Megaworld to gain control of Global-Estate Resorts

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Category: Top News

09 May 2014

 

Written by Vg Cabuag

Real-estate developer Megaworld Corp. is set to acquire the majority stake in Global-Estate Resorts Inc. (Geri), the upscale leisure developer, to put all of Andrew Tan’s property assets under one roof although, they will continue to operate as separate units.

Megaworld said in a regulatory filing, it agreed to purchase 49.2 percent of Geri from the company’s parent Alliance Global Group Inc. for a total consideration of P10.43 billion.

The company bought Geri for P1.93 per share, which was based on its 30-day volume weighted average price as of April 30.

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“The price is supported by a fairness opinion-and-valuation report issued by Navarro Amper and Co. [Deloitte],” the company said in a statement.

After the transaction pushes through, Megaworld will own 74.96 percent of Geri. The company will then initiate a mandatory tender offer to acquire the balance of the shares.

According to the Philippine Stock Exchange, Geri is still 8.81-percent owned by Fil-Estate Realty Associates Inc., with the rest owned by the general public.

“The acquisition is set to complete the consolidation of all the real-estate businesses of AGI under the Megaworld brand, enabling the company to capitalize on real-estate opportunities and to capture the expected growth momentum of its real-estate affiliates,” the company said.

Unlike other property firms that merged its assets into one big company, Megaworld simply wanted to put under one roof Andrew Tan’s property development assets although they will continue to operate as separate units.

The companies include Empire East Land Holdings Inc. and Suntrust Properties Inc., each with its own management team.

Megaworld owns all of Suntrust and 82 percent of Empire East.

“The consolidation will also increase our land bank all over the Philippines to more than 3,900 hectares,” Megaworld’s Francisco Canuto, chief finance officer, said.

GERI was behind the development of so-called tourism estates as the 150-hectare Boracay Newcoast on Boracay Island, the 1,149-hectare Twin Lakes project in Tagaytay, the 170-hectare Sta. Barbara Heights in Iloilo and the 561-hectare Southwoods City straddling the boundary of Carmona, Cavite and Biñan, Laguna.

Megaworld is known for its township project developments across the Philippines.

JLL outlook

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Category: Properties

06 May 2014

 

Written by Rizal Raoul Reyes

ALTHOUGH 2014 is the Year of the Horse, the Philippines property sector cannot achieve a galloping pace brought about by several factors.

“For me, the Philippines property sector is still on a jogging pace because it needs several reforms to stimulate the sector and attract more investors just like its neighboring countries,” said David Leechiu, country head of JLL Philippines, in a recent media interview held in Makati city.

Leechiu said the provision of the Constitution limiting foreign investors to 40-percent ownership in investments hinders the growth of the property and other sectors as well. He stressed that legislators should seriously look into amending the economic provisions of the Constitution to boost investment and capital in the country. Further, he said reforms must be pursued in joint ventures, property tax, capital gains and other important economic activities.

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“I wish we can do more reforms to grow further,” Leechiu said. Assuming that the Philippines achieves a stable fiscal position and good credit rating, Leechiu said the property sector will have to create additional office space from 20,000 to 100,000 square meters from non-business-process outsourcing and traditional offices.

Office space leased totaled 365,000 sq m as of end-2012, while a total of 117,000 sq m were pre-committed also in the same period. Total committed space was 482,000 sq m.

In 2013 a total of 470,750 sq m were committed with 185,520 sq m leased as of end-2013, while 285,230 sq m were pre-committed.

Leechiu said, “The business-process outsourcing [BPO] sector continues to be a major growth driver, particularly in employment, with a total full-time employees of 960,000 in 2013.” He noted that the government is on target of hitting the 1-million mark in employment in the BPO sector in 2016. “We think the country can hit as high as 1.3 million workers in 2016.”

A lion’s share, or 75 percent, of the information communications technology-BPO is concentrated in the National Capital Region (NCR). In the Central Visayas region, 6 percent of the jobs are based in Cebu.

The top BPO locations in Metro Manila are Makati  City (355), Quezon City (198), Fort Bonifacio (191), Ortigas (70) and Mandaluyong City (85). The government aims to generate $25 billion in revenues in 2016.

In the high-end condominium projects, JLL reported that the premier developers developed a total 3,322 units, with the majority of them achieving high volume of sales.

Further, the market for high-end and midrange developments also showed robust growth as indicated by the increase in demand. From the existing period (1995-2013), a total of 3,930 units were put up. The
demand continued to rise to 6,790 units in the 2014-to-2019 period.

Leechiu said the Philippine retail sector is also benefiting from the country’s economic growth as shown by the continuous development of malls not only within and outside Metro Manila.

Although the country’s tourism industry continues to attract large number of foreign visitors, Leechiu stressed there is a lot to be done to make the country one of the top destinations in the region. “In 2012 the Philippines received 1.8 percent of the total arrivals in Asia Pacific.”

In Asia and the Pacific Tourism Overview 2012, the Philippines, with 4,273 tourist arrivals, emerged 12th among 15 countries as the top destinations in the Asia-Pacific region. Topping the list were China (57,725); Malaysia (25,033); Hong Kong (23,770); Thailand (22,354);  and Macao (13,557).

However, Leechiu said the country showed remarkable improvement in 2013, when it emerged fourth with 19.6-percent growth in international tourism receipts and an 11-percent growth in international tourism arrivals. The Top
3 were Thailand, Japan and Hong Kong.

The tourism department reported that 3.8 million foreign nationals arrived in the Philippines from January to October 2013. However, the bigger picture indicated that the Philippines has a lot of catching up to do in terms of attracting foreign investment. In 2012 the country only managed to attract $2.8 billion in foreign capital—much lower than Indonesia ($19.8 billion); Thailand ($8.6 billion); and Vietnam ($8.4 billion).

“We can’t develop the country overnight. But we have to make the right policies and regulations to attract more investors in the country,” he pointed out.

CBRE: Growth to continue in 2014

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Category: Properties

28 Jan 2014

 

Written by Rizal Raoul Reyes

IN the Year of the Horse, expect the Philippine property sector to gallop toward growth as more investors recognize that it possesses a sweet spot in all property fronts—office, residential, retail and leisure.

“The Philippine property sector will continue to accelerate in 2014, taking off from last year’s stellar performance. Elsewhere in Asia, markets have slowed down. However, and despite recent calamities, the country’s real-estate sector is a buoyant market and global investors are starting to recognize the country as a top investment spot in Asia Pacific,” said Rick Santos, CBRE Philippines founder and chairman, in a recent press conference held in Makati City.

Santos stressed that investors were bullish  despite the recent calamities such as the earthquake that hit Bohol and Cebu, Supertyphoon Yolanda which struck Leyte, Samar and other areas in Central Visayas. With the high demand for space, Santos pointed out vacancy rates were maintained below 5 percent and resulted in an increase of rental rates across major commercial business districts (CBDs).

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However, Philippine rental rates remained very competitive globally at $26 per square feet per annum, with Makati still offering the lowest prime rents across major international CBDs.

Joey Radovan, vice chairman of CBRE, reported that Metro Manila and Metro Cebu were identified as the best outsourcing destinations globally, while the information technology/business process sector has been consistently the biggest source of office space.

“Metro Manila and Metro Cebu continue to increase ranking in the top 10 outsourcing destinations as the Philippines established delivery destinations. IT-BPO industry fueled by increased new investments from large and mid-sized foreign providers, and expansions of established locators and captives across many of the country’s upcoming and alternative delivery locations,” said Radovan

“Outsourcing [BPO] and call-center operations, expansion for back office of multinational operations—particularly from banking and finance, health management, and game development—are expected to share in the projected take-up of 600,000 square meters nationwide for the year,” he added.

Meanwhile, Santos said that the BPO sector will continue to grow this year as banks and financial institutions in developed economies transfer their back-office operations to the Philippines and the continuous strengthening of the Indian rupee.

He also said that the residential sector, particularly the high-end segment, will experience growth as China, Singapore, Hong Kong and Malaysia will experience restrictive cooling measures in their economies. This will accelerate the development of luxury residential properties in Bonifacio Global City, Makati, Boracay and other high-end development areas.

CBRE also reported that the country’s retail sector will continue to grow in 2014 boosted by sustained high domestic consumption. Further, the firm reported more than 242,000 square meters of gross leasable area catering primarily to foreign brands and international retailers is expected to enter this year. Retail rental rates remain competitive at $36 per sq. ft. per annum when compared to other areas such as Bangkok ($111 per sq. ft. per annum), Kuala Lumpur ($552 per sq. ft. per annum and Beijing CBD ($674 per sq. ft. per annum).

The remittances of the overseas Filipino workers (OFWs) drive the country’s consumption-driven economy. Cumulative remittances as of November 2013 amounted to $20.6 billion growing at 6.1 percent year-on-year.

The leisure sector will also experience an upswing as more local tourists will be touring the country due to an increase in their purchasing power, mainly because of OFW remittances and the political uncertainty in Thailand.

As of October 2013, the country posted an 11-percent growth in tourist arrivals on a year-on-year basis.  

Further, Santos said that the logistics and manufacturing sector will speed up the pace in 2014 as more northeast Asian countries such as Japan and South Korea plan to move their operations due to long-standing territorial disputes with neighboring countries and political uncertainty in Thailand.

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In Photo: CBRE Philippines discloses that the Philippine property sector is among the best investment sites in Asia Pacific during its first press briefing held in Makati on Thursday. Present during the briefing are (from left) CBRE Chairman and founder Rick Santos, CBRE Vice Chairman Joey Radovan and CBRE Denior Director Jan Custodio. (Alysa Salen)

Sulit.com.ph and Property24

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Category: Properties

28 Jan 2014

 

Written by Rizal Raoul Reyes

PREMIER local buy-and-sell web site Sulit.com.ph and major South African real-estate web site Property24 formed a partnership recently and launched the Property24.com.ph web site as part of boosting its presence in the flourishing property market.

JP Farinha, Property24 chief executive officer, said the Project23 portal will provide a user-friendly environment to all users who want to get the information on the latest development projects in the country. “We will provide a list on the major developers in the country which will contain comprehensive information tools and tips,” he said.

“We’re incredibly excited to partner with Sulit.com.ph on this venture, and to provide Filipino real-estate agents and home hunters with innovative technology aimed at streamlining the property search process,” added Farinha. 

Farinha noted that Property24 is currently checking the list of developers before they finalize the list for the users. He said the portal will also harmonize the  listing  of the different projects of the developers.

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To ensure many Filipinos would access the site, Farinha said Property24 will only charge affordably so the users can experience the different features of the web site. He noted the site would only put licensed brokers on the list to ensure professionalism and quality of service to the clients.

Steve Santos, country manager of Property24, said the company is confident there is a big room for growth in the industry as Internet penetration in the country is increasing with people using the Web for their transactions.

He said the move to put up Property24 was in response to the large hits of Sulit in the transactions of property. “The segment receives 360,000 to 400,000 hits per month in the secondary markets such as vacant lots,” he said.  

Santos said sources of revenue for the site would be sourced from the classified advertisements of developers and other postings from industry players. “But the main source would be the microsite for brokers, which will give them presence in the mobile sector,” said Santos.

“At the end of the day, what we are after is the quality of listing,” he added.

Further, Property24.com.ph’s mobile wireless access protocol (WAP) site is accessible via all WAP-enabled mobile phones, conveniently offering consumers the ability to search for property from anywhere. The mobile site also boasts enhanced functionality such as location-based searches, available on GPS-enabled handsets.

Santos said that the web site would have a development tab on the side that contains the latest development projects plus their advertisements. “Since the developers are heavy advertisers, we are targeting this sector,” he said.

He said Property24 would initially focus on residential homes and condominiums. “Eventually, we will branch out into other areas as we go along.”

Emerging trends in real estate 2014

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Category: Properties

14 Jan 2014

 

Written by Rizal Raoul Reyes

BUSINESS-process outsourcing (BPO) and, more recently, back-office operations for multinational companies in the finance sector have become the favorites of foreign executives searching for investments in the Philippines.  

In its “Emerging Trends in Real Estate Asia Pacific 2014” report released recently by the Urban Land Institute (ULI) and PriceWaterhouse Coopers (PWC), the Philippines has been getting the attention of foreign capital because of its current political environment, strong macroeconomic fundamentals and impressive credit ratings given by major institutions.

 Alistair Meadows, head of the international capital group of Jones Lang LaSalle, said the 2014 survey indicated investors are more interested in Manila as compared to the previous year’s, citing its fourth position in investment prospects and eighth for development prospects in 2014. “I think the fundamentals are there to attract foreign investors over the next few years,” said Meadows in an interview with reporters at the sidelines of the ULI event in Makati City.

 Further, Meadows said ULI sees the retail market as the “most exciting sector” in the next 10 to 15 years in Asia Pacific as it will be driven by strong consumer spending, growing middle class and rapid urbanization. He said this will also be experienced by Manila as consumer spending continues to grow driven by the solid remittances of overseas Filipino workers.

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 However, Meadows said the Philippines needs to address structural issues, particularly the real-estate investment trust (REIT), to strengthen the ability to attract its way into the market specifically foreign capital. He added a combination of domestic and foreign capital would be healthy for the property market and the whole economy as there would be more funds circulating in the market.

 Nevertheless, the report stressed there are good prospects as capital rates are pegged at the 9-percent to 10-percent range, while developer returns range from 15 percent to 20 percent.

 Although the country’s economic fundamentals are good, a foreign investor said the Philippines is considered a dark horse. “I like the Philippine economy from a demographic perspective, and they do manufacture more people than people think,” remarked Meadows.

 “The problem is just lack of political leadership and the amount of corruption, which, at the end of the day, stops infrastructure works from being completed,” he pointed out.

 In the same report, another foreign investor active in the Philippines noted the huge amounts of office space taken up in Manila two years ago, “which, at some four million square feet, rivaled uptake in Tokyo,” whose 400 million to 450 million square feet was much larger. “So, Manila is where India was 10 years ago,” said the investor.

 “Multinationals, not just call centers, will be adding employees in Manila over the next three years, the reason that you have an English-educated workforce who is 95-percent literate,” he added.

 The IT and Business Process Association of the Philippines (ITBPAP) is eyeing $25-billion revenue for the country in 2016. In 2012 the ITBPAP reported the industry posted $13.2 billion in revenues.

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In Photo: Multinational companies in Metro Manila