Fundamentals in property sector remain strong through 2011

Thursday, 29 December 2011 20:13 Rizal Raoul Reyes / Correspondent

THE year 2011 has been a success for the Philippine property sector across all sectors and stronger than 2010. In fact, CB Richard Ellis (CBRE) Philippines Chairman and Chief Executive Officer Rick Santos said there will be a continued show of confidence in 2012 in all sectors of the property industry.

“The success of 2010 was built on in 2011 and this continued show of confidence will be seen in 2012,” said Santos in an e-mail response to the BusinessMirror.

“The Philippine property industry is expected to continue its positive performance in 2012 given the upward momentum that continues to build up in the office sector relative to business-process outsourcing [BPO] office demand is strategic areas across the country, continued rise in overseas Filipino worker [OFW] remittances which is expected to reach $23 billion this year,” added Santos.

He noted that a major part of the disposable income of OFW households benefits the residential, retail, hospitality and leisure sectors of the Philippine property industry.

For instance, Santos said the industrial sector, particularly those that cater to the growing consumer market such as manufacturing and warehousing as well as logistics, is expected to fair well because of the upsurge in economic activities

Lui Matti, executive director for asset services group at CBRE Philippines, said in the same interview that 2011 was stronger than 2010 across all sectors. In the market, Matti said the commercial sector saw the entry of new major players in the BPO industry as well as the continued expansion of major firms.

He said the residential market also continued to enjoy good take-up, with developers focusing on the mid/affordable market segment. Earlier, CBRE said expatriate Filipinos comprised the bulk of the buyers in this segment. “Low interest rates and willingness of banks to lend to capable payers have made it easier for more people to own their first property in 2011,” said Matti.

Environment-friendly and sustainable construction have also emerged as major themes for 2011, with architects, engineers and developers seriously considering the US Leadership in Energy and Environmental Design (or LEED) and the Philippines’s Building for Ecologically Responsible Design (or BERDE) standards in the conceptualization, planning and construction of projects.

In its Philippine Property Market Monitor (November 2011 issue) posted on the company’s web site, Jones Lang Lasalle Leechiu reported that offshore and outsourcing(O&O) companies are looking to expand to next wave cities and urban areas. The company said total leasable floor area for sites in Manila, Tarlac and Davao has an approximate total of 21,000 square meters (sq m). Robinsons Land Corp. alone has started constructing two new BPO buildings in the Ortigas area, which will have around 80,000 sq m of leasable office space.

Based on the projection of a 20-percent growth rate from 2011-2016 by the Business Processing Association of the Philippines, Jones Lang Lasalle Leechiu said the prospect for the local O&O industry in the upcoming years is bright.

Victor Asuncion, executive director for global research and consultancy at CBRE Philippines, pointed out the drivers of the Philippine property industry for the last three years have always been and still are the BPO sector, OFW remittances and the tourism sector.

However, Asuncion said the gigantic collapse of the Lehman Brothers in September 2008 and the capital tightness in the US that lingered in 2009 slightly slowed down the growth of the industry. “However, given its strong demand fundamentals, the industry was able to shake off the negative influences of the sub-prime crisis in the US and resume its impeded growth,” he said. He is also confident the industry will continue to grow in 2012.

He said the affordable condominium market is one segment that has changed the landscape of housing development because it has attracted a lot of buyers from the middle-class and OFW households.

Designed for the middle-class segment, the affordable condominium is an ideal investment for young professionals working in the business districts of Metro Manila as well as start-up families or first-time buyers. This scenario is also being seen emerging in key urban centers such as Metro Cebu and Metro Davao.

As a result of the high demand for this product, Asuncion said major players such as Phinma Properties, DMCI Homes, New San Jose Builders and SM Development Corp. have established a niche in this market segment with more participants such as Camella Condo Homes of Vista Land and Amaia of Ayala Land.

At the rate property developers are putting up office, residential, retail and hospitality products, land bank are being depleted, Asuncion said there is a need to sustain business activity by finding and buying new developable land. “Thus, more hard asset acquisition and strategic business development by major players in the industry is expected going to in2012,” said Asuncion.

Asuncion said the high approval rating enjoyed by the Aquino administration is going to be a plus factor particularly in the property industry as it will continue to attract many investors starting in 2012.

Going into 2012, Santos said the trend to watch is the things that will happen in European economy and whether they will be forced to outsource to cut cost. “More large financial companies will be under increased pressure to save money and will thus outsource their banking support functions here,” he said.

Santos said there will also be a trend toward maintaining good property management of buildings to ensure the loyalty of tenants.

In 2012 Asuncion said he sees new property developments in secondary areas will take longer to sell or lease inventory relative to those situated in prime locations. “This will cause the total industry statistics such as vacancies and lease rates to be challenged,” he said.

For his part, Matti said the government should revise the implementing rules of the real-estate investment trust (REIT) to boost the market even further. Aside from the REIT, he said the government should continue to simplify the way to do business both in the national and local levels and keep the exchange rate within a competitive range.

Cebu Chamber eyes new markets to boost international trade links

By Ehda M. Dagooc (The Freeman) Updated December 29, 2011 12:00 AM

CEBU, Philippines - As the economies of the United States (US) and Europe continue to struggle, the Cebu Chamber of Commerce and Industry (CCCI) is looking at other emerging markets to boost international linkages.

Following the recently concluded trade mission in the north American region, which included Brazil, Argentina, and Chile, CCCI president Samuel Chioson said there is a big potential for Cebu to strengthen ties in this continent.

During the trip, CCCI forged a formal trade linkage with Chile-based traders through the National Chamber of Commerce, Services and Tourism of Chile.

Chioson said the chamber’s target country for trade mission next year, include Eastern Europe as well as Middle East, “we would establish connections with our counterparts there.”

Aside from government-to-government sisterhood agreement, Chioson said CCCI will be forging more trade partnerships with business and trade groups in other countries, just like what it recently did with Chile.

Because of its formal linkage with the National Chamber of Commerce, Service and Tourism of Chile, Chioson said a group of businessmen from Chile is set to come to Cebu next year, in time for the Cebu Business Month (CBM 2012) in June, to meet with the Cebuano traders and counterparts.

“There are a lot of businessmen in Chile who expressed interest to do business with Cebuano traders.,” Chioson said in fact, some of them are interested in investing into real estate, trading, and tourism, among others.

Likewise, Chilean businessmen also see good market potential in the Philippines to sell their well-known products such as wines, pet food, machineries, and dairy products, among others.

Aside from interest in real estate, Chioson said Chilean businessmen also expressed interest in Cebu’s furniture, gifts-toys-houseware products, processed and dried fruits.

Despite the distance, Chioson said Chilean traders displayed willingness to pursue stronger ties and mutual promotion of products and services between the two chambers.

“We see a lot of opportunities in this two-way process of linking with Chilean businessmen. We being in Asia where economic development and growth is expected to come in the coming years, and them being a new emerging market for our local businessmen,” Chioson said.

Members of the National Chamber of Commerce, Services and Tourism of Chile are also now organizing a trip to Cebu in 2012 for the Cebu Design Summit and again in 2013 to attend the Confederation of Asia Pacific Chamber of Commerce and Industry Conference where they will again hold more business matching in Cebu.

Chioson said they would continue to build links and open new markets through more trade missions next year.

Meanwhile, Chioson also encouraged the public sector to strengthen free trade agreements (FTAs) between governments.

“At present we think that FTAs are currently being drafted for these countries. It will be a big help if we can have FTAs as soon as possible so that we can expect more active trading between us and Chile,” said Chioson. (FREEMAN)

Remittances, BPOs fuel real estate

• By Katlene O. Cacho

Wednesday, December 28, 2011

REAL estate in Cebu is booming and the industry is optimistic growth will continue next year, with the continued strong inflow of overseas remittances, low interest environment and growth in tourism and business process outsourcing (BPO).

“Growth in Cebu’s real estate industry continued as is evident in the number of construction projects in the city,” said Cebu Holdings Inc. president Francis Monera.

He pointed out accelerated development within the Ayala-owned Cebu Park District (Cebu Business Park and Cebu IT Park).

Monera said construction in Cebu has become more dynamic and diversified.

“This reflects the increasing number of condominium units, which is expected to grow by 74 percent to over 5,000 units to complete in 2011, together with an expanding office space that may reach some 460,000 square meters of usable area or 15 percent more than in 2010 in Cebu,” Monera said.

Growth drivers

Philippine Association of Realtors Board Inc. – Cebu Realtors Board Inc. (Pareb-Cereb) president Antonina Fritzche credited the growth of the industry to BPOs, foreign students like Koreans learning English here, foreign retirees, Cebu’s warmer climate, surge of overseas remittances and increased purchasing power.

OFW remittances went up by seven percent to $16.534 billion in the first 10 months of the year from $15.456 billion in the same period last year, according to the Bangko Sentral ng Pilipinas.

Attractive financing schemes also boosted the housing sector.

According to Rizal Commercial Banking Corp. first senior vice president and RBG deputy group head for VisMin sales Prudencio Gesta, lending activities this year increased because of the low interest environment. Car and home loans are also on the rise.

The Pag-ibig Cebu branch, meanwhile, reported releasing P688 million as of November this year to finance the home loan applications of 776 borrowers. Pag-ibig estimated 70 percent of these home loans are for house and lot; 15 percent for lot only, and five percent for condominiums.

“Generally, 2011 is a bullish year for property developments,” Fritzche said.

Innoland Development Corp., meanwhile, topped off its flagship mixed-used project Calyx Centre in the Cebu IT Park. The company also announced it will build Calyx Residences, a residential condominium project at Cebu Business Park and The Link, an office-space building also at Cebu IT Park.

Taft Property Venture Development Corp., meanwhile, broke ground last November for its first condominium project, Horizons 101, which will have a total of 1,468 units.

Taft Property chief operating officer Manuel Colayco said Cebu has an unserved requirement of 167,000 units for the middle income category for house units with prices ranging from P1.25 million to P3 million.

Maria Luisa Properties, on the other hand, recently announced its latest premier development, The Heritage, in Mandaue City.

Big players like Ayala Land Inc. and AboitizLand Inc. also unveiled their latest projects in Cebu like Alveo Land’s Solinea and AboitizLand’s Hanaya.

Monera said tourism is a key factor in the continued growth of Cebu’s real estate industry.

“In the past few years, the entry of foreign tourists, businessmen, returnees and local travelers amplified the range of hotel accommodation in the city, which now varies from boutique and businessmen’s hotels, leisure-oriented resorts, five-star luxury hotels and casinos to travelers’ inns,” he said.

Hotel rooms

Monera said Cebu has more than 30 established hotels or some 6,000 rooms that vary from economy to first class.

Developer Megaworld Corp. recently unveiled 8 Newtown Blvd., a condominium development in its 16-hectare The Mactan Newtown project in Cebu. The project is targeted at the retirees market.

“Similar to Hawaiian islands such as Honolulu and Maui, Cebu boasts both natural wonders and urban conveniences, which are appealing to retirees,” said Philippine Retirement Authority (PRA) general manager Veredigno Atienza.

Megaworld inked a partnership with the PRA to facilitate Special Resident Retiree’s Visa (SSRV) applications of qualified foreign clients through their investment with 8 Newtown Blvd.

The firm said construction is also under way for One World Center, a five-level office building designed to serve the needs of top firms in the BPO and IT industries at The Mactan Newtown.

Monera, meanwhile, said plans are underway to start construction of a BPO building within Cebu Business Park as well as the third sequel to the eBloc Tower within Cebu IT Park.

He said that with the success of 1016 Residences, Ayala Land Premier is also set to launch another residential condominium within Cebu Business Park. Avida, on the other hand, also plans to launch a third tower by next year.

Fritzche also said more developers will offer a resort feel and low-rise condominium developments. She said more projects will gear toward the “work-live-play” concept for the young professionals market.

Challenges

When asked about potential challenges in 2012, Fritzche mentioned the lack of support infrastructure and worsening traffic problem as some of the factors that might hamper growth.

“The challenge would be not in selling the development, but in convincing those investors to invest with us when we cannot sustain more buildings,” she said.

Meanwhile, the Philippine Allied Chamber of Real Estate Brokers and Licensed Salesman (PhilAcre) is also asking the government to come up with an effective promotional program to help them sell the Philippines as a vacation destination, especially that global property buyers are now slowly shifting their interest to Asia.

PhilAcre president Anthony Leuterio said international investors, largely Americans and Europeans, are now turning their attention to properties in Asia. He said bulk buying of condominium units is becoming a trend for global investors.

“If the Philippine Government will remain less supportive in promoting the Philippines as a long-term vacation destination like Hawaii, investors’ interest may be snatched by other Asian countries, which actively promote property investments,” Leuterio said.

Published in the Sun.Star Cebu newspaper on December 29, 2011.

London luxury prices set to rise

Dec 2, 2011 - PropertyGuru.com.sg

Prices of ultra-prime London property will rise as much as 10 percent next year according to billionaire property developer Nick Candy, with increasing demand coming from wealthy Asian buyers.

Nick, together with his brother Christian, are the brains behind One Hyde Park, a £1 billion luxury development in the heart of the U.K. capital.

Speaking exclusively to PropertyGuru on the sidelines of this week’s 2011 South East Asia Property Awards in Singapore, Candy exuded confidence about the potential for the very top end of London’s luxury property sector.

He said: “Prices will rise by between 5 and 10 percent in the next 12 months. There’s zero supply and there’s growing demand. London is increasingly being viewed as a safe haven, and for overseas buyers the weakness of the sterling means an increasingly good investment in terms of a currency play.”

One Hyde Park is home to the United Kingdom’s most expensive residence –a £166.4 million (S$275 million) penthouse owned by Ukraine's richest man, Rinat Akhmetov. Australian pop star Kylie Minogue is also an owner at the development. Candy said that 63 of the 80 units have now been sold – the latest happening just this week.

Overseas buyers dominate London’s ultra-luxury property market. Candy said: “A year ago the demand was coming from Eastern Europe, but now it’s buyers from Asia who have become increasingly active.”

And developments such as One Hyde Park will struggle to even get off the drawing board in future. Candy said: “There’s simply no finance. The development company responsible for One Hyde Park borrowed £1.15 billion. That’s not going to happen again anytime soon.”

St. Regis unveils resort in South China

Dec 1, 2011 - PropertyGuru.com.sg

St. Regis Hotels and Resorts has debuted its first St. Regis resort in South China, with the opening of The St. Regis Sanya Yalong Bay Resort.

A premiere destination in Yalong bay, the resort will set a new standard of contemporary sophistication, luxury and unique services for guests to Hainan.

“We are thrilled to unveil South China’s first St. Regis resort — a standout gem along the Yalong Bay coast,” said Sunny Heng, General Manager.

“The St. Regis Sanya Yalong Bay is an exclusive tropical sanctuary with an unrivalled combination of amenities and service, including our famous St. Regis Butler service.”

The resort offers 373 guest rooms and suites and 28 beachside villas, inspired by contemporary architecture. Other amenities include fine dining restaurants and a sophisticated lounge. The resort also features the first Iridium Spa in the South China region.

“Hainan’s Yalong Bay is the tropical playground for China’s elite travelers,” said Qian Jin, Senior Vice President of Operations for Greater China at Starwood Hotels & Resorts.

“The introduction of the St. Regis brand to Hainan offers a new level of sophistication and amenities and redefines Yalong Bay as a destination resort for discerning international travelers who are seeking new experiences with the confidence of the highest levels of service and luxury.”

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