Arnel Paciano Casanova: From a slum dweller to a city builder

In Photo: Lawyer Arnel Paciano Casanova, president and CEO of Bases Conversion and Development Authority, speaks before participants of an investment conference in 2014.

By Leony R. Garcia

WHO would ever think that a slum dweller, a penniless student who migrated to the city to pursue the elusive dream of education, would one day become a city builder?

This is the story of Arnel Paciano Casanova, currently the president and CEO of the Bases Conversion and Development Authority (BCDA), a government development corporation mandated to transform former military lands into alternative productive civilian enclaves. 

Casanova grew up in a poor family in Padre Garcia, Batangas province. His father, a farmer, and her mother, a seamstress, had a hard time raising him and his seven siblings. Thus, at a young age, there was this thirst for learning as a way out of hardship for the family and a way to be successful in life someday.

Thirst for learning

“In my town, a college degree was literally an impossible dream.  Yet, my thirst for learning was insatiable.  Armed with P100 in my pocket, I went to Manila and took the University of the Philippines [UP] College Admission Test, and passed,” Casanova reminisced.  

So while studying in UP, the young Casanova lived with relatives, who were slum dwellers in Fort Bonifacio. He then became one of those unknown city migrants who had to scrounge for food, shelter and education while sleeping on the floor, enduring leaking roofs and flooded road.  “Yet, I found grace in humanity in the slums.  Neighbors know each other. I never ran out of people to play street basketball with at any given time of the day or night.  We shared food, no matter how meager it could be. I found my true friends in the midst of  squalor,” he continued.

Peace negotiator at 25

Fast forward. Casanova was 25, just a year out of the UP Law School. He was a young lawyer working as part of the government peace panel.

“Fortunately, we were able to successfully negotiate peace with former military rebels.  For this, I was awarded the prestigious Philippine Legion of Honor Medal [1997], one of the youngest recipients of such award under the presidency of President Fidel Ramos,” he said.

According to Casanova, other accomplishments of the peace panel then included the recovery of weapons, firearms, explosives and ammunitions of the army rebels—Reform the Armed Forces Movement, Soldiers of the Filipino People, Young Officers Union (RAM-SFP-YOU).

As a lawyer, he also helped draft the General Peace Agreement between the Philippine government and the RAM-SFP-YOU and the Marcos loyalist forces and the Amnesty Proclamation. And in 2003, he testified on military corruption before the Feliciano Commission, a body created to investigate the Oakwood Mutiny. This resulted in the recovery of government property, valued at approximately $200 million, which was misappropriated by a group of retired and active generals of the military.

BCDA chief

And now, 20 years after, Casanova finds himself approaching his fifth year as BCDA president and CEO.

And his latest accomplishments:  “Through sound partnerships forged with the private sector, prudent asset management and revenue collection, we were able to contribute over P27 billion for the account of the modernization of the Armed Forces.  Among our projects which greatly benefited the nation are the Bonifacio Global City, the Subic-Clark-Tarlac Expressway and soon, the country’s first, smart, disaster-resilient metropolis, the Clark Green City.”

Other advocacies

Currently, he is a faculty member of the Ateneo School of Government and UP College of Law teaching social entrepreneurship and law, while mentoring other social enterprises involved in health care, poverty alleviation, environment, housing and others.

He is also into microfinancing and is part of CARD Inc., the biggest microfinance institution in the Philippines. He has founded AvantChange, a social enterprise organized in Cambridge that aims to promote social entrepreneurship in Asia. Further, he supports the Tsinelas Leadership of the late Secretary Jesse Robredo, and is among the pioneers of Kaya Natin! (We Can!), a social movement for good governance and ethical leadership.

A staunch supporter of the youth, Casanova believes in the promise and the vast possibilities that they can do.  “For me they are equally good and hardworking. My story is not unique, and we have many youths who have moved mountains through hard work and selflessness.  The only difference with today’s youth is the lack of reverence for the heroes of our country. Because we can learn a lot from our history, value those who passed before us,” he admonished.

He also advised today’s Millennials  to love the country and study hard, to value the opportunity to participate in  good governance, and  not holding back in dreaming and working hard to achieve those dreams.

“From a slum dweller, I am now a city builder.  And my education in UP and in Harvard has given me a different perspective—a perspective that has empowered me to pay it forward. In building Clark Green City, my colleagues in the BCDA are  being able to offer Filipinos an opportunity to live a better quality of life—a life they deserve,” he said.  

“Clark Green City is a project for the benefit of the new generation. And we in the BCDA are committed to realize this for our country. We hope our countrymen will support this project, as it will behold proper urban planning that will yield growth that is inclusive—affordable quality of life that is world-class and responsive,” Casanova concluded.

Source : http://www.businessmirror.com.ph/arnel-paciano-casanova-from-a-slum-dweller-to-a-city-builder/

Lucio Tan at 25: Birth of an enterprise

In Photo: Himmel, 1999

By Joey de Guzman / Special to the BusinessMirror

AS a child, Lucio C. Tan was always fascinated by technology. With a sense of wonder, he marveled at the speed and efficiency by which machines and high-tech devices of his time transformed the world. He believed then, as now, that technology and innovation play vital roles in the development of any enterprise.

At his tender age, he dreamt of becoming a scientist. Thus, after graduating from Chiang Kai Shek High School in 1955, he immediately set this dream to motion: He enrolled in a chemical engineering course at the Far Eastern University. Though he did not become a full-time scientist by profession, his almost obsessive fondness for science and technology is reflected in his daily life and throughout his business empire.

Business mind-set

As a working student, the young Lucio Tan busied himself with mastering the craft of mixing chemicals and flavorings at the Bataan Cigar and Cigarette Factory. Through hard work and a frugal lifestyle, he slowly raised the seed of his envisioned enterprise. While still working for the cigarette firm, he became a partner in a cornstarch venture and, later, established an electronics shop producing transistor radios. Though both attempts at entrepreneurship didn’t take off, these setbacks only fueled his determination to pursue his dream.

Sowing the seeds of an empire

At 25, he started laying the groundwork for a chemical manufacturing and trading firm. While others of similar age were busy establishing careers after college, Tan was already forming the foundations of what would become one of the most inspiring corporate success stories in the Philippines.

Making the most of what he learned from his chemical engineering studies and his work of mixing chemicals at the Bataan Cigar and Cigarette Factory, he drew plans and purchased second-hand machines and reconditioned American trucks for his envisioned enterprise.

On November 18, 1960, Himmel Industries Inc. was born. The company started small, venturing into the trading of chemicals, such as refined glycerin, sorbitol, industrial honey, menthol and flavoring compounds. While the company’s original target market was the burgeoning cigarette industry, it later expanded operations to supply major ingredients to the food, pharmaceutical, beer, paint, ink, textile, cosmetic, paper, glue, plastic, rubber, PVC and cement industries.

Within the same year, Tan married Carmen Khao Tan. They have seven children.

Founders

Located in Barrio Santolan, Pasig City—where it still stands today—Himmel was founded by Tan and several partners. Each took specific roles in managing plant operations, marketing and cash management. With this core group, Himmel provided high-quality products and professional services, thus earning the trust and loyalty of its clients and business partners.

Early years

At the time of Himmel’s entry, there was great demand for refined glycerin—a chemical widely used in the cigarette, paint, pharmaceutical and cosmetics industries. However, few Philippine companies could meet the demand and the pharmaceutical grade required by most manufacturers. Seeing great opportunity, Tan flew to the United States and bought an old glycerin refinery, dismantled the same and rebuilt it piece by piece in the Philippines.

The refurbished plant was a huge success. Himmel was able to process and produce high-grade glycerin, which it sold to local companies at costs much lower than its imported counterparts. Because of Tan’s foresight and keen business sense, many local companies benefited from his glycerin plant, which made Himmel a byword in Philippine industrial circles.

Trading and related businesses

Years later, Himmel’s operations expanded to the trading of industrial chemicals. In 1977 it built a second glycerin plant.  With the foundation for long-term stability in place, Himmel diversified into the trading of fabricated steel drums, compound flavors, and fragrances and printing ink.

With great demand for flavorings and fragrances, Himmel introduced the planting of peppermint grass in Mindoro; propagation of citronella plants in Laguna; and raising of honey bees. It was upon Tan’s initiative that honey production was pursued. Even today, the tycoon is an acknowledged beekeeping expert, a skill he acquired during his younger days as a chemist for the Bataan Cigar and Cigarette Factory.

With natural competitive advantages as a supplier of raw materials, Himmel ventured into soap manufacturing. Through Manserve, an affiliate company, Himmel produces its own line of bath soap, like Nova, Success, Persona and Stiefel. The company is also a major subcontractor, producing different brands for various multinational corporations.

In 1981 Himmel set its sights on the booming Calabarzon area. Using South Korean technology, it built a private pier in Pinamucan, Batangas, that could service huge vessels with average lifting capacities up to 17,000 dead weight tons. Later, Himmel acquired 14 shore tanks with a combined capacity of 11.5 million liters of liquid bulk cargo, including aviation fuel.

On a par with international standards, Himmel’s liquid cargo terminal could store imported chemicals and solvents in bulk for later delivery to different parts of the Philippines. Equipped with some of the best safety and firefighting equipment, the cargo terminal has attracted an impressive list of clients which includes giant multinational firms.

Himmel and the lt Group

Through vision and hard work, Tan and his cofounders built Himmel from its small plant in Pasig City to its current status as one of the country’s biggest chemical traders. Its path to success was paved with calculated moves, carried out with methodical precision. Its operations were anchored in the belief that nothing can be gained from haphazard strategies.

Indeed, after more than five decades, Himmel has distinguished itself not only in the chemical manufacturing and trading sectors, but also as the seed from which sprouted a vast conglomerate that now cuts across the length and breadth of Philippine commerce.

It was from Himmel and, later, Fortune Tobacco Corp., that the Lucio Tan Group of Cos. (now publicly listed as LT Group Inc., or “LTG”) expanded into agribusiness; airlines and related services; banking, finance and securities; brewery; chemicals; distillery and alcohol; education; food; hotel; real estate; soap manufacturing; steel fabrication and construction; and tourism and travel services.

Since Himmel was established, Tan set his sights on the pursuit of quality and profitability that was to shape the vision of today’s LT Group Inc. With its achievements, it could be said that Himmel—more than a corporate success—is one man’s vision which he dreamed and put into action at the young age of 25.

Source : http://www.businessmirror.com.ph/lucio-tan-at-25-birth-of-an-enterprise/

Ambassador Antonio L. Cabangon Chua: No Dream Too Tall

In Photo: Portrait of the Cabangon Chua couple, who got married on the eve of Christmas, 1959 and Young businessman Tony, shown here with his third motorcycle, a Harley-Davidson speeder.

By Joel Pablo Salud |Special to the BusinessMirror

It was half past the summer of 2009 when, as the new boy in the Philippines Graphic newsroom, I was introduced to the company’s chairman emeritus, Ambassador Antonio L. Cabangon Chua. I was then just recently hired as the magazine’s new managing editor.

Tony (in bow tie), then the youngest member of the Chamber of Pawnbrokers of the Philippines. Then Manila Mayor Antonio J. Villegas is in left foreground.

At the doorway to his office, I saw the ambassador standing all dapper and sporty in his dark blue jacket, sports shirt and beige pants, even as he sported a smile that made me feel doubly welcome.

I immediately sensed a humility to him that defied explanation. I had worked in numerous companies prior to working with the Aliw Media Group. I was no stranger to corporate top brass. The same level of modesty I sensed in my new boss came few and far between.

Very few had had the chance to meet the man, whom many fondly call Amba, up close. As we shook hands and settled in his office, I noticed a huge framed photograph of a lovely woman in Filipiniana attire hanging by his wall. I recall wondering who the woman was, until later in the day when I was told she was the ambassador’s mother, Dominga Lim Cabangon.

Past the routine civility of introducing myself as his new hired hand, Amba immediately set the pace of the conversation. No small talk, no further courtesies; just a gesture of trust I rarely see in other bosses I’ve worked with in the past.

“I want you to interview General Ermita for the magazine today,” the ambassador said, obviously eyeing me with a bit of curiosity. After about half a minute of silence, he waved at his secretary, who apparently knew what the gesture meant.

The Filipinas Pawnshop, on the corner of Herran (now Pedro Gil) and General Luna in Paco, in a recent photo: Still in the same location after almost 50 years.

Turning to me, he then said, “My driver and my car are waiting for you downstairs. Hijo, I have worked with a lot of journalists and editors in my lifetime. All I ask is that you be fair.”

With no further instructions, he stood up and kindly saw me out the door. As I strolled past the secretary’s desk, he again called and asked me to draw near.

Thereafter, he leaned over and said, “I want you to think of the magazine as your own, and think of me as your own father. From this day on, I will treat you as one of my children. We’re your family, always remember that. If you need anything, anything at all, don’t have second thoughts of asking me.” He then patted me on the shoulders.

That alone said a lot about the sort of individual I was to respect as my boss. Little did I know then that there was more to this man than meets the eye.

Weeks into the job saw me scrounging for information about the ambassador—who he is, how he runs things. I have yet to hear anything adverse when, quite by accident, I stumbled on two books, one written by National Artist for Literature Nick Joaquin, Antonio L. Cabangon Chua: A Saga of Success, and its sequel penned by award-winning writer Jose F. Lacaba and Eric S. Caruncho.

While I was not the sort who read biographies, Joaquin and Lacaba were good enough reasons to flip the pages.

Tony Cabangon’s life as a child cared for by single parent—his mother Dominga—along the poorer side of Barrio Namayan in Mandaluyong was anything but a breeze.

During and immediately after World War II, the young Tony ran errands as a servant, rented out komiks, sold newspapers and magazines, and buffed the shoes of American GIs just to make ends meet. Later on, with a little help from a vocational course, the future ambassador to Laos worked as an automotive and diesel mechanic and a passenger jeepney driver.

His mother Dominga borrowed money from rich relatives in exchange for life’s modest needs.

Often ill-treated to the point of being humiliated, both mother and son soldiered on, Tony more than ever, who did everything humanly possible to ease the poverty of his mother.

It was a hard climb for both mother and son, but none too steep for Tony to reach. To ease the grip of poverty, the young Tony engaged in everything, from vending fish whenever he can to finally opening a humble sari-sari store in that pitiful riverside barrio they called home.

One defining moment in young Tony’s life came by way of an American GI. In the book The Continuing Saga of Success, written by award-winning poet Jose “Pete” Lacaba and Eric S. Caruncho, Tony himself reminisced about the incident.

Tony related that while he was shining the shoes of a GI, his eyes caught the pear the man was eating. Tony hardly had a bite to eat for hours. As if to taunt him, the GI asked if Tony wanted the pear.

“And this son-of-a-bitch American knew my mouth was watering for that pear he was eating. ‘You want this pear, boy?’ he grinned at me. I could only gape at him. The pear was only half-eaten and suddenly he hurled it away. ‘Go get it, boy!’ I didn’t move […] I refused to stir.”

It was then that the GI kicked the young boy “like a dog.” The sudden violence forced the young Tony to scamper under a six-by-six truck for safety, where he wept because of the pain.

“But at the time,” Tony said, “I felt something of my mother’s pride. I hadn’t run to pick up that thrown-away pear the GI wanted me to eat. I was very thin then, probably malnourished, certainly quite hungry. But I had not run after food like a dog. I had shown the American how even in misery, one can keep one’s pride.”

It served the young boy a lot of good to see to it that his mother was cared for by him all throughout her life, earning for himself some home-spun wisdom along the way. Coupled with being streetwise, the young Tony began his dream of a life even while in high school and college.

With more than ample resources from the sari-sari store, the young Tony ventured into being a driver of a passenger jeepney in his middle teens. It was, as he said, his first car. His job as driver and shopkeeper kept him busy all throughout the day, plying the Pandacan, Santa Ana and Paco routes. The hours he spent as college student of the University of the East he dedicated to studying until he made it into the Dean’s list.

No summer went by without seeing Tony on campus, between the pages of textbooks and inside classrooms. He was, at an early age, a man in a hurry. In three years, and at the age of 22, he was able to finish what was supposedly a four-year commerce course.

However, his attempt at being a certified public accountant proved disastrous for a time in Tony’s estimation. He had failed the first test. While on the verge of taking the second, his first business as a jeepney operator was already taking off.

But he had better things in mind than the meager return on investments he received from driving and operating a fleet of public-utility jeeps. Able to convince college friends to invest their money on a new venture—a pawnshop—Tony took on the reins of what would be a defining moment in his career as a businessman.

It cost him more than a hand and a limb: all of the P30,000 savings he garnered from operating a fleet of passenger jeepneys.

And so rose the Filipinas Pawnshop at the corner of Herran (currently Pedro Gil Street) and General Luna in Paco, Manila. It still stands today as an admirable tribute to the ingenious young man who knew how to turn his misfortunes into fortunes.

At the age of 26, Antonio L. Cabangon Chua was the youngest member of the Chamber of Pawnbrokers of the Philippines. He would decades later stand as the country’s diplomat to Laos and chairman emeritus of one of the country’s largest and most extensive business and media enterprises—the Antonio L. Cabangon Chua Group of Companies and the Aliw Media Group.

In honor of his mother’s memory, the ambassador shares his blessings through the Dominga L. Cabangon Memorial Foundation. With its goal of supporting needy children through education, the foundation has lent its hand in support of hundreds of scholars belonging to deserving children of his employees, also to priests seeking further education.

With this comes his homage to his good friend and first editor in chief of the Philippines Graphic, National Artist for Literature Nick Joaquin: the Quijano de Manila Foundation. The foundation’s aim is to offer financial assistance to the effort of developing young writers and children of journalists. The Philippines Graphic Nick Joaquin Literary Awards, now on its 25th year, seeks to enhance writers’ skills by empowering them with tools needed for the task.

“Whether you’re rich or poor, everyone has 24 hours in a day. It’s what you do with your 24 hours that counts. In life, you never give up.”

*Joel Pablo Salud is currently the editor in chief of the Philippines Graphic.

9 trending local cities this year

Property analysts and experts forecast that developers will continue to pursue township developments in and outside Metro Manila in 2016. Now, where could these, and other types of developments be? Here are the nine likeliest urban locations:

1 Cavite. Colliers International Philippines cites three reasons Cavite is on developers’ maps:

• Cavite has been known as a suburban support area to Metro Manila. With its relatively cheaper housing costs, Cavite has drawn within its boundaries hundreds of thousands, who still commute daily to their workplaces within Metro Manila.
• Numerous infrastructure projects recently launched will allow Cavite to flourish. The LRT-1 extension project will end in Bacoor; the government has now started the bid for LRT-6 which will further extend the LRT line from Bacoor to Dasmariñas City. Furthermore, the 44-kilometer Cavite-Laguna Expressway (Calax) project will provide necessary access to growth areas in Cavite.
• With the completion of the Muntinlupa-Cavite Expressway (MCX), a toll road which connects the South Luzon Expressway (SLEx) to Daang Hari, property values in the area are foreseen to escalate rapidly. The new toll road will spur rapid development in emerging master-planned communities such as Vista Land’s Vista City and Ayala Land’s Vermosa Estate, which have the potential to establish themselves as full-blown central business districts (CBDs).

Property portal Lamudi Philippines, in its 2016 top cities list, shares eight more locations that will benefit from real estate investments.

2 Quezon City. The population of Metro Manila’s largest city is projected to grow to more than 3.5 million by 2020, with many looking into relocating there. Quezon City properties are relatively more affordable compared to Makati and Taguig, and offers plenty of options to homebuyers.

3 Makati. The country’s foremost financial and business district won’t be outdone, even if the average rental rate in its CBD is expected to decrease 3.39 percent year-on-year by the third quarter of 2016, vacancies to increase to 10.19 percent across all condo grades. Fringe areas, however, are starting to see an uptick in real estate activity, particularly Barangay San Antonio, near Ayala Avenue. “Worsening traffic conditions in Metro Manila are making these areas attractive to renters and homebuyers,” said Lamudi.

4 Taguig. “Taguig’s population is projected to reach almost one million by 2020, which will make it the National Capital Region’s fourth more populous (after Quezon City, Caloocan and Manila) and the country’s 9th. The city’s real estate sector has been on an upswing ever since Fort Bonifacio was privatized,” noted Lamudi. It added that several projects now are underway: Megaworld’s McKinley West and Ayala Land’s Arca South. Access to and from the airport (particularly Terminals 1 and 2) and to Coastal Road will also improve when the flyover connecting CP Garcia Avenue to the Moonwalk Access Road and West Service Road is finally completed.

5 Pasay. This city is gaining prominence because of: 1) Bay City—the reclamation area along Manila Bay housing the Mall of Asia Complex, Entertainment City—and Aseana City; 2) The SM group has already incorporated office and residential components in the MOA complex; 3) Federal Land is set to complete its Six Senses Residences in 2016 and its first tower in the Palm Beach project in 2017; 4) Improved infrastructure when the Naia Expressway connecting the Metro Manila Skyway to the Manila-Cavite Expressway and Entertainment City, is finally completed.

6 Bacolod. In mid-2015, Lamudi data showed that Bacolod had become among the most popular cities among online property hunters. In fact, real estate giant Megaworld announced in late 2015 that it was building two integrated townships in the city (the 50-hectare Northill Gateway and the 34-hectare The Upper East), while Ayala Land has sealed an agreement with the provincial government of Negros Occidental to build the mixed-use Capitol Central.

7 Davao. Davao remains southern Philippines’ economic and business center, and one of the most searched cities in the Lamudi website in 2015. Its population is projected to balloon to 1.83 million by 2020. Davao is also consistently among the most searched by online property hunters, and the sixth and third most searched city by property hunters based in the United States and Saudi Arabia, respectively, according to Lamudi data.

8 Cebu. Cebu City is one of Tholons’ top 10 outsourcing destinations in the world (and second in the Philippines behind Metro Manila). According to CB Richard Ellis Philippines, exciting expansions and new developments are coming in over the next few years. In 2015 alone, two new large malls opened in the city, SM Seaside City Cebu and Robinsons Galleria Cebu. SM Seaside alone has an area of 10-15 hectares devoted to commercial development, similar to the E-com office towers in the MOA complex, while Robinsons Galleria will have entire floors dedicated to BPO offices.

9. Muntinlupa. The south of Metro Manila, specifically Muntinlupa, is also projected to perform well this year, with the launch of several high-profile projects from the country’s biggest developers, one of which is Avida’s South Park District, a mixed-use development sitting on the former Nestlé plant in Alabang, in addition to the established Filinvest and Madrigal business districts. Further, in anticipation of infrastructure projects expected to ease travel to the south, property developers, including Rockwell subsidiary Rockwell Primaries, and Vista Land are now eyeing Muntinlupa as their next focus area.

Source: By: Tessa R. Salazar / http://business.inquirer.net/206043/9-trending-local-cities-this-year

Elections to affect real estate activity; oversupply in vertical residential segment

AS THE PHILIPPINES “goes bananas” in an election year—in the year of the monkey at that—property experts see a number of challenges, and likely trends, flavoring and coloring the real estate industry in 2016. Here’s their fearless forecast:

1. There will be an oversupply in the mid-market vertical residential segment.

“I expect 2016 to be the most challenging year for the residential property sector. A looming oversupply in the mid-market vertical residential segment in Metro Manila is developing, and developers should expect a slowdown by as much as 10 percent in the average annual take-up rate of 50,000 units. Several developers are already holding back sales of new projects until supply balances out in 2018,” said Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business, in an Inquirer Property interview.

Soriano said that with this oversupply scenario, “we will naturally anticipate vacancy rates to go up in 2016 to double digits in the Makati and Ortigas CBD (central business district) area.”

2. The 2016 presidential elections will affect the market. Soriano said the presidential and national elections “is likewise expected to freeze any major real estate activity in the first two quarters of 2016. Naturally, investor sentiment will be on a wait-and-see attitude. This will not bode well for the property sector and the economy as a whole. Hopefully, after the elections, it will be followed by a possible uptick in transaction levels in the last two quarters of 2016,” said Soriano.

3. Business process outsourcing (BPO) growth continues. BPO companies, according to property portal Lamudi Philippines, will continue to buoy Metro Manila’s commercial real estate.

“Experts do not foresee the supply of office space surpassing demand soon, meaning commercial properties (and offices in particular) remain a beneficial investment for 2016,” said Lamudi

Philippines in a statement.

Soriano said that in 2016, Grade-A office rents in prime areas is expected to increase 5 percent, given strong demand for office space and low vacancy rates. Meanwhile, rents in non-CBD areas may slightly drop by 5 percent due to available supply in Makati and Bonifacio Global City.

4. Metro Manila land values will go up. Lamudi Philippines said that despite slower gross domestic product growth in 2015, land values still continue to appreciate, albeit at a slower pace.

Colliers International said that growth rates of land values in Metro Manila accelerated in the second quarter of 2015. In addition, land values in the Makati CBD, growing at only 0.85 percent during the first three months of the year, rebounded in the next three by growing at a rate of 2 percent. This raised the area’s average price to P452,704 per square meter. Values similarly rose in the business districts of Fort Bonifacio and Ortigas Center, increasing at 1.97 and 2.1 percent, respectively.

5. Retail property market will face a slowdown. Soriano said “the challenging retail environment is likely to persist next year due to diminishing inbound tourist arrivals. We expect prime rents outside of the shopping centers to slide by 10 percent in 2016, while shopping mall spaces are expected to escalate.”

“We can also expect a decline in premium retail market rents due to the expected drop in tourist arrivals as a result of the national elections happening in the first half of 2016. The mass retail market is expected to remain resilient as domestic consumption continue to grow, fueled partly by election spending nationwide,” said Soriano.

Source: by Tessa R. Salazar / http://business.inquirer.net/204872/elections-affect-real-estate-activity-oversupply-vertical-residential-segment

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

PROPERTY SECTOR GROWTH SLOWDOWN SEEN

Brokerage firm Colfinancial.com  sees a slowdown in the property sector in 2016 after years of robust expansion.

The online brokerage firm noted this is particularly true in the residential market.

“Take-up sales of residential properties continue to grow annually. However, the pace of growth has been slowing down since 2014 given the high base effect,” it said. 

“This year, we expect growth to remain slow as take up sales in 2015 remain substantial. Aside from high-base effect, as risk to growth this year is the slowing growth of OFW remittances,” it added. 

Colfinancial.com noted that in the first 10 months of last year,  remittances from overseas Filipinos increased by only 3.7 percent to $20.6 billion from an average of around 7 percent in the past five years.

 This should a big consideration in the property market, according to the brokerage firm, given that the average contribution of OFW sales to take-up sales is around 31.5 percent. 

“Another possible, albeit small, risk to demand is higher interest rates. Local bond yields have increased following the rate hike by the Federal Reserve of the United States in December of 2015 and
expectations of more rate hikes,” Colfinancial.com said.

 “However, according to our banking analyst, lending rates are not expected to mirror the increase in bond yields due to ample liquidity conditions and intense competition among banks. Moreover, the Federal

Reserve has repeatedly said that the rate hike cycle will be slow,” it added.

 Colfinancial.com said any increase in lending rates will be very small and not enough to significantly dampen demand for real estate. 

The brokerage firm also assured that the risk of a glut is low.

 “For the first nine months of 2015, takeup sales of leading property developers outpaced launches. This indicates that sales are not primarily driven by new launches and that there is enough demand to
absorb developers’ existing inventory. This also indicates that developers are disciplined enough to continuously monitor the demand- supply situation and are careful not to flood the market with supply,” it
said.

 The office space segment meanwhile continues to benefit from the good prospects of the business process outsourcing sector. 

“The depreciation of the peso last year also gives international companies greater incentive to move backroom operations to the Philippines,” it added. 

Colfinancial.com said the growth in demand will be able to absorb incoming supply. 

“According to Colliers, office supply will grow at a CAGR (compounded annual growth rate) of 8 percent from 7 million sq uare meters in 2014 to 9.5 million sqm by 2018. Meanwhile, IBPAP (Information

Technology Business Processing Association of the Philippines)  expects the BPO (business process outsourcing) sector to have 1.3 million full-time employees by 2016, up by a CAGR of 14 percent from 1 million in 2014,” it said.

 “Even if growth rate of full-time employees drops to half in 2017 and 2018, we believe it will still be enough to fill the incoming supply,” it also said.

 Colfinancial.com meanwhile said outlook for the commercial leasing segment remains positive as retailers continue to expand, creating demand for retail space. 

“The improvement in the economy is also resulting to an increase in the number of casual dining outlets. Economic growth and stability has led to the increase in the frequency of people dining out rather than
eating at home, thus creating demand for more casual dining outlets. This serves as a big driver of demand for commercial space,” it said. 

“With this in mind, we expect vacancy rates to remain low and same store/ mall sales to remain on an upward trajectory,” Colfinancial.com added.

Source: By ALBERT CASTRO  / http://www.malaya.com.ph/business-news/special-features/property-sector-growth-slowdown-seen

Iloilo and Bacolod emerge as top Tier 3 sites for outsourcing firms

WHILE India and the Philippines remain the top countries for offshoring, an A.T. Kearney study revealed companies are looking to locating in Tier-3 sites outside these nations’ capitals.

“While India and the Philippines are still top of mind when it comes to offshoring, the hunt for new talent is now taking companies beyond these countries’ capitals and major cites to Tier-3 locations, such as Surat, Nagpur, and Lucknow in India; and Bacolod and Iloilo City in the Philippines,” A.T. Kearney’s New York partner Arjun Sethi was quoted in a news statement as saying.

Sethi based his statement on the recently released 2016 Global Services Location Index (GSLI) by the management consulting firm. The report shows India and the Philippines unchanged in the index from the 2014 ranking at No. 1 and No. 7, respectively.

A.T. Kearney ranks countries to arrive at its GSLI according to financial attractiveness (FA), people skills and availability (PS&A) and business environment (BE).

India’s FA score of 3.22, while lower than Indonesia—also unchanged at No. 5, is still higher than the Philippines’s 3.17 score. The Philippines’s PS&A score of 1.43, while higher than Malaysia’s 1.42 score, pales in comparison to India’s 2.55 PS&A score. Malaysia and China, to note, also remained unchanged from their 2014 ranking of No. 2 and No. 3, respectively.

But the Philippines’s BE score of 1.29 beats India’s 1.19. “Since the 2014 GSLI, the Philippines has registered gains in its scores in infrastructure, environment and tax and regulatory costs,” the report, titled “On the Eve of Disruption,” said.

The report added that companies are looking at Tier-3 cities in the Philippines as location for offshoring because of the advantages these sites offer. “One advantage of Tier- 3 cities is the relative affordability of real estate. Another advantage is the relative availability of labor, its lower cost and lower attrition rates,” the report said.

Now on its seventh edition since 2004, the 2016 GSLI “helps companies make key location decisions for offshoring and industry development projects with objective guidance,” A.T. Kearney said.

The 55 countries in the 2016 index—four new countries have been added this year—are selected based on corporate input, current remote services activity, and government initiatives to promote the sector, the consulting firm added.

Source: By Daphne J. Magturo / http://www.bworldonline.com/content.php?section=Economy&title=bpos-in-smaller-cities-keep-phl-competitive—-a.t.-kearney&id=121530

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