Saturday, January 31, 2009

More investments in Cebu

DESPITE forecasts of a slow growing economy this year, an Indian national is prepared to establish several businesses in Cebu.

To test the market, Louis Godinho—originally from Goa, India—put up a function hall that now serves as venue for various gatherings in the northern town of Consolacion. Palms Cebu, which is equipped with a bar and will soon feature snooker tables, is located near the Fooda commercial complex in the town center.

“It’s more than a multi-function hall. It will be a showcase of my business, which I will soon introduce in Cebu,” he said in an interview.

Godinho runs Lazer Inc., an advertising company in Dubai that provides signage printing and installation, store presentation setup and metal fabrication and woodworking services. The company employs Filipinos, mostly from Cebu.

Before expanding to Cebu, however, Godinho said he will observe the market growth in Cebu.

“There is a need for it; maybe not so much in Cebu now, but more in Manila. (When Lazer expands here), Lazer Cebu will be a production site for orders from Manila and other places in the Philippines,” he said.

Better market

He added, though, that Cebu will eventually be at par with Manila and he wants “to be in the position to take advantage of that when it happens.”

“As of now, the better market is Manila, but I love Cebu,” said Godinho, who is married to a Cebuana.

He said he has shipped three container vans of equipment for painting, carpentry and metalworks for the future expansion of his advertising company.

While observing the Cebu market, Godinho said he plans to open an Internet café and coffee shop near Palms within the year.

He said he also plans to open a restaurant within Palms that will offer Indian food. When this happens, he will bring in chefs from India.

“We might have to modify (the food) to suit the Filipino palate,” he added.

He said he remains “optimistic and determined” about investing in Cebu even with the global financial crisis that has hampered economic growth in the Philippines.

“Besides, I’m not working on a large scale,” he said. He added that he is used to tackling challenges, having come from a difficult childhood in India.

Although Palms is located in Consolacion, Imelda Licen-Godinho said the function hall has received several bookings for parties.

The Godinhos said they are optimistic about Palms’ success as it is the only establishment of its kind in Consolacion. (LAP)

Osmeña: Real statute of fraud

Antonio V. OsmeñaEstatements

THROUGHOUT the history of title recording, means and ways have been sought to make transfer of real property as simple and safe as the procedures related to other properties; doing away, if possible, with the repeated search and examination of titles.

The search for some permanent form of title registration is still prompted by the tedious and often difficult and cumbersome method by which title changes and, in addition, by the ever present fear that ownership of farm or home may be invalidated by the court because of faulty or illegal property transfer somewhere in the chain of title grantors.

To illustrate, let’s consider a certain tract of land in Inayawan, Cebu City with a land area of 443,553 square meters, which is the subject of legal claim by the Abangan clan. The property in question is in the name of Anastacia Abangan with
certificate of title no. OCT-0-1754 and cadastral lot no. 3616 Cebu CAD.

The Abangan clan filed a case in court as the legal heirs of Anastacia Abangan. The property in question was acquired by Anastacia Abangan sometime in 1918 wherein a decree was issued in her favor (Decree No. N-226189, Cadastral Case No. 14, (GLRO) LRA Cadastral Record No. 9470). Unfortunately, the Abangan clan learned of such property only two years ago by accident of information. Obviously, the property in question has now been overlapped with another title totaling 285,793 square meters with 55 individual transfer certificate of titles (TCTs) and another 203,235 square meters with individual tax
declarations in the name of 73 individuals or new owners totaling 128 individuals and entitles.

The Abangan clan will be facing a tremendous legal obstacle in canceling the over-lapped titles and tax declarations. No land developer in his right mind would touch this property until the overlapping of ownership is first settled in court.

A research made in the archive in Manila revealed that the said property was sold by Anastacia Abangan to Eleuteria Abangan on Oct. 30, 1920. Eleuteria sold it to Adelaida Basay on March 9, 1952. Consequently, in the early 1970s, Basay sold the said lot to a certain local realty corporation.

Although in the US the development and perfection of title insurance has hastened the search and transfer of titles, particularly in urban areas, the necessity to re-establish and re-check the chain of ownership and title encumbrances every time a sale takes place still impedes the use of realty as a readily transferable, liquid asset or form of investment.

Under present operation of the recording acts, deeds and other instruments affecting rights or property in realty are placed on public record. In early days, far fewer instruments were on record; it was, therefore, possible to examine a title with fair speed, and consequent reasonable time and expense.

Now, the more active countries have such voluminous records that the operation has become slow, time-consuming and expensive. This condition is becoming worse as time passes and as more instruments are recorded. Yet, theoretically, it is necessary for each title examination to go back and study the records from the earliest recorded instrument.

As for lot 3616, titles and tax declarations that overlapped Original Certificate of Title No. 0-1754 issued to Anastacia Abangan in 1918 indicate the corrupt practice of government agencies concerned in issuing land titles. The anomaly was done by using a different reference point for the existing lot title.

Obviously, the presence of other claimants of idle titled lots is due to the negligence of absentee lot owners. The failure of the deceased landowner to leave intestate to immediate members of family also encourages other claimants to use statute of fraud over the said land.

The law of real property is complicated and technical. The average person dealing in real estate has no knowledge of these rules and neither has the time to examine the title. In Cebu there are only a few title examiners.

As the records in the country and other offices grow in size and complexity, it is safe to have searches made by someone familiar with them. It is important that title searches be done by people who make a specialty of making up abstracts and supply these to lawyers on order. The lawyer then reads the abstract and certifies the title.

In Cebu, the abstract of the title company is the Osmeña Realty Corp.

Firm to pour in P2.7B

A CEBU-based real estate firm will launch five projects within the year to answer a strong demand for housing in Metro Cebu.

Primary Homes, formerly known as Commonwealth Estate Inc., will be spending at least P2.7 billion for its projects to be launched within the year.

Arroyo Watch: Sun.Star blog on President Arroyo

Ramero Espina, assistant sales manager, said Cebu’s tourism and business process outsourcing (BPO) industries have increased demand for various real estate products—from lots, houses and lots and condominium units.

“The high rental rates in Cebu is also (a factor) why there is strong demand for houses,” Espina said during the blessing and opening of the company’s satellite office at the Parkmall@168 in Mandaue City.

He added that students from neighboring provinces who come to Cebu City to study medical courses are also purchasing condo units or houses and lots instead of renting.

In the first quarter of this year, Primary Homes will launch three projects—the first being La Guardia Flats, a 14-story building with over 250 condominium units.

Groundbreaking

In a statement, Primary Homes’ president Stephen Charles Liu considers the La Guardia Flats “a testament to the synergy within the Primary Group.”

Next month, Primary Homes is expected to break ground at the project site of La Guardia in Barangay Lahug, to start the development of the condominium project.

Primary Homes will also be launching Casa del Rio, its latest house-and-lot offering in Talamban.

Casa del Rio is a pocket-size subdivision for the middle to lower high-end market.

The company will also develop Sunflower Place, a subdivision inspired by the success of 188 Sunflower Drive, which was sold out in a year, said Michelle Cutang, marketing supervisor.

Sunflower Place will have 24 townhouses ranging from 60 square meters to 150 square meters in floor area.

Cebu’s location a plus

TOURISM stakeholders remain optimistic about Cebu’s tourism industry this year amid reports of a slowdown in the travel market in some parts of the world due to the global financial crisis.

This optimism can be attributed to Cebu’s “strategic geographical location” and availability of more flights to neighboring provinces and Asian regions.

Charles Lim, special tourism envoy for the Association of Southeast Asian Nations (Asean), said that despite the economic slowdown, Cebu’s “greater accessibility” to other areas is increasing the province’s tourism potential this year.

“Cebu would be a hub for tourists who want to go to Boracay, Davao, Cagayan and even some parts of Luzon without them
having to go to Manila,” he told Sun.Star Cebu.

He added that Cebu is also becoming an ideal point for travelers who want to go to Singapore, Kuala Lumpur and other destinations in the Asean region.

To be able to continue tapping this potential—especially during the economic slowdown—Lim advised hotels, resorts and tour operators to aggressively market their destinations to specific target sectors.

Sites, events

In response, the members of Cebu Association of Tour Operators (Cato) is planning to go around domestic destinations this year to check out the latest events and products that they can help promote to both local and foreign visitors.

“We want a hands-on experience. We have to see the destination so that we’ll know what to sell. If we have inquiries from international people, we can tell them that they can come to Cebu and have a side trip to Cagayan de Oro and then go to Dipolog, for example,” said newly-inducted Cato president Zenaida Chua.

She disclosed that about 16 travel agents will be going to Dipolog City in Zamboanga del Norte next month. They are coordinating with the tourism office of Northern Mindanao for a possible trip there by March.

Chua, also managing director of Worldwide Travel and Tours Inc., said that local tour operators’ promotions are limited by packages that include Cebu, Bohol, Boracay and some neighboring areas. Cato wants to expand its offers to include activities in other provinces like sightseeing in Davao and whitewater rafting in Cagayan de Oro.

She said that despite concerns of several tourists over expensive hotel costs, her group maintains a positive outlook this year and hopes for an increase in tourist arrivals coming to Cebu. They observed that Americans, Europeans, Koreans and Japanese continue to visit the province.

Cato is also anticipating an increase in domestic travelers this summer as the group keeps on encouraging families to visit local destinations first before heading to other countries for vacation. (NRC)

Osmeña: Ideal title registration law needed

Antonio V. Osmeña
Estatements

IT is amazingly strange that our country’s insurance industry has no interest in lobbying with Congress for the enactment of an enabling title insurance law.

No system of title searching is perfect. As many legal cases have arose, errors may creep in or forgeries and other things that cannot be guarded against may cause loss.

To remedy this situation, title insurance has come into use in the larger cities of America. It is a direct growth of the abstract company. Many of these companies, years ago, devised the idea of insuring not only their abstracts but going a step beyond, and for an additional fee, reading and insuring the title as well.

Like all other insurances, title insurance is a distribution of loss among all insured. Title companies are organizations authorized by law to examine and insure titles. They charge a fee or premium for their service. The amount of premium is usually based upon the value of the property and covers not only the expense of the examination and abstract but an additional amount this is placed in a general fund to cover losses insured against.

The company makes a careful examination of the title. If it is satisfied that there are no apparent defects in the title, it insures against any loss. Should there be a loss later, by reason of forgery or any other defect arising prior to the insurance, the title company pays the loss. This, in brief, is the theory of title insurance.

In seeking title insurance, the person who is about to acquire the title or some interest in the real property first applies with the title company. He agrees to pay a certain fee for examination of the title. The title company, for its part, obligates itself to make an examination of the title and to insure against undiscovered defects. It does not, however, agree to insure against defects and encumbrances that may appear from the examination.

After the examination is completed, the applicant should insist on being given a “report of title,” which is a statement setting forth a description of the property, the name of the record owner, and a detailed list of all objections to the title—such as encumbrances and defects found upon the records.

The reason for having this report is simple: it enables the applicant to know the exact condition of the title. If he is a purchaser, his contract stipulates that he shall take title subject to certain encumbrances.

The report sets forth all the encumbrances found on the records. The purchaser demands that the seller disposes of all those not agreed upon in the contract, before delivering a deed. If the applicant has agreed to make a mortgage loan, he insists that the owner renders his title free and clear before the loan is made. After the objections that were not agreed on have been removed, the title is closed and the instruments passing title are delivered and recorded.

The title company now prepares to issue its policy of the title insurance. There may, of course, still be encumbrances on the property which have been agreed upon. For example, the transaction may be a sale of property subject to one or more mortgages.

The policy should be carefully examined to see that the property is properly insured without any exceptions other than those agreed upon. There is now a need for the Philippines, which had advocated the Torrens Law, to enact a model Land Title Registration Law.

Our country has reached a high development in the larger communities and most title examiners realized that some method must be devised to avoid the inconveniences of the present system of examining and ascertaining the validity of land titles.

The remedy may be merely a simplification of the present system or the enactment of an ideal registration law. The sentiment in favor of one may increase. And it is quite possible that the future will see the general use throughout the country of a title registration law, probably patterned after the Torrens system, with modifications to remove present objections.

Our country’s real estate boards--specifically the Cebu Realtors Board that is comprised of specialists in real service and professional agents who are knowledgeable of facts as well as law—should be capable of presenting to Congress an ideal registration law.

Maturity of local market strengthens developer’s optimism amid crisis


THE sales team of Sta. Lucia Realty and Development Inc. (SLRDI) believes its new projects in Cebu this year will be “successful” because Cebuanos are already “mature” when it comes to real estate investments.

This year, SLRDI will launch three or four residential projects in Cebu since many of its buyers are also aware that when the market is volatile, it is an “opportunity to invest.”

Last Saturday, SLRDI launched its first development for 2009 and its first business venture with Hanoverland Development Corp—Vista Verde Residential Estates.

Hanoverland is headed by Cebuano Joel Ng, whose family owns the 28 hectares of land in Consolacion that is projected to be fully developed by SLRDI in three years.

Liezel Tuason-Magpoc, Orchard Property Marketing Corp. (OPMC) vice president for sales, said the company is now
working on phase one of Vista Verde, which covers 13 hectares.

Magpoc also confirmed that from the 275 lots available in their inventory for Vista Verde, 30 percent is already considered sold.

She said the company was surprised with the buyer mix for the project since 50 percent are Cebu-based businessmen and
50 percent are overseas Filipino workers (OFWs).

“This is the first in Cebu that we have this 50-50 mix,” she said.

Lot sizes in Vista Verde ranges from 240 square meters to 500 square meters.

SLRDI is also offering a pre-selling price of P3,300 per square meters while corner lots are priced at P3,500 per square meters. The pre-selling period is only until the end of this month, after which prices will increase by 10 percent.

Vista Verde, which is a middle to upper-middle subdivision, is only available to in-house financing at present but Magpoc said the company is able to give flexible payment terms and offer various payment schemes.

During the pre-selling period, SLRDI is also giving as much as 15 percent discount.

Vista Verde, located at the hills of Sacsac, Consolacion, will have an entrance gate and guardhouse, clubhouse, swimming pool, as well as basketball and tennis courts.

The subdivision will also feature an underground drainage system, centralized inter-related water system and electrical facilities.

Within the year, SLRDI will also launch projects in Liloan in northern Cebu and in Pardo, Cebu City. (DME)

Noli pushes for investment of 70% of Pag-IBIG Fund in housing projects


Updated January 31, 2009 12:00 AM

Vice President and concurrent Housing and Urban Development Coordinating Council (HUDCC) chairman Noli de Castro urged yesterday the Senate and Lower House to restore the provision in the Charter of the Home Development Mutual Fund (HDMF) or Pag-IBIG Fund that the shelter agency should “invest not less than 70 percent of its investible fund to housing.”

De Castro thanked the Senate and House for pushing the amendments in the Charter of the Pag-IBIG Fund that seeks to strengthen not only the Fund but the entire housing sector.

He said the draft bills approved by Congress would restore the tax-exempt privilege of Pag-IBIG Fund and authorize the board to set the contribution rates of members which would result in additional funds for the benefit of Pag-IBIG members.

However, De Castro objected to the deletion of the provision in Pag-IBIG’s existing Charter that the Fund should “invest not less than 70 percent of its investible fund to housing.”

“Housing is one sector with a big multiplier effect on the economy. Every P1 million invested in housing translates to P16.6 million of economic activity in the country,” De Castro said. “At this time of the global financial crisis, we need to put our funds in industries that would stimulate the economy and create more jobs for our people.”

He urged Congress to restore the provision to realize the prospective law’s objectives of providing the Filipino citizen with sufficient shelter through the mobilization of funds for shelter finance. – Pia Lee-Brago, Jose Rodel Clapano

Friday, January 30, 2009

GSIS sells P313.9-million low-cost housing units


By Iris C. Gonzales Updated January 31, 2009 12:00 AM

The Government Service Insurance System (GSIS) has sold P313.91 million worth of low cost housing units last year through a program that provides low amortization to borrowers.

GSIS president and general manager Winston Garcia said that GSIS was able to sell more than 344 house and lot units last year under the program.

Under the scheme, installment buyers are entitled to a maximum repayment term of 30 years.

Garcia said the program offers the most attractive interest rates in the market which are better than most banks.

Majority of the housing units under the program are livable and located in subdivisions with complete amenities and with existing communities in over 70 locations, including key cities in Metro Manila, Bulacan, Rizal, Leyte, Western Samar, and South Cotabato.

Furthermore, GSIS’ housing program also has several payment options for buyers. Options include over-the-counter payments, post-dated checks, and salary deductions for members.

A three-month grace period is also given before payment of the first monthly amortization.

Unlike banks which have imposed stricter requirements, the GSIS has also waived the application fee for interested parties and demands minimal documentary requirements.

Any individual or corporate entity who has the legal capacity to acquire real property in the Philippines may acquire these foreclosed properties either in cash or installment basis. As such, cash buyers are entitled to a 10-percent discount on the selling price of the property.

GSIS said that to qualify for a housing loan under the program, the individual buyer must not be more than 65 years old at the time of filing of the Offer to Buy; has no delinquent loan account with the agency; and not an employee of the GSIS directly involved in the disposition of acquired assets.

On the other hand, institutional buyers must be a domestic corporation, provident fund, association, local government unit, and must be allowed by its by-laws to purchase a real property in the Philippines.

Institutional buyers must also have a specific authority to acquire real properties from the GSIS.

The maximum loanable amount shall be the selling price of the property less the P5,000 reservation fee and five percent down payment.

UA&P economist expects RP to grow by 4.1%


By Iris C. Gonzales Updated January 31, 2009 12:00 AM

The economy is likely to grow by 4.1 percent this year or within the government’s gross domestic product (GDP) growth forecast for the year of 3.7 percent to 4.7 percent, an economist from the University of Asia and the Pacific (UA&P) said yesterday.

Victor Abola said that while growth is likely to slow down in the first quarter of the year, the business process outsourcing is expected to push growth.

“While we do expect a further slowdown to sub-four percent in the first quarter of 2009, I still think domestic demand — spurred by high double — digit spending, residential construction, business process outsourcing, and non-metallic mineral products should again be able push GDP growth to our forecast of 4.1 percent for the year,” Abola said in his report.

He said that the 4.5-percent GDP growth in the fourth quarter of 2008 and the 4.6-percent full-year growth last year surprised analysts as many expected the economy to take a beating because of the global financial turmoil.

The 4.6-percent GDP growth was the slowest growth recorded in seven years, a drastic decline from the 31-year high 7.2-percent GDP growth recorded in 2007.

Abola said the performances of the construction sector (13.1 percent) and the business process outsourcing industry (15.3 percent) offset the decline in the manufacturing sector.

For 2009, Abola said the economy would continue to benefit from dollar remittances from overseas Filipino workers (OFWs).

The UA&P economist said dollar remittances would help push personal consumption as the beneficiaries of Filipinos abroad have more funds to spend.

He also said that the government’s plan to accelerate infrastructure projections would also help push economic growth.

“We don’t expect such a large decline for 2009, considering the acceleration of infrastructure projects and the continued strength in the residential property segment, where OFW peso-equivalent remittances are playing a positive role,” said Abola.

BSP expects inflation to drop to as low as 3.9% this year


By Des Ferriols Updated January 31, 2009 12:00 AM
Photo is loading...
Amando M. Tetangco, Jr. , Governor of the Bangko Sentral ng Pilipinas

After surging to double-digit levels in 2008, monetary officials said they expect the nationwide inflation rate to drop to as low as 3.9 percent this year and rise slightly to 4.7 percent in 2010.

The latest projections from the Bangko Sentral ng Pilipinas (BSP) indicated that the prices of basic commodities would not rise as much in the next two years, mainly because the economy is slowing down.

As early as November, the inflation rate had already begun to decline much faster and a lot sooner than monetary officials originally expected. By December, the rate had gone down to eight percent, bringing the full-year average to 9.3 percent.

In January, the BSP projected that price increases in basic commodities would slow down even more, bringing the inflation rate down to as low as seven percent — a full percentage point lower than the

previous month.

BSP Deputy Governor Diwa Guinigundo told reporters that the national average inflation rate would come down to within the target range of 2.5 percent to 4.5 percent in 2009 and 3.5 percent to 5.5 percent in 2010.

“These numbers are based on information that are available to us at this point, over time as the monetary board meets every six weeks, these forecast will be revised accordingly to reflect the developments in supply and demand conditions,” Guinigundo said.

According to Guinigundo the 2009 and 2010 projections factored in the decline in oil prices and food prices, the relative stability of the foreign exchange rate and the fact that inflation expectation remained anchored.

The overall decline in inflation had already allowed the BSP to cut its overnight lending and borrowing rates by 50 basis points and the market is expecting another 50-point cut going forward.

According to Guinigundo, the BSP paid particular attention to the massive pull-out of foreign portfolio investments from the Philippine market in 2008 which left a net outflow of $1.4 billion compared with the $3.5-billion net inflow in 2007.

“A lot of foreign investments have been pulled out but despite the withdrawal, we see relatively ample liquidity in the system,” Guinigundo said. He said this was the reason why the BSP’s rate cut was pre-emptive rather than reactive.

“As the global tightness in the market continues, we want to ensure that we would avoid such tightness in the market,” Guinigundo said. “This way, both the banks, corporate borrowers and individual borrowers are assured by the presence of liquidity in the market.”

Guinigundo said the BSP hoped that the rate cut would help moderate the cost of borrowing which would encourage lending. More lending meant more funds going through the system that would be spent and spur economic activity.

Monetary officials’ chief worry is the expected slowdown in consumption spending which has been fueling the country’s economic growth since the government started aggressively supporting labor exportation in lieu of domestic job creation.

But Guinigundo said falling interest rates would ease liquidity supply further that he said would benefit savings and investments and over the longer term, the pace of economic activities.

Real Estate Investment Trusts (USA VERSION)



Real estate investment trusts, known as REITs, are entities that invest in different kinds of real estate or real estate related assets, including shopping centers, office buildings, hotels, and mortgages secured by real estate. There are basically three types of REITS:

  • Equity REITS, the most common type of REIT, invest in or own real estate and make money for investors from the rents they collect;
  • Mortgage REITS lend money to owners and developers or invest in financial instruments secured by mortgages on real estate; and
  • Hybrid REITS are a combination of equity and mortgage REITS.

The Internal Revenue Code lists the conditions a company must meet to qualify as a REIT. For example, the company must pay 90% of its taxable income to shareholders every year. It must also invest at least 75% of its total assets in real estate and generate 75% or more of its gross income from investments in or mortgages on real property.

Many REITs trade on national exchanges or in the over-the-counter market. REITs that are publicly traded must file reports with the SEC, such as quarterly and annual filings. You can find these reports on the SEC's EDGAR database.

For more information about REITS, you can visit the website of the National Association of Real Estate Investment Trusts, a trade organization for the REIT industry.

http://www.sec.gov/answers/reits.htm

Chamber creates advisory group

TO identify issues affecting Cebu’s economy, the Cebu Chamber of Commerce and Industry (CCCI) created an economic advisory body that is composed of organizations representing a cross-section of Cebu business and the academe.

The Cebu Economic Advisory Group (CEAG) was organized last month to process and consolidate the collective positions and policy recommendations of business on concerns affecting the overall business and investment climate of Cebu.

“This group can become a sounding board for the concerns and sentiments of different sectors affecting business, so that we can articulate and come up with (business-related) pronouncements to the government and other sectors. We want to be an influential group,” CEAG chairman Ge-ronimo Sta. Ana said in a press conference last Monday.

CEAG’s chamber members include CCCI (trade, industry and services sector as well as and the export sector), the European Chamber of Commerce in the Philippines-Cebu, American Chamber of Commerce in the Philippines-Cebu, Japanese Chamber of Commerce and Industry Inc.-Cebu, and Mactan Economic Zone (MEZ) Chamber of Exporters and
Manufacturers.

The rest of the 11 institutional voting members are the Financial Executives Institute of the Philippines-Cebu, Cebu Bankers Club, University of San Carlos, and University of San Jose-Recoletos.

Sta. Ana said economist Dr. Cayetano Paderanga will act as special economic adviser while the Department of Trade and Industry (DTI) and the National Economic and Development Authority (Neda) will provide technical assistance and database.

“If we can reflect the true picture…that’s (when) we will be successful. CEAG’s pronouncements are more credible and in-depth, especially when it is validated by the academe and a special adviser and further validated by DTI and Neda,” said CCCI president Edward Gaisano.

He stressed, though, that CEAG will only tackle issues that are of general concern to the Cebu business community and which impact on the overall business climate and economy of Cebu.

“It does not negate each chamber’s advocacy or supplants the chamber. We are just finding the common denominator of the different chambers by uniting together the issues common to all members,” he said.

He added that some aspects of labor, especially with labor flexibility being a raging issue amid the global financial crisis, can be discussed by the group.

As a start, CEAG sent out questionnaires to more than a thousand individuals who are members of the different chambers to determine their sentiments and outlook for 2009. Results of the survey will be presented next month. (NRC)

FLI eyes more projects

AS the global economic turmoil deepens, property developer Filinvest Land Inc. (FLI) continues to invest in ongoing and future projects in Cebu.

Louie Carandang, FLI business development officer, said two of the company’s ongoing projects are on time—the Grand Cenia Condotel and Residences in Cebu City and the Seascapes Resort Town in Lapu-Lapu City.

Both projects bank on Cebu being a tourism hub even while reports point to a slowdown in the travel market, as a result of the financial crisis that is affecting many major economies worldwide.

“It (tourism) is a cycle. It will recover later. We’re not scared about our investments, particularly in the Visayas and Mindanao,” said Carandang. He cited Department of Tourism figures that show Cebu would need about 400,000 to 500,000 hotel and resort rooms a year.

He said buyers of condotel units at Grand Cenia also see the same potential. “Our sales have not been affected by the crisis,” he added.

He pointed out that buyers of Grand Cenia are mostly foreigners or Filipinos with foreign income (like overseas Filipino
workers) “who are not so much affected” by the global crisis.

While Seascapes is considered “very high-end”—with lots priced around P15,000 per square meter and prices for condo units going up to as much as P9 million—FLI is confident the property will sell very well. Its target markets are foreigners and overseas-based investors.

Sold out

Carandang reported that all Seascapes lots have already been sold out within a year after the developer began pre-selling the property.

FLI, however, has decided not to sell shares to its club house that will feature a spa and sports facilities.

Carandang said FLI has seen the business potential of keeping the ownership of the club house and its amenities. He added that FLI might contact an international spa operator to manage the facility.

FLI is also confident about the success of its future projects: the One Oasis condo compound in Mabolo, Cebu City, which will be implemented this year; and its expansion of existing housing subdivisions in Lapu-Lapu City and Talisay City.

Cecille Canturias, FLI Cebu sales team head, said the company’s sales continue to go up. In 2000, its sales were only P30 million a year, which went up to P450 million in 2007 and P700 million in 2008.

“We have many repeat buyers, they buy condo units for investment,” she said.

Grand Cenia condotels are projected to earn P300,000 to P400,000 a year for the unit owner, which means “it will pay for itself,” said Carandang.

“FLI has been around for more than 15 years, surviving crises is nothing new to us. But we’re very prudent and in 2009, we will continue to be; but we will not sacrifice the quality of our products,” said Carandang.

He admitted, though, that to respond to the needs of its target markets, FLI has decided to develop products that are more affordable. He cited One Oasis, whose condo units will be priced from P1.4 million to P2 million.

He said One Oasis, which will be located near major malls and universities, will be ideal for new families and those with children who study in Cebu City.

To make it easier for buyers, FLI has also lowered the interest rates of its in-house financing program to 11.5 percent for the first years from P19 percent. It has also extended its low-interest rate period to 36 months from 18 months.

FLI will also invest in a 50.6-hectare mixed-use development at the South Road Properties of Cebu City in a joint venture with the City Government. (LAP)

Opportunities in crisis’

WITH several companies resorting to job cuts to cope with the economic slowdown, an entrepreneur has decided to venture into staffing and consultancy services to help displaced workers find work somewhere else.

Ava Duremdes-Echevarre, Staff Linx general manager, said that the present economic turmoil provides many opportunities.

“There are always opportunities. It’s a matter of finding them and the willingness to work hard to tap those opportunities,” she said in an interview following the formal opening of Staff Linx, which holds office at the North Reclamation Area, Cebu City.

She noted that the tourism and health care industries continue to grow despite the global financial crisis that has affected many industries in the country, particularly the manufacturing and exporting sector.

“There is no better time for this venture than now. I believe that when a door closes, a window will open. (Besides), it’s not just about tapping opportunities; we can also help those who have lost jobs,” she said.

A few days after it began operations, Staff Linx is accepting and evaluating applicants for positions like production workers, product promotion personnel, hotel staff, accountants and other posts that need qualified professionals.

Evaluation

Echevarre said Staff Linx has deployed nine production workers and is in the process of evaluating applications for 31 others for various positions. Among its first clients are Fortune Tobacco, Laundry Express and a foreign non-profit organization.

She said the company is also negotiating with one of the major hotels in Lapu-Lapu City to supply the latter with qualified personnel.

She said the need of business organizations to cut costs amid the challenging times also presents an opportunity for Staff Linx’s consultancy services.

At present, Staff Linx offers bookkeeping and accounting consultancy services to local companies. Echevarre said though the company is planning to expand its consultancy portfolio and is also studying its chances of going international—both in its consultancy and staffing departments.

While companies can easily advertise their staffing needs, Staff Linx takes out the hassle of evaluating applicants, Echevarre said.

“We also train those whom we have assessed to be qualified for a certain job so when they join a certain company, they are prepared for their tasks,” she added.

Staff Linx human resource manager Winston Montecillo said the company can advance the training cost incurred by applicants. “We can later deduct the training cost from their salary, pero (but) staggered lang so that the worker will not feel it,” he added.

A human capital management firm like Staff Linx is also beneficial to professionals, even those who merely want to engage in freelancing, and skilled workers.

“Professionals and skilled workers can go out on their own to find jobs—or engage in freelancing as in the case of many bookkeepers and accountants—but they might find that exhausting and frustrating during these times. We find the right jobs for them,” she said. She added that Staff Linx also makes sure that their client-companies pay the right salaries and benefits to protect workers.

Echevarre said she is hopeful that global economic recovery will start soon. She noted that the assumption of office of President Barack Obama creates a lot of optimism in the United States, the country’s major export market.

“Obama’s presidency brings the hope of recovery (in the US), which will also pave the way for our (Philippines) economy’s rebound,” she said. (LAP)

Crisis a mere ‘bump in the road’ for Aboitiz group’s realty arm

CEBU CITY — Aboitizland, Inc. will pursue its projects this year despite the slowing global economy, and has in fact started planning for the years beyond 2009.

Aboitizland President Andoni F. Aboitiz said they would not stop development activities since it takes two to three years to develop a project.

"We hope that 2009 will just be a bump in the road. We will continue planning and developing [land]," Mr. Aboitiz said.

He said there was still a lot of interest in real estate projects "although people are being cautious."

The real estate arm of the Aboitiz group is building a five-storey building for business process outsourcing (BPO) companies.

The iMEZ, located inside the Mactan Economic Zone 2, is estimated to cost P160 million and targeted to be completed this March.

Mr. Aboitiz said they were not talking with any prospective locators yet since they would rather complete the building first.

About 5,000 square meters of the building may be leased. Its ground floor will be rented out to retail shops and dining outlets that will complement retail establishments in the area.

"We’re trying to attract the real BPOs. We have a lot of confidence in the viability of BPOs in the long term," Mr. Aboitiz said.

Since the structure is within the Mactan economic zone, locators will automatically enjoy tax incentives, he pointed out.

The Mactan Economic Zone 2 is a 63-hectare area developed and operated by Aboitizland under the build-operate-transfer scheme for landowner Mactan Cebu International Airport Authority. It has 48 locators that employ about 18,000 workers.

The realty firm is also developing the first urban village in Cebu, dubbed The Persimmon.

The first residential tower, called the West Tower, has been presold.

A second residential building, called the North Tower, will also be built.

A low-rise commercial and entertainment strip is targeted for turnover to tenants this September.

The building will host restaurants, bistros and cafés, among others.

The project is expected to be completed by the third quarter of 2010.

Aboitizland also co-owns with Tsuneishi Holdings, Inc. the Cebu Industrial Park Developers, Inc., which developed and operates the West Cebu Industrial Park in Balamban town in western Cebu. — Marites S. Villamor

Wearing your fortune


AS GLOBAL financial houses fall and stock markets across the world stumble, investing in assets that constantly appreciate — like jewelry and watches — makes perfect sense.

Since the price and financial returns of jewelry investments rely on several factors (including design and rarity of materials used), jewelry has been one commodity that has been the most stable and longstanding investment of all times.

Zabeth Co, co-founder of Hoseki Jewelry Art, said investing in jewelry is a wise choice since jewelry is not susceptible to the fluctuations that take place in shares of stocks or even the currency market.


Jonathan L. Cellona

"You really won’t even have to think about what the stock market is doing; you don’t have to pay attention to the Forex (foreign exchange) at all. All you need to do is to keep your jewelry safe," Ms. Co told BusinessWorld in an interview.

Ms. Co said it is also good to invest on jewelry because it can be liquidated easily. "Just look at the many pawnshops around, and you will get a sense of how valuable jewelry can get in times of crisis," she said.

She said pawnshops generally accepts precious metals like gold as well as gemstones. "Once cash is needed, you can simply visit the nearest pawnshop and pawn one small piece of jewelry at a time. That is unlike real estate properties where you need time to look for the best offer. You even sometimes need a broker to do the selling for you," she said.

Accenture Country Managing Director for the Philippines Beth G. Lui said she prefers to invest on jewelry because it is "wearable art."

"You can buy a painting, but you just hang it on your walls," Ms. Lui told BusinessWorld. "With jewelry, you can wear it. It is art, and at the same time, it is a portable investment because you can take it with you anywhere you go," she added.

Businesswoman Rosa Bairan said more than considering the investment potentials of jewelry, one should think of the inherent "sentimental value" that makes jewelry pieces as "priceless investments."

"Sure, you can think of jewelry as something that could appreciate in value over time. But more than that, you collect jewelry so you can pass it on to your children. You save certain pieces because of its sentimental value, like it is the first item you spent your first paycheck on, etc.," she said.

Jewelry designer Knoi Esmane advises those interested in investing in jewelry to begin with simple gold and diamond pieces. "Do not worry about choosing designs. Choose what pleases you. What is important is you get your jewelry pieces from reputable stores to ensure its quality," Mr. Esmane said.

For gold, he said people should consider buying 24-karat gold pieces to ensure better resell value in the future. While it is okay to invest on white gold, he noticed that yellow gold is "far more in demand."

For diamonds, one should look for medium quality diamonds with no visible imperfections or obvious discoloration. "Do not be tempted to buy so-called rare diamonds because they are much more difficult to resell," he said.

Mr. Esmane said a single diamond does not go up in value faster than a pair or a matched set in a three-stone ring. "But a single stone may be more liquid than a collection. A single stone might cost less to set," he explained.

While princess cut diamonds are hot at the moment, Mr. Esmane advises prospective jewelry investors to stick to round brilliant cut diamonds, which are most re-sellable in the long term.

If gold and diamond jewelry sets are too expensive for your investment budget, Mr. Esmane said people can start with silver pieces, and jewelry using precious stones.

Again, he stressed that it is important to buy silver and precious stones from reputable jewelry stores to ensure their quality, and guarantee that they could be resold in the future.

Aside from jewelry, experts also favor investing in fine quality watches. Emerson A. Yao, managing director of Lucerne watches, said that like jewelry, the value of watches has been steady for many years.

"For sure, stocks and bonds are not attractive investments right now, a watch, on the other hand, holds its value. There might be other items that might appreciate more, but what’s good about watches is that you can use it, you can enjoy it, but at the same time it keeps its value, it never goes down," he said. "So far 50 and 100 years in history, watch prices never depreciate. I mean luxury, high-end, well-made watches," he added.

Maxime Ferte, regional director of International Watch Co, Asia-Pacific, said investing in watches is a good alternative investment because it provides "physical appreciation."

"In the collector’s world, you will always find people that appreciate having something physical in their hand rather than just a number in the bank," Mr. Ferte said.

Mr. Yao said those looking for which watches to buy as an investment should consider buying well-known brands.

"Look at the pedigree of the watch brand, the history and the movement. It’s important that the movement should be in-house made, the brand has to have a long history to be assured of continuity year after year," he said. "On top of that, the design, how they adopt to the changing designs and looks," he added.

Money in technology ventures


WITH SAFE bets for your hard-earned money viewed as close to nonexistent going into the New Year, Information Technology, or IT, may be one of the budding entrepreneurs’ remaining options.

AN artist works on digital animation artwork during the BPO Summit Philippines.
AN artist works on digital animation artwork during the BPO Summit Philippines. — Photo By Jonathan L. Cellona

As credit gets tighter as a result of the US-led financial crisis, people may want to reconsider decisions to keep their entire life savings under pillows, thanks to distrust towards the world’s financial institutions.

But it’s not software programming or building Web sites that will pay dividends in these uncertain times, industry players say.

In the recession, money will be made in cheap but vital services like photocopying, printing and even online gaming.

While hardware sales may post flat growth this year, Mon Ibrahim, Commission on Information and Communications Technology (CICT) commissioner for cyber services, said IT-related services would fare better.

"If you look at [businesses that provide] IT-related services, like Internet cafes, there are a lot of people using them," he said.

Mr. Ibrahim said as companies cut costs, having other people do some of the office’s little tasks will be more prevalent.

He said this year, owners of shops offering simple services like photocopying and printing services, to name a few, can take comfort in the fact that their offerings will remain sought-after, if not more so, this year.

Another sector that is looking at better times compared to other industries is small-size outsourcing.

Mr. Ibrahim said Internet cafe owners looking to make the most out of their facilities during off-peak hours may want to consider turning their Internet stations into call center seats.

He said industry projections by groups like the Business Processing Association of the Philippines (BPA/P) of about 30% growth, even as the world goes into recession, will also apply to small size operations, not just to multinationals.

"If I were to retire from my government job and start my own business, I would most likely put up my own call center," Mr. Ibrahim said.

The Philippine Call Center Alliance, Inc. (PhilCall), a group of call center companies with less than 500 seats, said growth is expected to hit around 20% this year.

This is twice as fast as the growth that small call centers, which outnumber bigger BPO firms two-to-one, experienced in 2008, at around 8% to 10%.

"The advantage of small call centers is that they are very flexible," PhilCall President Joji Bian said in a recent interview.

She added it would be easier for small call centers to attract clients than bigger call centers since the former could offer cheaper rates.

The biggest challenge is raising awareness among the clients of small call centers, which are mostly small to medium businesses in the US.

"There are still [small companies] in the US that do not know they can outsource," Ms. Bian said.

Notably, however, PhilCall’s growth projection for 2009 is much lower than that of the rest of the industry, according to the BPA/P.

The industry group, which is the official consolidated marketing arm of the country’s BPO industry, is projecting a growth of around 20% to 30% in terms of revenues and number of full-time employees.

This entails employing more than 100,000 new employees, and posting more than $2 billion in increase in export revenues, all in the span of one year.

The BPA/P says at the end of 2009, the local BPO sector will have more than 600,000 employees, and would have raked in over $9 billion for the year.

Meanwhile, another source of income, which seems to have become a staple for most Internet cafe owners in the past decade, is computer gaming.

"I think online games will still be a growing business. We are still at infancy [stage]," said Gil Edeza, chief operating officer of local computer game publishing company, IP-eGames, a subsidiary of listed IT firm, IPVG Corp.

Industry players have claimed that the country’s online gaming industry may be worth up to $1 billion.

The IPVG unit expects its online gaming business to grow by as much as a fifth this year, owing to the introduction of new games in several genres.

This should come as good news to Internet cafe owners, whose shops are patronized mainly by elementary school and elementary school-at-heart gamers.

"Online gaming is one of the cheapest forms of entertainment," he said in a recent interview.

"The Filipino youth is one of the most technology-savvy markets in Asia. We are not afraid of technology. This is validated by our early adoption of mobile applications and online games," Mr. Edeza said.

He said the Filipino youth’s barkada culture also fits for the sector since, unlike console-based video games played in other countries like the US, online gaming is a way by meeting new people, albeit virtually at first.

Value for money

Suppose you have P500,000 in extra cash that you want to invest. Where will you place it? The choices are many — bank deposits, mutual funds, stocks, government and corporate bonds, etc. — but choosing which among them is tricky. Which will give the best and least returns? Which is the least and most risky? Deciding will not be easy. But you must be guided by a rule of thumb, that your return must be higher than the inflation rate to offset any erosion in the value of your money.


"There is no ’one size fits all’ when it comes to investing. The answer depends on the investor’s objectives and risk tolerance as well as the current environment and investment outlook," said Ador A. Abrogena, Banco de Oro Unibank, Inc. executive vice-president and head of trust banking.

You have to take into account your investment horizon, whether the money will be invested for the short- or long-term, he added.

"Obviously, one can buy a higher-yielding 20-year bond if the fund is for retirement more than 20 years from now. But the money should be placed in an SDA (special deposit account) or [the usual] deposit accounts if it is needed within a year," he said.

Mr. Abrogena categorized investors, based on their risk tolerance, into conservative, moderate and aggressive.

Averse to losses, the conservative investor prefers the safety of deposits and short-term government securities. Since aggressive investors are after maximizing capital appreciation, they are open to the possibility of incurring losses in exchange for higher potential for gains. Moderate investors will be somewhere in between, in varying degrees, he added.

"As investors move their investment horizon to longer term, the range of investments appropriate for them increases. The same thing happens as they are able to tolerate more risk," he said.

"The investors who have the most flexibility in placing their funds are those with an aggressive profile and long-term horizon for investments."

Special deposit account

Deposits are your safest bets. They are insured up to P250,000 — and up to P500,000 if initiatives by Congress to raise the maximum deposit insurance coverage prove successful.

However, they offer the lowest return — currently less than 1% per annum — which make them unsatisfactory if you are looking for something higher. The central bank expects inflation to average 5.5% this year.

Fortunately, the Bangko Sen-tral ng Pilipinas (BSP) opened its SDA to government financial and trust institutions. If you are interested, you may go to a bank that offers the SDA.

The BSP introduced the SDA in 2006 to mop up excess liquidity in the financial system — and counter inflation — without raising its overnight borrowing and lending rates.

You must have at least P100,000, however, before you can place your cash in the SDA. "At present, only the 14-day and 30-day windows are available. This facility is deemed very lucrative because it offers relatively high interest rates and are considered very safe, akin to government securities, because the counter-party is the central bank itself," said Josefino P. Cerin, Land Bank of the Philippines investment and trading department head.

The SDA offers interest pegged on the central bank’s overnight borrowing rate. As of Dec. 23 last year, the 14-day SDA offered 5.265%, and the 30-day SDA, 5.875%. Interest income, however, is subject to a 20% withholding tax.

Mr. Abrogena said the SDA is a secure investment since it is backed by the BSP and offers better rates compared to deposits.

"This is a combination that is hard for investors to resist. However, they are not for everyone because it is basically short-term in nature, so even if the rates are high it cannot provide the higher yields over the long term like the retail Treasury bonds or corporate bonds, which can provide fixed yields for five years or more," he said.

Time deposit

With the introduction of the SDA, however, banks were forced to raise the interest rates of their time deposits and special savings deposits.

"Placements can mature in a number of days, anywhere from one year and under. As a rule of thumb, the longer the tenor of placement, the higher the interest rate for that placement. Rates usually differ from bank to bank, depending on the bank’s borrowing policy," Mr. Cerin said.

Generally, the bigger, more stable and liquid banks offer interest rates lower than those of the smaller, more illiquid banks.

"Smaller banks, which are less liquid, are willing to pay higher interest because of their more immediate need for cash. Bigger banks usually pay lower interest because they can afford not to borrow," Mr. Cerin said.

PERA

If you want to save for retirement, you should consider setting up a Personal Equity Retirement Account (PERA).

PERA, according to Republic Act 9505 or the PERA Act of 2008, "refers to the voluntary retirement account established by and for the exclusive use and benefit of the contributor."

The PERA law, Mr. Abrogena said, is a "very significant piece of legislation that will provide the incentive and the discipline for our countrymen to save for their retirement."

Francis Ed. Lim, Philippine Stock Exchange (PSE) president and chief executive, added that "as adverse global developments beyond our control threaten our economy, a measure like the PERA represents a welcome help not only for our capital market but also for millions of Filipinos who are looking for alternative sources of income."

Roel A. Refran, PSE general counsel, said the PERA law, if implemented properly, will be a "major capital market development tool that can expand the investor base in the Philippines."

Under PERA, you can contribute up to P100,000 per account annually. You may create and maintain up to five accounts at any one time.

If married, you and your spouse may each save up to P100,000 per account annually.

An overseas Filipino worker, on the other hand, may contribute double this amount, or P200,000, to his or her account annually.

Contributors will get a 5% tax credit. Amounts beyond the P100,000 or P200,000 ceiling, however, are excluded from computation for this incentive. The PERA law also provides that income earned from the investments and reinvestments of the maximum contributions are tax-free.

Mr. Abrogena noted how the investments allowed under the PERA program — unit investment trust funds, mutual funds, insurance plans, pre-need plans, equities, corporate and government bonds, etc. — are tailor-fitted to an individual’s risk preferences.

"The law not only provides tax incentives but also the widespread application across all individuals," he said. "This makes the program powerful in inducing people to save, making it easy to have a disciplined approach to savings and making the returns on these savings attractive enough for people to make it worthwhile."

"I believe everyone should take advantage of this opportunity not only because it is profitable, but because it provides financial security. Furthermore, the long-term funds that will be made available to Philippine industries will bring down the cost of capital, make our industries competitive and make us less dependent on foreign borrowings that have made our economy very susceptible to external shocks," he added.

The PERA law’s implementing guidelines, however, are still being hammered out by regulators.

Government securities

If bank deposits offer negligible interest rates, your P500,000, if you prefer to be on the safe side, will have the potential to earn more if placed in government securities.

Fixed-income securities issued by the Bureau of the Treasury, had taken a beating in the past year as inflation soared, hitting a peak of 12.5% in August, but investment managers see a rebound in bond prices now that inflation has eased.

Bond interest rates and prices have an inverse relationship. As rates rise, prices go down and vice versa. Interest rates had risen along with inflation, or the rise in the price of goods and services, last year.

"Fixed-income returns will be better this year given the direction of interest rates," said Paul Joseph M. Garcia, former president of the Fund Managers Association of the Philippines and currently chief investment officer of ING.

If you are a retail investor, you may avail of government debt papers from government securities eligible dealers, usually the large universal and commercial banks. You must be armed with P100,000, but need to cough out only P5,000 if you are buying a retail Treasury bond.

Marcelo E. Ayes, Rizal Commercial Banking Corp. (RCBC) senior vice-president for financial markets, said the local market should see more debt issuances this year as the government faces the twin problem of low tax collection and pump priming the economy to counter an economic crunch.

An abundant supply of government securities should make bond prices more competitive, he said. "The Treasury might change its course [compared to last year when it repeatedly rejected bids]. [The government] needs to spend more to stimulate the economy," he said. "Bond prices will definitely become more competitive."

Managed funds

Managed funds such as mutual funds and unit investment trust funds (UITFs) have become popular options for investors looking for yields higher than those offered by bank deposits. They are called as such since the management of the funds is assigned to portfolio managers who ensure that investments are earning and losses are minimized.

Fernando Jose Sison III, chairman of the Investment Company Association of the Philippines, the umbrella organization of mutual fund companies in the country, said net asset values per share (NAVPS) may have slumped in 2008 but this year should see them rebounding with inflation on a decline.

"NAVPS have gone down but at these levels, it is a good time buy," Mr. Sison said.

Mutual funds are pools of funds placed in high-caliber outlets such as stocks and bonds. They provide small-scale investors access to investment outlets that are normally limited to high net worth investors since minimum investments can be as low as P5,000.

Investors may buy mutual fund shares from licensed mutual fund agents. Mr. Sison said the total amount of funds managed by mutual fund companies slumped to P62 billion as of October 2008, P24.2 billion lower compared to the P86.2 billion recorded in end-2007.

Funds invested in stocks such as stock and balanced funds were the most severely hit after the local bourse fell by almost 50% in 2008. Those that were invested in fixed income outlets such as bond and money market funds were likewise hit after bond prices slipped due to high interest rates last year.

Stock funds are invested in shares of stock while balanced funds are invested in both equities and bonds. Bond and money market funds are essentially invested in bonds, but the latter are invested in securities with tenor of less than a year.

"There’s softening of interest rates. There should be a recovery for NAVPS [this year]," Mr. Sison said. The stock market is also expected to make a rebound this year since benchmarks such as Dow Jones and the PSE index have appeared to have bottomed out, he added. The entry of new mutual funds — Deutsche Bank’s DWS Deutsche Philippine Fixed Income and DWS Deutsche Philippine Equity Fund, Inc. as well as three others in the pipeline — are also signs of better prospects for the mutual funds industry this year, he said. Trust industry players, however, are less bullish.

Marvin V. Fausto, vice-president of the Trust Officers Association of the Philippines, said that while there is a big chance for the bond and stock markets to rally, the volatile market conditions might minimize returns from these investments.

Mr. Fausto is also Banco de Oro senior vice-president and chief investment officer of trust banking. "There will be a rally but conditions will remain volatile. The general sentiment will still be risk aversion," he said.

Like mutual funds, UITFs are also invested in fixed-income securities, money market instruments and stocks, only that these funds are sold in units instead of shares. UITFs, introduced in 2005, replaced common trust funds. UITFs are being offered by banks’ trust departments, and minimum investments start at P5,000.

Mr. Fausto said assets held in trust amounted to around P110 billion as of September, and growth of at least 10% is expected this year, slower compared to growth rates in previous years, as investors are expected to remain risk averse and to save rather than invest. He said growth for the UITF business this year will come from money market funds.

Going back to the question of where you should place your P500,000 in a time of market turbulence, Mr. Abrogena said you should strongly consider the SDA, short-term deposits or short-term government securities if your time horizon is short-term.

"For P500,000, what we can offer is a money market fund that invests in a diversified mix of these instruments: SDAs, bank deposits and short-term government securities.

"It gives the investor the flexibility of placing in smaller amounts [minimum of P100,000], automatic reinvestment [no need to track down maturities], nor pretermination penalties, and professional management to maximize yields and minimize risk exposure," he said.

For those who are at the "extreme, long term horizon, aggressive investor," he said now is an exciting time to invest.

"Amid the turmoil and fear in the current environment, Warren Buffet’s words remind us: ’Be fearful when others are greedy and greedy when others are fearful,’" Mr. Abrogena said.

Property developers balance their options


The stock market has not been immune to the turmoil unleashed by the near collapse of the US financial system. Like their foreign counterparts, local firms could only watch helplessly as their share prices plummeted due to the massive sell-offs initiated by panicked investors.


With people suddenly finding their inner bears, not even positive earnings reports by the more fundamentally sound companies could lure investors back in.

Risk aversion has gripped the market so much that the property sector, one of the best performing industries on the bourse in 2007, has also been hit. As of Dec. 12, share prices of real estate companies have lost 59% of their value from the close of trading last year, trailing only mining and oil stocks, which shed 60%.

It is not helping the sector’s prospects that the economy is expected to slow down further this year as more negative news hurts investor sentiment.

Ricardo B. Tan, Jr., chief information officer of subdivision developer Vista Land & Lifescapes, Inc., noted that right now, fundamentals are not enough to keep share prices afloat.

"Investor sentiment will play a larger role than usual. Right now, even if things are going well and the outlook is promising for some companies, stock prices have continued to suffer primarily due to the negative mood among investors," he said.

In an e-mail, property analyst Ramon Jose E. Aguirre, research manager of Colliers International, said external appetite for local stocks would determine share prices.

"Share prices and the local bourse take their cue from financial markets abroad. As long as markets abroad face unprecedented volatility, there is no guarantee that share prices will go up," he said.

While most companies are sound, "that’s clearly not enough to erase bearish investor sentiment, at least for now."

Reprieve

But property firms had one less reason to worry about after the Securities and Exchange Commission heeded the request of four industry groups to postpone by three years to 2012 the enforcement of an accounting rule that bars developers from booking revenues until projects are completed.

In October, the Subdivision and Housing Developers Association, Organization of Socialized Housing Developers of the Philippines, National Real Estate Association and the Chamber of Real Estate Association warned the corporate regulator that the rule could trigger a stock meltdown.

Investors, they said, could lose confidence in the real estate business as they worry about low income or even losses during the construction of a project.

In a telephone interview, Ayala Land, Inc. Spokesman Alfonso Javier D. Reyes noted that since the rule only changes accounting procedures, it should not affect the way the business is conducted.

"It’s an accounting change but it does not really affect the fundamental value of a company... [The deferment] helps to some extent," he said.

The last thing the market needs now, he added, are more uncertainties but it would largely be a communication challenge.

Mr. Reyes noted that firms would have had to explain to investors wild variations in sales from ongoing projects.

Mr. Tan agreed, but noted that the accounting rule change would have affected condominium and vertical developers more since their projects take three to five years.

"It is a positive development overall since it removes a potential source of confusion in the market," he said.

But Prince Christian R. Cruz, a senior economist of the online research house Global Property Guide noted that while the deferment might help in the short run, "it could prompt suspicion on the figures being presented by local companies to foreign investors if we use different accounting rules."

Prospects

Mr. Tan said the high-end condominium segment would most likely be affected if economic conditions deteriorate next year.

He noted buyers who look at condominiums as an investment may postpone their purchase. "Also, much of the demand in this segment used to come from the US."

Mr. Aguirre thinks smaller developers could suffer more than seasoned ones since these are not backed by a strong brand, reputation and credit lines.

"High-end residential condominiums should be fine for [this year] as demand appears to be holding up... Big and established companies should find [this year] challenging, but not too much to handle," he said.

For his part, Mr. Reyes said the industry’s growth could come from the retail and mid-level market, where demand remains strong, and from outsourcing companies.

He added that Filipino workers abroad would continue to buy houses — a phenomenon that has fueled the industry’s recent boom — since remittances remain strong and bank financing is accessible.

The passage of a real estate investment trust (REIT) law would also help the industry, analysts said. Mr. Aguirre said REITs could be an alternative to stocks, and could allow investors to have a pool of assets without the tax bite.

"The pool of funds will be injected into the real estate industry. This in turn will spur economic activity and growth of the sector," he said.

"In times like these, it is important to continue looking for instruments that may work, or may give investors reasonable options for their money," he added.

Mr. Cruz said the law should address ownership and regulatory issues involving real estate investment trust funds.

"The devil is in the details... While the REIT may offset weaker demand, it must be ensured that its main beneficiaries are firms that complete their projects as scheduled," he pointed out.

Moreover, the law should prevent a situation where big developers are also the owners of big financial institutions. "So instead of a real estate investment trust company buying up a number of property from different developers, what you might get is big financial institutions buying from their sister real estate companies," he said.

Real estate players see growth in mid-end market

By Rhia de Pablo Updated January 19, 2009 12:00 AM

Real estate players continue to see a growing trend of the middle-end market as the unabated growth of the business process outsourcing industry continue to pump in a growing income in this market segment.

In an interview, Engr. Rey L. Ralota, Subdivision and Housing Developers Association (SHDA) president and Ramman Realty Development Corp. president said that they remain to be optimistic that the real estate industry will continue to achieve an upswing this year fuelled by the foreseen growth of the middle-end segment.

“There is a growing, manifested demand of middle-class kind of developments here in Cebu and this can impact the growth of the sector this year amidst the negative forecasts brought by on-going global crisis,” said Ralota.

He said that last year, 72 percent of housing take outs from their segment was composed of economic housing with unit prices ranging from P300, 000 up to P750, 000.

However, they have also seen a growing demand in the middle-end housing segment in line with the further growth of the country’s business process outsourcing (BPO) industry.

“The middle-end housing development opens up as housing demand in this sector builds up along with the further growth of the country’s business process outsourcing industry which usually employs people from the middle class,” said Ralota.

Middle-end housing’s units range from P750, 000 up to two million pesos and above and these commonly are houses that are fully-furnished.

Meanwhile, Joseph Y. Sison, the VP for marketing and communications of Land Asia Global Properties Network Inc. also attested that this year, they are also looking at a growing trend of the middle market in terms of project category.

He said that employees from private companies mostly from contact centers have topped their buyer’s profile last year and this year they continue to see this segment growing along with the continuous positive growth projection of the BPO sector in the country.

Sison said that at the moment, more and more real estate developers are realizing this growing demand in the middle-end housing segment so most of them are shifting their focus to specifically building and doing middle-end housing projects.

“Middle-end units do not need to be improved because it’s good to live in as it was made. Homeowners can also do improvements unlike low cost houses which are limited to expansion and its bare so you still need to spend this is why a lot of developers are now shifting their upcoming projects in this market,” said Sison.

He explained that the rise of the middle-end segment reflects a growing consumer spending brought about by the positive inflow of investments from the growing BPO industry.

Sison said that usually, middle-end home buyers see real estate as investments for their future so at these tough times they are most likely to spend their hard-earned money on real estate which is something which can ensure them higher returns in the future instead of depositing in banks.

He said that this growing trend in the middle-end market segment has started since last year.

Real estate continues to be strong amid crisis


Updated January 22, 2009 12:00 AM

Despite the negative prospects of some economists in the county’s real estate industry, most stakeholders in the sector remain bullish that a positive outlook can still be expected this year amidst challenges of the global recession.

“The market in the Philippines is still showing positive signs compared to other foreign markets abroad despite the global recession that is why we real estate practitioners still maintain a positive outlook for this year,” explained realtor Ricardo N. Inting, the chairman of the board of Land Asia Global Properties Network Inc., the biggest realtor in Cebu.

He said that in the country, Cebu specifically is showing strong signs of economic activity that is eyed to fuel the further growth of the real estate sector in the area.

“Cebu has salient features and advantages over other places as big projects still keep pouring in such as call centers, retirement villages, and even new lifestyle facilities. The rapid growth of Cebu as a major destination in the country is also keeping the real estate sector afloat amidst negative outlooks brought by the economic crisis,” said Inting.

He said that compared to Metro Manila which has already reached a saturation point with the oversupply of properties, the real estate market here in Cebu still has ample room for more real estate investments.

“Cebu still have two to three years before it gets an oversupply of properties so this is why real estate investors continue to be enticed to come to Cebu to do projects,” he said.

Meanwhile, Land Asia’s VP for marketing and communications Joseph Y. Sison said that contrary to what most people believe, real estate continues to thrive amidst the negative prospects of the economy this year.

As a matter of fact, as marketing arm of most major real estate developers in Cebu and in Manila, they have noted that new projects still continue to pour in this year.

Sison shared that this month, many of their clients will be launching new projects in Cebu like Bloomstar Property Development Corp.’s Villa Vicenta Subdivision, Commonwealth Estate’s new middle-end condominium project called La Guardia Flats, and F3 Properties, Inc.’s high-end subdivision San Fermin Place in Mactan.

“Despite the fears caused by the crisis, developers continue to develop new projects this year so there is no such thing as a slowdown at the moment,” he pointed out.

Sison revealed that as early as January this year, they have already managed to generate P15 million sales which is equivalent to 13 units and this goes to show that many people are still investing in real estate as a hedge for the crisis.

“The industry is not totally problematic, there is no slowdown and despite the fears about on-going financial crisis, people continue to invest. In this time, people with money either save more or spend on something with tenfold returns and they realize that buying properties at this time is a wise investment,” said Sison.

He also said that at this point, developers have even increased their units’ prices to about 10 percent more because they believe that the crisis will only make people keener on investing in real estate.

Sison shared that last year, their company reached P590 million sales, which decreased over last 2007’s P634 million.

But he stressed that this is not due to the global crisis but because of the issue on licensing of agents that resulted to limited sales because unlicensed agents had limited exposure.

He also said that employees from private companies mostly from contact centers topped their buyer’s profile last year and this year they continue to see this segment growing along with the continuous growth projection of the business process outsourcing (BPO) sector in the country.

For this year, Land Asia is targeting to reach sales of P1.2 billion, which is an average of P100 million per month target and Sison said that they are optimistic to achieve this goal considering the bullishness of the market to invest in real estate at these times. — Rhia de Pablo

Real estate remains a viable investment


By Rhia de Pablo Updated January 30, 2009 12:00 AM

Amidst the negative prospects of the economy this year with forecasted slowdown on consumer spending brought about by the current global economic crisis, real estate players stays upbeat in opening new projects.

One of which is the San Fermin Place, the first project of F3 Properties Inc., a fairly new player in Cebu’s thriving housing sector which was recently launched at the Casino Español.

“People nowadays look out for stability in the market and they are on the lookout for good valued developments as investment prospects, value will now be important to a lot of people,” said Peri S. Villarta, managing director of F3 Holdings Corp., the umbrella company of F3 Properties Inc., sister companies of Tita Gwapa stores and F3 International Inc., a furniture exporter.

Villarta said that despite the volatility of the economy today, real estate prospects remain bright that is why they remain upbeat in pursuing this high-end project.

San Fermin Place is a two-hectare exclusive beachfront real estate development located in Mactan, a walking distance from beach resorts in the island such as Costabella, Maribago Bluewater, Cebu Beach Club, among others, said Villarta.

The development is composed of 19 open lots and 21 townhomes with complete amenities and so far seven opened lots have already been sold.

This high-end development in Mactan initially has P200 million funding with a unit price ranging from P9 million to P14 million for its townhomes.

“With the shaking investment in the stock market and the drop of property value in the US which is under deep recession, most are now looking at Asia to put up more stable investments so we aim to be known to attract these potential markets. In any business whether there is a crisis or not, nothing’s going to happen if you don’t work hard for it, “said Villarta.

She said that equipped with their long experience in the furniture exporting industry and retail with Tita Gwapa, they are striving to serve the needs of the market especially at these tougher times when most people are holding on to their hard-earned money and are hesitant to invest.

“San Fermin was created with concept of security, exclusivity, and value for investment so that their investment will appreciate every year,” said Villarta.

Realtor Ricardo N. Inting, the chairman and CEO of Land Asia Global Properties Network, the marketing arm of San Fermin Place said that real estate is still the best investment option at this point of crisis.

But he stressed that marketing a particular project should no longer be confined with the traditional tools such as exhibits or open houses because it has to have a global appeal and the better way to do it is through the World Wide Web.

“In these exceptionally challenging times with increasing prices of construction materials which slowed down sales, marketing should be a global appeal so that potential buyers will know that real estate is still the best investment at this point,” said Inting.

He forecasted that for the second quarter of this year, Manila will deeply be affected with the crisis with foreclosed condominiums but Cebu will remain resilient because of its salient features that will keep its real estate sector upbeat for the next two to three years.

“Most investors from different countries under recession like the US are now looking at Cebu as an investment destination and they believe that Cebu is the right place to invest at this point in time especially the baby boomer market,” said Inting.

He said that there are about 80 million baby boomers abroad that could be tapped as potential investors and two million of which are Filipino Americans with an average of $2, 000 who are looking for the best place to retire.

“The opportunity is here in Cebu and it’s just a matter of doing the right thing and adopting new marketing systems that will work to capture these markets,” said Inting.

Investments in BPO sector seen to hit $60 million this year


By Ma. Elisa P. Osorio Updated January 30, 2009 12:00 AM

Investments in the country’s business process outsourcing (BPO) industry is expected to reach $60 million this year as the Philippines remains the most stable country in the Southeast Asian region, international property services firm CB Richard Ellis (CBRE) said.

“The Philippines is the most stable country in the Southeast Asian region,” CBRE chairman Rick M. Santos reiterated in a press briefing yesterday. “There are no talks of any coup and the peso has been stable over the years”.

He said the Philippines is a maverick market among countries greatly affected by the slowdown in global consumer demand.

The country has a number of industries that will insulate the economy from the global recession, specifically the BPO and tourism sectors, Santos pointed out.

He noted that amidst the global credit crisis, the environment of doing business in the Philippines has provided a refuge for foreign direct investors.

Likewise, he said overseas Filipino workers’ remittances, a large domestic market, and relatively low cost of doing business should be able to keep the local economy growing in 2009 en route to its original recovery plan by 2010.

Meanwhile, CBRE research and consultancy director Victor Asuncion said offshoring is expected to continue in spite US President Obama’s campaign to encourage US firms to keep jobs in the United States.

Asuncion said companies will continue to seek destinations which offer cheaper operations costs. In fact, he said he is seeing a lot of expansions of existing BPOs in the country as reflected in the high inquiries they are receiving.

Asuncion said they expect to fill the 240,000-square meter office space for BPOs. With an investment of between $1,000 to $ 1,500 per BPO seat, the estimated new investments for the sector would amount to between $40 million to $60 million.

He said they expect more technical support and back-office operations of major US firms and financial institutions to come in, given the huge 70-to 80-percent disparity in salaries.

Economy grows by slower 4.6% in 2008


By Iris C. Gonzales Updated January 30, 2009 12:00 AM

The economy grew at its slowest pace in seven years in 2008 as the global financial crisis took a toll on services and industry while agriculture wilted from typhoon damage.

Growth in gross domestic product slowed to 4.6 percent last year from a three decade high of 7.2 percent in 2007, the government said yesterday.

President Arroyo struck an optimistic note, saying that with two-thirds of the world in recession, “We should all be proud that our country is growing.” The government forecasts the economy to grow between 3.7 percent and 4.7 percent this year.

Growth in the services sector – the linchpin of the economy – dropped to 4.9 percent from 8.1 percent the previous year. Agriculture, which employs four in every 10 Filipinos, grew 3.2 percent compared with 4.9 percent in 2007 reflecting a drop in rice and corn production due to typhoon damage and high fertilizer costs.

“Our neighboring countries also experienced a dramatic slowdown due to high inflation, high oil prices, and the deepening global financial crisis in the fourth quarter,” said Socioeconomic Planning Secretary Ralph Recto. He said the “continuing debacle” in the global economy took a toll on the country’s trade as merchandise exports contracted, with declining shipments of electrical machinery, semiconductors, electronic microcircuits and garments.

Several multinationals, including Intel Corp. and Texas Instruments Inc., have announced job cuts in the Philippines due to falling demand, but International Labor Organization economist Steven Kapsos said Thursday that this had not resulted in a marked increase in unemployment so far.

He said the crisis was likely to affect workers “in other ways that are somewhat more difficult to measure, such as declining hours of work, an increase in part-time work, pressure for lower wages and less job security.”

Unemployment last year averaged 6.8 percent - or one out of 10 Filipinos in the work force of 58.2 million. Despite the global slowdown, 3,000 Filipinos were still leaving their homes every day for jobs abroad.

About 10 percent of the population works overseas, last year sending home an estimated $17 billion, or one-tenth of GDP, and helping to fuel domestic consumption.

Recto said fourth-quarter GDP expanded 4.5 percent, and third-quarter growth was revised from 4.6 percent to five percent, bringing the overall 2008 expansion in line with government’s projection. - With AP


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