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

HIGH-END CONDOS TO BOOST INDUSTRY

ONLINE real estate agent MyProperty.ph has listed six mid- to high-end condominium projects in Makati and Cebu that, it said, would keep the residential market upbeat in the next five years.

The online property agent said the condominium projects are all under construction and
in varying completion dates that would last until 2020.

On its list are: Century Properties’ “Trump Tower Manila,” Shang Properties’ “Shang Place Salcedo,” and Megaworld’s “San Antonio Residences,” all in Makati City; Filinvest Land’s Studio 7 in Quezon City; and Vista Residences, Inc.’s Vista Suarez Cebu and Ayala Land Premier’s “The Alcoves” in the Queen City of the South.

The Trump Tower Manila and Shang Place Salcedo are set for completion in 2016.
The Trump Tower Manila is a 56-storey luxury residential condominium that is the first Trump-branded condominium in Southeast Asia.

It houses 250 luxury units that imbibe the style of New York’s uptown aesthetic, as it will be in “themed designs ranging from the uniquely sophisticated Downtown to the classic and timeless Park Avenue to Fifth Avenue’s glamour.”

Shang Salcedo Place is a 67-storey tower situated at the convergence of Gil Puyat Ave., Tordesillas St., and H.V. Dela Costa St.

It will have 749 units and amenities like a ballroom, a gym with sauna, multi-purpose game rooms, and swimming pools.

Megaworld’s San Antonio Residences and Ayala Land Premier’s The Alcoves are both set to be completed in 2020.

The San Antonio Residences is Megaworld’s 20th tower in Makati and caters to the family-market. The 40-story tower houses 848 units and is expected to generate sales of about P2.1 billion.

Ayala Land Premier’s The Alcoves was planned with Cebu’s Japanese tourists in mind.  The 390-storey development will have 480 residential units, each at least 50 square meters in size, and the one-bedroom units offering a Zen theme.

The Vista Suarez Cebu is a 32-storey condotel that offers both a hotel and a residence.

The hotel component will be from the sixth to the 14th floor.  The condotel units will be from the 15th to the 28th floors, while the top four floors will house the residential studios and one- to two-bedroom flats.

Aimed at the broadening millennial market, Filinvest Land’s Studio 7 is a 17-storey condominium with 450 residential units, an office tower, a mall, a supermarket, bistros, and cafes.

Source: by CATHERINE TALAVERA / http://www.manilatimes.net/high-end-condos-to-boost-industry/233790/

The magic of compounding

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Category: Banking & Finance

Published on Monday, 13 May 2013 19:05

Written by Josefino R. Gomez

HAVE you ever wondered what’s the eighth wonder of the world?

Let’s start with a story. A long time ago in China, there was a man named Wong Li. He was a smart man who had helped the Chinese emperor many times in solving the country’s problems. The emperor, wanting to show his gratitude, insisted that Wong name his reward.

“Great emperor, I have only a very simple thing to ask,” Wong said. “I would like to ask for a grain of rice to be placed in a stockroom today. Every day for two months, whatever rice remains in the stockroom must be matched by an equal number of grains. If I leave my single grain of rice tonight, one must be added to it. If I leave those two again, then two more grains must be added on the next day. If you could grant me this wish, I would be the happiest man alive in China.”

The emperor thought he was getting a good bargain, so he agreed. By the 12th day the emperor would only need to give 2,048 grains of rice. But after a month the emperor realized the price of the deal and called Wong to his castle to be put to death. Why? The total number of rice grains the emperor had to pay after the end of the second month, assuming a 62-day period, was 4,611,686,018,427,390,000 or 4.6 quintillion. That is more than all the rice in China.

You might have guessed right: The eighth wonder of the world is called compounding.  The story I just told took it to the extreme and used what mathematicians called a geometric progression. What do you think would have happened if Wong had always taken out one grain to eat and leave another every night? He would have had 62 rice grains at the end of the 62-day period.

What if he took all the additional grains every day and left only one every time? Well, he would have ended up worse: He would have that same grain at the end of that period. Knowing this basic principle and applying it could go a long way in making your strategic investment decisions. It’s not how much you earn that counts, but how much you get to keep and reinvest.

Philippines Property Listing, PropertyDepot.ph

If you’re having trouble coming up with surplus cash for saving and investing, consider these:

1. Remember to pay yourself first. This is a good rule to follow, especially for those needing more discipline. It simply means setting aside some money first for investment before paying for regular expenses.

2. Live within your means. Every time you feel an urge to go on a shopping spree, ask yourself these four questions: One, do I need it? (Differentiate between a need and a want); two, what is the “before tax” of doing it? (Remember, the money you’re about to spend is “after tax”); third, what is the impact of this on my ability to meet my financial objectives? (Think long term); and fourth, is there a less expensive alternative? (Less expensive substitutes and alternatives abound. Make use of the benefits of free enterprise).

After being introduced to compounding, let’s get to know its sidekick. But first, try answering this:

John and Jeremy are two close friends who happen to have the same birthday. After landing his first job at 22 years old, John started investing P5,000 every year for the next eight years at 10 percent. But he eventually stopped investing after getting married at 30. But he did not withdraw any money. He just left it to be reinvested at 10 percent per year. He anticipates using it for his retirement.

Jeremy, on the other hand, started investing after getting married, also at 30. He invested P5,000 every year for the next 25 years at 10 percent per annum. At 55, both friends decided to retire. Who do you think has more money for retirement? Pause before reading the answer below.

The answer might surprise you. John would have earned P681,474.67, while Jeremy would only have P540,908.83. John had more, despite contributing P40,000 in total, while Jeremy contributed only P125,000. We just proved this Filipino saying: “The early riser beats the hard worker.” 

There you have it. You’ve just learned two important basic financial concepts you can use in planning your financial future. By utilizing the power of time and the power of compounding to your advantage, you will reach your financial goals easier and faster. So, what are you waiting for? Start now!

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Josefino R. Gomez is a registered financial planner of RFP Philippines. To learn more about financial planning and how to become an RFP, attend RFP Philippines’s personal-finance talk at the Philippine Stock Exchange Center in Ortigas Center, Pasig City, on June 6 at 7 p.m. To reserve, e-mail at info@rfp.ph or visit www.rfp.ph.