. It had worked with Los Angeles-based CBRE Group, Inc. before partnering with London-based Knight Frank LLP this year.

here’s an article from bworldonline.com correspondent, Imee Charlee C. Delavin :
Transportation operation

Transportation operation

Metro Pacific continues expansion into Logistics

INFRASTRUCTURE conglomerate Metro Pacific Investments Corp. (MPIC) is further expanding its logistics business with another acquisition as it anticipates strong demand and growth in the industry.

MPIC, through its subsidiary PremierLogistics, Inc., is acquiring another logistics firm Ace Logistics, Inc. for P280 million, it told the Philippine Stock Exchange on Tuesday.

“The assets and business that will be acquired in the transaction will be utilized to further expand MPIC’s logistics business, which continues to offer attractive returns in view of the strong demand in the sector,” MPIC said.

Ace is engaged in the business of logistics, including warehousing, courier express and parcel delivery, e-commerce delivery, trucking, freight forwarding, customs brokerage and domestic shipping. It is also involved in pre-delivery inspection in the automotive industry, which Premier intends to expand, MPIC said.

The transaction will be carried out through an asset purchase agreement.

MPIC said the closing of the transaction will be subject to the satisfaction of certain conditions, which the companies aim to complete within February. Among the conditions include Ace selling certain logistics assets, securing new contracts with its existing clients, and transferring certain key Ace officers and employees to Premier.

“An initial payment shall be delivered to Ace on the closing of the transaction. The controlling shareholder of Ace will likewise acquire a 10% interest in Premier after the closing of the transaction,” the listed conglomerate added.

In May 2016, MPIC announced its foray into the logistics business with an initial P2-billion investment in a logistics company. The company said it is acquiring the assets of Basic Logistics Corp. and transferring them to a newly formed company called Metro Pacific Movers, Inc., which will provide services related to logistics, shipping, freight forwarding and e-commerce.

“There is strong demand for logistics services and the sector, which is broadly unregulated, offers the prospect of attractive returns,” MPIC said in a earlier statement.

Shares in MPIC closed at P6.90 apiece on Tuesday, 2.13% lower.

MPIC is one of three Philippine subsidiaries of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

here’s an article from Manila Standard’s correspondent, Gabrielle H. Binaday

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PH seeks China aid for 40 Infra projects

The government is seeking China’s support for 40 infrastructure projects in the Philippines, including the $3-billion South Line of the North-South Railway from Manila to Legaspi City.

The Finance Department said it submitted a list of 40 “large and small” infrastructure projects for the approval of the government of China during the visit of the Duterte administration’s economic managers to Beijing.

The infrastructure projects were presented to China for possible loan financing and assistance in conducting feasibility studies, with further discussions on the details of the proposals to take place in Manila next month.

Finance Secretary Carlos Dominguez III said the meeting of the high-level Philippine team with officials of China’s Commerce Ministry was a “productive first step towards achieving the desire of Philippine President Rodrigo Duterte and Chinese President Xi Jinping in further reinforcing ties between the two countries.

Of the 40 projects, 15 are being proposed for loan financing while another 25 were submitted for feasibility study support.

Aside from Dominguez, the Philippine delegation included  Secretaries Benjamin Diokno of the Budget Department, Arthur Tugade of the Transportation Department, Mark Villar of the Public Works Department and Ernesto Pernia of the National Economic and Development Authority.

“It was a very positive and very productive meeting,” Dominguez said in an interview in Beijing with members of the Chinese media.

“My expectation is that the projects that we have discussed would be implemented very quickly and that it would benefit both [the[ people [of China and the Philippines],” he said.

Three of the large-scale projects submitted for Chinese loan financing are meant to raise the productivity of small farmers, improve transportation and logistics services in underserved areas of Luzon and ensure a steady water supply to Metro Manila.

These three projects, with a combined total of $3.4 billion, are the Chico River Pump Irrigation Project in the provinces of Cagayan and Kalinga with an estimated total project cost of $53.6 million; the New Centennial Water Source-Kaliwa Dam Project in Quezon, $374.03 million; and the South Line of the North-South Railway running from Manila to Legaspi City in Bicol, $3.01 billion.

Dominguez said the other projects on the list were relatively small in scale and would be easier to implement, such as the construction of bridges across the Pasig River to ease traffic congestion in Metro Manila.

Dominguez said the assistance offered by China to the Philippines was among the concrete results of the president’s foreign policy rebalancing towards accelerated integration with the Association of Southeast Asian Nations and its major Asian trading partners.

He said that amid global uncertainty over a possible overhaul of US trade policies under the new presidency of Donald Trump, it was a “very smart”  move by President Duterte  to recalibrate the Philippines’ foreign policy early on and reorient the economy toward greater integration with its Asian neighbors.

Dominguez said the 40 projects discussed during the meeting aimed to help realize the President’s primary goal of reducing poverty.

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robert
Robert G. Sarmiento Properties
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