Construction in full swing: Commercial sector shows no signs of slowing down as developers off to a strong start this 2016

IF the latter part of 2015 and the first quarter of this year would be any indication of how busy and vibrant the entire 2016 will be for the Philippine real-estate sector, it would be safe to say that we’re likely bound to surpass the milestones of the past year.

While the residential sector has been reaping the fruits of continued investments over the past few years, players within the commercial development sector, most notably, are now starting to enjoy an increasing growth momentum as more and more developers venture outside of Metro Manila.

ArthaLand and Robinsons Land Corp. (RLC), for example, have both began strengthening their presence in Cebu, which has earned the reputation as the most vibrant investment destination in the Visayas. ArthaLand plans to promote its sustainable building culture by putting up an “energy-efficient and environmentally sustainable office building” also in Cebu City. The company recently acquired a property in Cebu via its subsidiary, Cebu Levana Land Corp., and plans to offer approximately 51,000 square meters of office space for the region’s offshoring and outsourcing sector (O&O) players.

Meanwhile, the latest Philippine Property Market Monitor from Jones Lang LaSalle reported that RLC is set to inaugurate an office building in Cebu City, which will take up about 30 percent of its 4.6-hectare property that also houses the recently opened Robinsons Galleria Cebu. This is deemed to be a welcome development for commercial locators in Cebu, particularly for those engaged in its O&O, as the facility will be offering a GFA of close to 9,500 sq m.

Booming growth beyond Metro Manila

Back in Luzon, developers are also keen on building the next thriving investment districts outside of Metro Manila. In Clark at Northern Luzon, construction activities will likely hit a record high in the months to come following the recent announcement of two massive development projects: Global Gateway Development Corp.’s (GGDC) Aeropark Campus and the 35,000-hectare Clark Green City.

The $150-million Aeropark Campus, one of the more remarkable investments initiated by Kuwaiti investors GGDC, promises to be a major development that will help shift the focus of growing industries away from Metro Manila. The project, which will host more than 5.8 million sq m of premium office, logistics, retail, hotel and residential space, is expected to generate at least 10,000 jobs during the first few years of its operations. That number is seen to balloon to at least 300,000 jobs once the entire project is completed. Clark Green City (CGC), meanwhile, is seen to lure more foreign investors as state-owned Bases Conversion and Development Authority (BCDA) continues to facilitate development for the 9,450-hectare master-planned property inside the Clark Special Economic Zone. Once completed, the entire CGC has the potential to generate a gross output of at least P1.57 trillion annually, apart from facilitating the continued growth of more areas in Northern and Central Luzon.

Supply more than meets current demand

The abundance of office spaces in other areas within Metro Manila continues to complement the increasing demand and confidence of local and foreign investors.

A recent insight shared by experts from Jones Lang LaSalle revealed that, as we speak, there’s a total of 1 million sq m of available office space spread out among areas like Makati City, Ortigas, Bonifacio Global City, reclaimed areas in Manila Bay, and Alabang in Muntinlupa. Of this grand total, at least 15 percent to 20 percent will be taken up by business-process outsourcing (BPO) companies, as established firms expand their operations and new players come in. All of these developments confirm the earlier analysis made by Lamudi Inc. Founder and Managing Director Jacqueline van den Ende, who was among the thought leaders I spoke to for one of my trend reports prior to the end of 2015. “Developers are looking to go provincial due to the increasing scarcity of available land.

A couple of very big projects are being launched, especially in Cebu and in other provinces.…The office market in Manila will continue to be very strong. We see a lot of strata-titled office developments launched this year, which I think will be huge in 2016. Metro Manila’s office market is tight with very few properties coming online.

This is especially true in non-BPO-type offices. This presents an opportunity for investors.” We’re definitely on the lookout for how all these exciting developments will shape up this year. Great times ahead, everyone!

Source: http://www.businessmirror.com.ph/construction-in-full-swing-commercial-sector-shows-no-signs-of-slowing-down-as-developers-off-to-a-strong-start-this-2016/

LESSONS LEARNED IN 2015

Property portal Lamudi said  2015 was a good year for Philippine real estate. 

In the first part, we gave a rundown of 12 of the 25 lessons in property development in 2015.

The remaining 13 are as follows:

13.  Forbes Park is the most expensive subdivision in the Philippines
Average monthly rents in the very exclusive Forbes Park—home to business tycoons, foreign dignitaries, and boxing icons—stand at Php402,459, making the enclave the most expensive area to rent a
house anywhere in the Philippines.

15. Filipino-Americans prefer houses
Despite the condo boom happening in Metro Manila and other major cities across the Philippines, it seems that many Filipinos based in the United States still prefer to purchase houses, at least according to
January–June 2015 search data from Lamudi. More than half (57.83 percent) of all searches in the Lamudi website were for houses, followed by condos (16.58 percent). The most searched cities? Quezon
City, Makati, Manila, Tagaytay, and Baguio, in this particular order.

16. Cities affordable for first-time homebuyers
There are cities surrounding Metro Manila abound with affordable options for first-time homebuyers. These cities include San Jose Del Monte, Bulacan, where average home price stands at Php495,999; and followed by San Mateo, Rizal (Php549,259); Dasmariñas, Cavite (Php1.189 million); Imus, Cavite (Php1.858 million); Bacoor, Cavite (Php2.777 million); Antipolo, Rizal (Php3.668 million); Santa Rosa, Laguna (Php4.16 million).

17. Condos close to train stations are more expensive
An average condo located within 100 meters of an MRT station is at least Php16,645 more expensive per square meter than a similar, newly built condo situated more than 500 meters away, according to
listings data from Lamudi.

18. Ayala Center, Century City, and Rockwell Center lead most expensive list
Ayala Center—the commercial core of the Makati CBD—commands the most expensive condo rent per sqm than any area Metro Manila. Living in the area, which is within striking distance of Greenbelt, Glorietta, and most of Makati’s luxury hotels, can set a renter back Php1,144 per sqm per month, meaning a 100-sqm condo here can command monthly rent of more than Php110,000. Following Ayala Center are Century City and Rockwell Center in Makati’s Poblacion area, where condos command monthly rents 
of Php986 and Php973 per sqm, respectively.

19. Pricier condos are not necessarily bigger
On a per-square-meter basis, more expensive condos do not necessarily mean bigger space. Areas where condos are on average bigger are actually cheaper on a per-sqm basis. These areas include Ayala Triangle/Apartment Ridge, where condos average 275 sqm and where monthly rents average Php568 per sqm. This area is followed by Salcedo Village, where the average size of condos is 126 sqm and average monthly rent stands at Php652 per sqm. In contrast, in the Mall of Asia Complex and Newport City, the average sizes of condos are 34 and 50 sqm, but monthly rents average Php850 and Php785 per sqm, respectively.

20. Caloocan will be the second most populous city by 2020
The City of Manila will be overtaken by nearby Caloocan as the Philippines’ second most populous city by 2020. This is according to an analysis by Lamudi using the annual average population growth rate issued by the Philippine Statistics Authority in 2010. Caloocan’s projected 2020 population will be 1.88 million, compared to Manila’s 1.72 million.

21. Eleven PH cities will have populations of more than 1 million by 2025
Using the annual population growth rates recorded in 2010, 11 cities in the Philippines are projected to have populations of more than 1 million. These are Quezon City (3.95 million), Caloocan (2.115 million), Davao City (2.056 million), Manila (1.76 million), Dasmariñas (1.27 million), Antipolo (1.25 million), Zamboanga City (1.25 million), Cebu City (1.14 million), Taguig (1.12 million), Bacoor (1.11 million), and Pasig (1.022 million).

22. Can BPO workers afford condos?
With an average monthly salary of Php22,500, entry-level customer care representatives cannot afford to rent a condo in either of these “affordable” areas: Eastwood City, Pioneer-EDSA, Poblacion (Makati), and San Antonio (Makati), where average rents range from Php19,838 to Php22,563 per month. Using the 30 percent rule (spending not more than 30 percent of one’s monthly income on housing), only those working as managers, with an average compensation of Php75,000 per month, may only afford to rent a condo in these select areas.

23. How long Filipinos should work to buy a home
A salaried Filipino with more than 20 years of work experience and earning Php1.43 million per year may need 128 years’ worth of his salary in order to afford a house in Makati where average home price stands at Php184 million. In contrast, this same person needs 4.16 months’ worth of his annual salary in order to afford a home in San Jose Del Monte, Bulacan, where the average home price is Php495,999.

24. Are Filipinos buying or renting?
Based on its third quarter 2015 search data, Lamudi found that there is an almost equal proportion of renters and buyers among 18- to 24-year-old online property-hunters (50.2 percent for rent versus 49.8 percent for sale). Quite interestingly, there is a tendency for property-hunters to check out for-sale properties online as they get older. Among 25- to 34-year-old users, 57.3 percent are checking out for-sale properties. In the 35–44, 45–54, and 55–64 age groups, it is even higher; 70.8, 72.6, and 71.1 percent of the website’s users, respectively, are checking out for-sale properties.

25. Most sought-after locations for land
Quezon City, Tagaytay, and Baguio are the top three most popular locations among property-hunters looking for land online. These cities are followed by Davao and Antipolo. “Clearly there are cities preferred by people researching about land for sale online, and we hope these findings will give real estate developers insight into how to properly plan their next projects,” said Lamudi. In addition, the fact that only five Metro Manila cities were in the top 10 indicate that Filipinos are not too keen into buying residential land within the National Capital Region, either due to lack of supply, unaffordability, or both.

Source: http://www.malaya.com.ph/business-news/special-features/lessons-learned-2015

No real estate bubble – BSP

MANILA, Philippines - Initial results of stress tests conducted by banks validated the assessment made by the Bangko Sentral ng Pilipinas (BSP) that there are no risks from the real estate market.

BSP Deputy Governor Diwa Guinigundo said initial results of the real estate stress tests conducted by banks showed the capital adequacy ratio (CAR) of banks would remain above the central bank requirement even if 25 percent of their real estate loan portfolio turns sour.

“At this point we don’t see any signs of stress in the real estate sector,” Guinigundo said.

The central bank has asked banks to submit data on their real estate portfolio to include exposure in socialized housing as well as debt incurred through the issuance of bonds to finance real estate activities.

“We now have a more comprehensive definition of the exposure to real estate. It’s more dependable,” he said.

Based on the new definition of the exposure of banks to real estate, Guinigundo said stress tests conducted by big banks showed that their CAR would still be above the 10 percent requirement set by the BSP and the eight percent threshold set under the Bank for International Standards (BIS).

“Even if they factored in a 25 percent souring of the loans on real estate, they are still above the 10 percent regulatory capital that we imposed on the banks,” Guinigundo said.

Aside from the BIS methodology, he said the BSP also used the International Monetary Fund (IMF) identification of asset bubbles.

“Those two tests will show that we are far from the so-called danger level,” he added.

The CAR of big banks stood at 15.48 percent on a solo basis and 16.42 percent on a consolidated basis as of end-June last year reflecting their continuous efforts to maintain adequate capital buffer against unexpected losses that may arise during times of stress.

The BSP stepped up its watch over the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to property industry.

The pre-emptive macroprudential policy measure approved by the BSP required stress tests for banks to determine if their capital will be enough to absorb credit risk that may arise from their exposure to the property sector.

Banks’ exposure to real estate jumped 21.8 percent to P861.22 billion in end-November from P708.88 billion in end-September last year. The sector accounted for 17.5 percent of banks’ total loan portfolio of P4.91 trillion as of end-November.

The BSP has set the cap on real estate loans at 20 percent of the bank’s total loan portfolio.

Guinigundo added that real estate developers are now more prudent after learning their lessons during the Asian financial crisis in 1997.

“We can also say that we are in touch with various real estate developers, the bigger ones, and it is very comforting to know that our developers have become more prudent, more discreet with respect to their expansion plans,” he said.

Source: By Lawrence Agcaoili (The Philippine Star) / http://www.philstar.com/business/2016/01/12/1541553/no-real-estate-bubble-bsp?nomobile=1

Vista Land gets ‘AAA’ credit rating from CRISP

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Category: Top News

19 Mar 2014

 

Written by VG Cabuag

Property developer Vista Land & Lifescapes Inc. has received the highest credit rating from Credit Rating and Investors Services Philippines Inc. (CRISP) with “AAA” issuer rating with a stable outlook.

CRISP said the Villar-controlled company currently leads in the low-cost and affordable-housing market, and lauded it for its “excellent financial performance, strong management team and a successful operating model.”

Vista Land leads all property developers in the country in the low-cost and affordable- housing market segments.  The company has built more than 250,000 houses in 34 provinces, 73 cities and towns throughout the country.

“[Vista Land] has an operating model that can successfully replicate large-scale housing-community projects in its large land-banked properties widely spread throughout the country,” the ratings firm said.

It also cited Vista Land’s “excellent financial performance” in the last five years, in which it recorded a 22-percent average net-income growth. 

During that five-year period, Vista Land’s earnings before interest, depreciation and amortization margins averaged 36 percent, while its gross margins averaged 51 percent.

Vista Land reported a 15-percent increase in its net income last year as a result of its double-digit growth in sales after it completed and turned over more of its projects to its owners.

The company said in its report that its net income for the whole of 2013 reached P5.06 billion; the year before, it registered P4.38 billion in profits. Revenues from real-estate sales grew to P20.02 billion, a 23-percent increase from the previous year’s due to the increase in its overall completion rate of sold inventories, mainly of its horizontal developments, led by Communities Philippines and Crown Asia and high-rise developer Vista Residences.  The company uses a percentage of completion method in which it will recognize revenues according to the stages of development, of the pieces of property.  The real-estate revenue of Communities Philippines increased by 59 percent to P9.35 billion from the previous year’s P5.87 billion.  “This increase was principally attributable to the increase in the number of homes outside Mega Manila completed or under construction in the low-cost and affordable housing segment,” the company said. For Project Inquiry contact Vistaland at 09173236123.

Megaworld township project in Davao set

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Category: Top News

19 Mar 2014

 

Written by VG Cabuag

Megaworld Corp. on Wednesday said it will establish its first township development in Mindanao, the Davao Park District, envisioned to be the city’s next central business district and information-technology hub for the southern part of the country.

Megaworld said it would spend some P15 billion in five to seven years to develop an 11-hectare property along the S.P. Dakudao Loop in Lanang, Davao City. The area used to be the Lanang Golf and Country Club.

“Through the years, we have witnessed how Davao City has transformed into a major economic center of the country. This city has an impressive track record as an investment and business-friendly city, and a city where peace and order are truly your local government’s top priority,” Jericho Go, Megaworld first vice president, said.

The company did not give specifics on how many towers it would build on the property, but said it would have office towers, residential condominiums to be built by its unit Suntrust Properties, commercial and retail centers, open parks and lagoon and a school.

“The first building to rise in Davao Park District will definitely be an office tower. We are committed to generate around 20,000 jobs in the township in the next five years,” Go said in a statement.

Megaworld usually builds office towers when there is demand either from its existing pool of tenants from mostly business-process outsourcing sector or from new companies that want to set up in the Philippines.

The company expects its office-space inventory to reach 712,000 square meters this year, the biggest in the industry.

“Within the next five to seven years, we see Davao Park District as the next city center where business, pleasure and lifestyle meet— all in one district,” Go said. “Davao City is the economic center of Mindanao. This is the best place to build our very first township in the Southern Philippines, which we envision to be Mindanao’s new central business district. In Davao Park District, the people of Mindanao can finally experience Megaworld’s township concept,” Andrew Tan, chairman and chief executive officer of Megaworld, said.

Most of Megaworld’s development are in Metro Manila, while it has also other large developments in Cebu and Iloilo.

Megaworld’s Davao development is its 10th township since the company introduced the “live-work-play” concept in its 17-hectare Eastwood City in Libis, Quezon City.

The company’s previous announcements involved the development of the former Ajinomoto factory in Pasig now to be called Woodside City, the redevelopment of Manila Southwoods City in Cavite that will be undertaken by its unit Global Estate Resorts Inc.

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In Photo: Megaworld announces its “entry” in Mindanao with its P15-billion Davao Park District—its first on the island. Making the announcement at a news conference are Jericho Go (right), Megaworld first vice president; and Harold Geronimo, Megaworld director for strategic marketing and communications. For Megaworld Project Inquiry contact +639173236123. 

Philippines jumps 5 notches in competitiveness ranking

By Michelle V. Remo in Manila/Philippine Daily Inquirer | Asia News Network – Thu, May 30, 2013

Manila (Philippine Daily Inquirer/ANN) - With an economy growing at a robust pace and an efficient workforce to boast of, the Philippines jumped by five notches in this year's World Competitiveness Ranking.

From 43rd last year, the Philippines landed 38th in this year's global survey on competitiveness conducted by international business school IMD. There are 60 countries covered by the annual survey.

A country's ranking results from queries to respondents, mostly from the business sector, focused on four main categories: economic performance, government efficiency, business efficiency and infrastructure.

In the area of economic performance, the Philippines improved its ranking by 11 notches from 42nd last year to 31st this year.

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This came about following its encouraging growth performance last year, when its economy grew by 6.6 per cent, surpassing the government's target of 5 per cent to 6 per cent.

In this year's survey, the United States gained the top spot, while Switzerland landed second.

Other countries in the Top 10 are: Hong Kong, Sweden, Singapore, Norway, Canada, United Arab Emirates, Germany and Qatar, which landed on the 3rd to the 10th spots, respectively.

The countries at the Bottom 10 are: Brazil, Slovenia, South Africa, Greece, Romania, Jordan, Bulgaria, Croatia, Argentina. They landed on the 51st to the 60th spots, respectively.

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Barclays ups Philippines' growth estimates

By Michelle V. Remo in Manila/Philippine Daily Inquirer | Asia News Network – Tue, May 21, 2013

Manila (Philippine Daily Inquirer/ANN) - Barclays has raised its 2013 growth forecast for the Philippines as it expects the economy to post one of the fastest growth rates among emerging markets in Asia.

In one of its latest reports, Barclays said the Philippines was now seen to grow by 6.2 per cent this year and 6.3 per cent in 2014.

The international financial services firm earlier projected that the Philippine economy would grow by 5.9 per cent this year.

Its new 2013 forecast for the Philippines is now within the government's official growth target of between 6 and 7 per cent.

Barclays said the Philippines would likely post the third-fastest growth rate among emerging economies in Asia, behind China and Indonesia.

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It expects China to grow by 7.9 per cent this year and 8.1 per cent next year. Indonesia, on the other hand, is seen expanding by 6.3 and 6.4 per cent in the same years.

The upgraded growth forecast for the Philippines came amid improved business sentiment on the Philippines following the country's attainment of investment grades this year.

On March 27, Fitch Ratings gave the Philippines its first investment grade from an international credit-rating agency, by lifting its score for the country by a notch from BB+ to BBB-, which is the minimum investment grade.

Standard & Poor's followed on May 2, giving the country its second investment grade from an international credit watchdog.

The two credit-rating firms cited improvements in the country's macroeconomic fundamentals for their decisions.

These fundamentals include the declining outstanding debt of the government in proportion to the country's gross domestic product, the buildup in foreign-exchange reserves, robust economic growth rate, benign inflation and a stable banking sector.

Meantime, Barclays said some central banks in emerging markets in Asia may be poised to ease their monetary policies within the short term to ensure their economies maintain a robust pace of growth despite problems confronting industrialised countries.

"Admittedly, not all emerging economies have slowed but the general climate has engendered some further easing [of monetary policy]," Barclays said.

Its statement is consistent with prevailing views that the Bangko Sentral ng Pilipinas may further cut the interest rate on special deposit accounts, even as it now stands at a record low of 2 per cent.

Barclays said that despite favourable economic performance of the emerging markets, measures to counter the drag caused by the lacklustre demand for imports by industrialised countries were necessary.

"While stronger nominal GDP (gross domestic product) expansion should help to allay deflationary concerns, it is vital that countries seek additional ways to deliver faster real demand expansion," Barclays said.

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Philippine economy grows a stunning 7.8%

By Riza T. Olchondra in Manila/Philippine Daily Inquirer | Asia News Network – Fri, May 31, 2013

Manila (Philippine Daily Inquirer/ANN) - The Philippines became the fastest-growing economy among Asian countries during the first quarter of the year, with a better-than-expected growth rate of 7.8 per cent, boosting the country's efforts to attract more foreign investments.

Driven by strong manufacturing and construction sectors, the first-quarter growth was the highest since President Benigno Aquino III took office in 2010, Jose Ramon G. Albert, secretary general of the National Statistical Coordination Board, said Thursday.

Aquino's allies won majorities in both houses of Congress in midterm elections early this month, making it possible for him to proceed with his legislative agenda in his remaining three years in power.

"Business confidence and consumer optimism fuelled this growth, [erasing] doubts cast on the 2012 figures that [they were] due to base effects only," said Socioeconomic Planning Secretary Arsenio M. Balisacan.

Helped by increases in government and consumer spending, the year-on-year growth exceeded public and private forecasts, outpacing China (7.7 per cent), Indonesia (6 per cent), Thailand (5.3 per cent) and Vietnam (4.9 per cent).

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The Palace raved about the unexpected growth, but said it needed to be sustained to enable the masses to benefit from economic improvements.

Trickle-down effect

The trickle-down effect does not happen overnight, said deputy presidential spokesperson Abigail Valte.

"There is no one-to-one correspondence. It takes some time, which is why the goal of the administration is to sustain the growth," she said.

"We are getting there. While it's a work in progress, we have to make direct interventions," she added, referring to conditional cash handouts to 3.9 million of the country's poorest households.

Balisacan said the first-quarter growth was the second-fastest growth rate for the Philippines since the 8.9-per cent growth in the first quarter of 2010.

The growth of the gross domestic product (GDP), the value of all goods and services produced by the economy in a given period, surprised even the government's own economic managers.

Balisacan, also director of the National Economic and Development Authority (Neda), said the growth from 6.5 per cent in the first quarter of 2012 was widely unexpected, beating market forecasts that settled at 6 per cent.

He said the 7.8-per cent growth rate beat even his own forecast.

"But please note that I was the most optimistic of all," he said, spurring a flurry of tweets and retweets.

"I said, 'Wow,' when I saw the number. That was the reaction, I think, of everybody who saw the number," Trade Secretary Gregory Domingo said in a text message.

"It was significantly higher than expected given the weakness in exports, but it just goes to show the strength in other areas.

Manufacturing showed its leadership, with almost 10 per cent growth, which is a very big accomplishment," Domingo said.

Economist Cid L. Terosa of the University of Asia and the Pacific said by text message that his own calculation of the GDP growth was about 6.6 per cent to 7 per cent.

"Election spending and consumption contributed a lot to the spectacular first-quarter growth. To sustain it, consumption spending must be supported by strong investment spending, trade performance and sustained remittance inflows," Terosa said.

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc., said the growth was surprising given the weak exports market, but he added that election spending might have had some impact, even small.

Local business

Encouraging local businesses and local industries like mining would help the country sustain a 7-per cent to 8-per cent growth for the next 10 or so years, and this could curb poverty, Ortiz-Luis said.

The Manila Business Club attributed the strong first-quarter performance of the economy to the "sound macroeconomic foundations of the country, the capable leadership of our economic managers, and the steadily growing confidence of investors in the economy."

With the robust first-quarter growth, the club said the country was on track to achieve its 6 per cent to 7 per cent full-year economic growth target for 2013.

Melito S. Salazar, president of the Management Association of the Philippines, credited recent reforms for the high growth rate.

"With the recent election results, we are confident that more reforms will be introduced and previous reforms will be sustained, so higher growth is expected," Salazar said.

Broad-based output

The Neda said in a statement that the development on the production side was broad-based, with all sectors contributing positively to growth during the first quarter.

The Neda said services expanded 7 per cent during the period; industry, 10.9 per cent; and agriculture, 3.3 per cent.

"[The] impressive performance of these sectors prove that the country is already reaping the benefits of strengthening priority sectors that are potential growth drivers and employment generators," Balisacan said.

He noted that under agriculture, which grew by 3.3 per cent, fisheries showed a huge increase of 5.5 per cent after previous quarters of contraction.

"This shows that sustainable management in fisheries is also an effective growth strategy," he said.

Increased domestic demand pushed manufacturing growth to 9.7 per cent in the first quarter, Balisacan said.

He described as "stirring" the 32.5-per cent growth of construction, indicating, he said, "good positioning toward an industry-led economy."

"Initially, this was led by infrastructure spending of the government. By the second half of 2012, private construction started to rebound," he said.

Exports contract

Exports contracted in the first quarter, primarily because of a decrease in foreign demand for electronic components.

Analysts see the Philippines facing export headwinds as global growth shows signs of an extended slowdown.

But Finance Secretary caesar V. Purisima spoke Thursday of "signs of global recovery" and expectations of an increase in exports.

"With the coming finalisation of rules governing the mining sector, we expect to unlock another highly potent growth driver," Purisima said.

He said the government's strong cash position, arising from a robust growth in revenue collection, resulted in a 45.6-per cent expansion in public construction and 13.2 per cent in overall state spending.

"Coupled with the country's first investment-grade rating by a major ratings agency, we can say with much pride that good governance is good economics," Purisima said.

Budget Secretary Florencio B. Abad issued a statement saying the growth in manufacturing was particularly interesting because it was driven mainly by increased production of foodstuff.

"This not just translates to an increasing demand for local food products, but also indicates a growing need for unskilled labourers to support the industry's demands, which may help create thousands of jobs for Filipinos," Abad said.

Challenges

Despite the impressive growth figures, the Philippines faces many challenges. among them, the global slowdown, excessive capital inflows and natural disasters, an annual occurrence in the country whose rickety infrastructure and rice fields suffer damage from typhoons and floods.

"Disasters can negate the gains and even push back development. Moreover, the global economy remains fragile, negatively affecting our trade performance," Balisacan said.

"Due to the attractive investment opportunities, we are also at risk of receiving too much capital inflows as advanced economies implement quantitative easing. The challenge is to channel these inflows into productive investments," he said.

With reports from TJ A. Burgonio, Ronnel Domingo and AP

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Confidence at record high in Philippines

By Michelle V. Remo in Manila/Philippine Daily Inquirer | Asia News Network – Fri, May 24, 2013

Manila (Philippine Daily Inquirer/ANN) - Business confidence in the Philippines hit an all-time high in the second quarter, as the assignment of an investment grade to the Philippines prompted expectations that economic growth would remain robust and would continue to boost corporate earnings.

The Bangko Sentral ng Pilipinas (BSP or centra bank) on Thursday reported that the business confidence index for the second quarter hit +54.9 per cent, the highest since the BSP started conducting the Business Expectation Survey (BES) in the fourth quarter of 2006.

The latest index was an improvement from the +41.5 per cent recorded in the first quarter of this year and the +44.5 per cent posted in the second quarter of last year.

The index is computed as the percentage of respondent firms that said they are optimistic about the economy and their financial standing minus the percentage of those that say otherwise.

Results of the survey also showed that the "next quarter confidence index" remained strong at +4.2 per cent. This index indicates the companies' outlook on the economy and their respective financial performance in the coming quarter.

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BSP Director Rosabel Guerrero on Thursday said in a briefing that the improvement in the confidence index of most businesses was due to the increase in demand resulting from election-related spending, rising orders experienced by manufacturing firms, and robust construction activities that continue to boost the real estate sector.

Also, the favourable sentiment of businesses was brought on the investment grade rating the Philippines received from international credit agencies, Guerrero added.

On March 27, Fitch Ratings upgraded the Philippines' credit by a notch from BB+ to BBB-, the minimum investment grade.

On May 2, Standard & Poor's made the same move, giving the country its second investment grade.

The ratings firms cited the country's improving macroeconomic fundamentals, including declining debt burden of the government, moderate inflation, buildup of foreign exchange reserves and robust economic growth.

BSP Deputy Governor Diwa Guinigundo said the favourable result of the latest survey on business sentiment indicated that the Philippine economy is poised to sustain a robust pace of expansion.

"There is a good correlation between the confidence index as well as actual performance of the economy," Guinigundo said in the same briefing.

The government expects the economy to grow between 6 and 7 per cent this year. It is scheduled to announce the growth of the economy in the first quarter on May 30.

The latest survey was conducted by the BSP from April 1 to May 10 and covered 1,554 firms. The response rate stood at 83 per cent.

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CBRE: No stopping RP’s property growth

Manila Bulletin – Thu, Jun 6, 2013

Real estate services firm CBRE Philippines noted that the country's office sector shows no signs of slowing down with vacancy rate at an all-time low while the take-up of residential properties remains strong, especially in the fringes of Metro Manila.

In a press briefing, CBRE Philippines chairman Rick Santos said, "The pace and breadth of real estate growth is unprecedented in the country's history... The recent credit investment upgrades offer opportunities for sustaining growth in the Philippine property market."

He added that "the Philippines has all the ingredients and demographics of a sustainable growth market: Record GDP Growth, a large, young, growing, educated and English-speaking workforce."

CBRE vice chairman Joey Radovan said occupancy rates of office buildings are at 97 percent across Metro Manila's Central Business Districts (CBDs) in the first quarter of 2013. Occupancy rate in Metro Manila has consistently been above 90 percent since 2011.

Philippines Property Listing, PropertyDepot.ph

The office sector remained strong as high investor confidence brought vacancy levels in key business districts to hover at an all-time low. Overall average vacancy rates of offices in Metro Manila dropped to 3.21 percent from the recorded 3.43 percent in the fourth quarter of 2012.

"This decrease in vacancy rates is attributed to the positive economic outlook, cost-effective rental rates and dwindling availability of quality office spaces," Radovan said.

Makati City, the country's central business and financial district, largely gained from the expansion of multinational corporations while emerging business districts in Metro Manila, such as Bonifacio Global City in Taguig, benefitted from the tightening of supply and increasing rates in Makati CBD.

The growth of BPO full-time employees (FTE) was highest in BGC, Muntinlupa and Quezon City. CBRE Philippines estimates office space take up for 2013 in Metro Manila is at 450,000 sqm and nationwide at 600,000 sqm.

Meanwhile, CBRE research head Jan Custodio said strong demand for residential properties in Metro Manila fringe areas shows that the residential market still hasn't reached its full potential.

"The residential market in regions outside the Metro has been overlooked for quite sometime. But demand in these areas, particularly for single-detached houses, is continuously growing, he noted.

CBRE data disclosed that the average monthly take-up of horizontal residential properties excluding socialized housing for 2012 is 816 units for Central Luzon (Region III) and 1,914 units for CALABARZON (Region IV).

The growth potential in Metro fringe areas remains high, given the stellar take-up in these regions, driven predominantly by overseas workers.

Data from HUDCC shows that the total housing needs in 2013 amounts to 646,128, where 57 percent will come from new households who can afford to own or lease a residential property. This number will balloon to 7.5 million in 2016.

The growing number of OFWs and BPO employees will drive the demand for horizontal developments, particularly for the economic housing developments. BPO full time employees alone grow by approximately 30,000 every year.

Santos added that "the luxury residential sector will continue to pick up, with increasing demand from foreign expats. Expats are now moving from renters to buyers."