Battle over Cagayan de Oro airport: US base or new city center?

NEW CITY CENTER. Engineer Isidro Borja (left), Cagayan de Oro’s top planning and development officer; and Eileen San Juan, the city’s chief for Local Economics, Investment Promotion, discuss the planned Cagayan de Oro city expansion. Photo by Bobby Lagsa/Rappler.

CAGAYAN DE ORO CITY, Philippines – Is there a looming battle over the use of the old Lumbia airport?

The national government is not the only one eyeing the old airport, reportedly for use by the US military under the Enhanced Defense Cooperation Agreement (EDCA). The Cagayan de Oro city government has also expressed interest in developing 106 hectares of prime airport property in Barangay Lumbia.

The city’s top urban planners, with the help of the United Architects of the Philippines, created the Planned City Expansion (PCE) in Barangay Lumbia, an expansive uptown village deemed suitable for expansion as it is not prone to flooding and has potential as the new city center.

Cagayan de Oro Mayor Oscar Moreno said the PCE was conceptualized under the United Nation Habitat’s Achieving Sustainable Urban Development (ASUD) project with the assistance of Arcadis, a global design, engineering, and management consulting company.

The PCE covers 820 hectares of land including the Lumbia airport which is now under the control of the Philippine Air Force’s 10thTactical Operations Group, though the land is owned by the Department of Transportation and Communications (DOTC).

New growth area

Moreno said that the prime land, which is 180 meters above sea level, is a strategic area since future expansions under the Mindanao Logistics Infrastructure network (MLIN) pass through or near lumbia.

The MLIN is a long-term development plan for the road network in Mindanao. It includes new construction, and the upgrade and improvement of existing national roads and local roads.

All agencies, including the Department of Public Works and Highways, should use the MLIN plan as a guide for their own long and medium term development plans in the area covered by the plan.

EXTENSION. The conceptual plan of the planned Cagayan de Oro city extension. Map courtesy of the CDO government

The MLIN is intended to be used as a reference for agencies involved in the development of the Mindanao transport network.

A new national road is being constructed that will connect Iligan City to Bukidnon.

Engineer Isidro Borja, chief of the City Planning and Development Office, said that the PCE will be the new growth area of the city with its cluster of areas for development.

“It is like a self-contained community where everything is there, without having to go to other places to work or study,” Borja said.

Last year, Christopher Rollo, ASUD country program manager for UN Human Settlement, said that if the expansion of the city is left unplanned and unchecked, it is likely to be driven by real estate market that favors development for the rich.

“In Lumbia, it is where everything can be put in place like public spaces can remain public, road network connected to other districts without being blocked by private ownership of lands,” Rollo said.

Mixed-use modern district

Eileen San Juan, the city’s local economics and investment promotions chief said that she met with defense officials on January 11, 2016, to present the city’s PCE, which includes the Lumbia airport.

Moreno said the PCE was presented to President Benigno Aquino III and Cabinet officials as early as 2013 as part of the city government’s bid to promote the city.

San Juan said that the PCE is an exercise in urban planning which the city badly needed.

Under the PCE, there are 5 proposed clusters – Lumbia airport is under Prime Cluster A where local and national government offices are located.

“We will also replicate ‘Plaza Divisoria,’ which is a unique feature not found in any other city,” San Juan said.

Plaza Divisoria is a strip of 5 parks with statue of national hero Dr Jose Rizal, Andres Bonifacio, president Ramon Magsaysay, and mayor Justiniano Borja who first planned the city’s business district which Divisoria will be part of.

San Juan said the city wants a strategic and sustainable development node, a model for adaptive reuse, providing rural areas easy access to economic opportunities and social services.

“We want an institutional landmark with wide public parks and open space in harmony with medium to high density residential and commercial development which would showcase the city for livability and resilience,” San Juan said.

Borja said the PCE conforms with the approved Comprehensive Land Use Plan (CLUP).

“With the diverse housing market, low, medium, high end suitability for resettlement, this project will answer the housing shortage in the city,” Borja said.

Clusters

San Juan said each cluster under the PCE is designed according to use.

• Cluster A: Institutional and mixed use
• Cluster B: Farmstead/homestead villages
• Cluster C: Medium-density residential with community facilities, health and education, low intensity commercial area with at least 20% social housing with connection to town center and public spaces
• Cluster D: Residential villages in terraced fields, water retention ponds, soil erosion control and tourism activities with ecotourism (biking, trekking, adventure sports), mountain view resort with convention and meetings facilities
• Cluster E: Agri-processing Complex with waste management facility, mixed use Low–medium end housing, commercial, community facilities, value chain-considered efficient access to raw materials and markets

CLUSTERING. Cluster A is where local and national government offices would be located. Courtesy of the Cagayan de Oro city government

Borja said the PCE was designed considering road traffic. “All major roads will be 30 meters wide, while other roads will be at least 10 meters wide, both with provisions for pedestrian and cycling lanes.”

“We wanted the PCE is to be as walkable as possible; we want it to be environmentally and people friendly,” Borja added.

Adjustments

If EDCA enters into the picture and the airport is used by the US military, city officials said they would have to just adjust the design accordingly – but not without first exhausting efforts to convince the national government to favor the PCE.

Moreno said the long-term plan is for the common good.

“It is up to the national government if they’d allow the local government’s initial plan. We need them (national government) to cooperate because basically, the land belongs to to the Civil Aviation Authority and we cannot plan without them involved,” Moreno said.

Moreno added that the city government is taking steps to convince the national government on the expansion, as it is for the common good.

In its plan, residential areas will get 19.72% or 177.62 hectares; commercial area, 2.04% or 18.35 hectares; institutional 4.6% or 42.1 hectares; agro-industrial 2% or 17.87 hectares; mixed-used 15.8% or 142.9 hectares; commercial and transport facilities, 0.91% or 8.19 hectares; roads, 15.96% or 143.76 hectares; public spaces, 38.83% or 349.72 hectares.

“We will be expecting adjustments and needs to revisit the planning and resources needed to achieve our goal of the PCE,” San Juan said. – Rappler.com

Source: Bobby Lagsa/ http://www.rappler.com/nation/120224-battle-lumbia-airport-us-base-cagayan-de-oro-city-center

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

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

Philippine year in review 2015

Strong domestic demand and increased government spending helped sustain high levels of economic expansion in the Philippines throughout 2015, though a slight slowdown was observed late in the year as demand from the country’s main trading partners eased.

While yearend data have yet to be released, estimates from the Asian Development Bank (ADB) in December project gross domestic product (GDP) growth of 5.9% — short of the 6.4% forecast earlier in the year — as a result of declining merchandise exports, which fell by 6.9% year on year in the first three quarters to $43.7 billion.

Despite the modest slowdown, the Philippine government remains confident that end-of-year spending will help boost GDP growth to 6%-6.5% by the close of 2015.

The months ahead are expected to usher in strong economic expansion, with the ADB projecting growth of more than 6% in 2016 as the government continues to increase public spending. Higher demand from India and other Southeast Asian economies is expected to offset the effects of this year’s weaker exports.

INFLATION SUBDUED, EMPLOYMENT UP
While still modest, inflation gained pace late in the year, rising to 1.1% in November, up from 0.4% in October. However, rates remain within the Central Bank of the Philippines’ target band of 0.4% to 1.2%, and well below the 3.7% registered in November 2014.

According to the National Economic and Development Authority, inflation is being driven by rising food and non-food prices stemming from higher local demand and the lingering effects of typhoon Lando, which struck the country’s shores in October.

Core inflation — which excludes energy and unprocessed food costs — edged up in the last quarter of 2015, reaching 1.8% in November, its highest level since July, but still below the 2% target set by monetary authorities.

In a research note issued in early December, Barclays predicted inflation would rise to 2.4% in 2016, due in part to a modest anticipated increase in fuel costs and the potential impact of the El Niño weather pattern on agricultural prices.

Nonetheless, the ongoing strength of the economy helped stem unemployment in 2015, with figures released by the Philippine Statistics Authority in early December reflecting a 5.6% unemployment rate as of October, down from 6.5% in July 2015.

POSITIVE RATINGS OUTLOOK
The steady growth and stability of the economy prompted ratings agency Fitch to revise its outlook for the country from stable to positive in late September. The agency also affirmed the Philippines’ long-term foreign- and local-currency issuer default ratings at “BBB-” and “BBB”, respectively, maintaining the country’s investment-grade standing.

Moody’s was also optimistic about the Philippines’ economic prospects for 2016, reaffirming the country’s “Baa2” bond rating with a stable outlook in mid-October. According to the agency, the rating reflects the “resilience of [the Philippine] economy to the current headwinds buffeting neighboring countries” and expectations that the positive economic and fiscal trends will continue for the next one to two years.

BUDGET DEFICIT WIDENS
The year’s economic expansion was fueled in part by higher levels of government spending, which led to a deeper budget deficit in the latter half of the year. On the back of more than P1.82 trillion of disbursements in the first 10 months of the year, the year-to-date budget shortfall rose to P52.6 billion in October, up 56% year on year.

While outlays were higher than anticipated, government revenues were also up, with receipts rising by 12% year on year to P1.77 trillion between January and October.

In past years the government had come under fire for the relatively slow pace of spending, which often fell short of expenditure targets and delayed investment and capital projects. The late-term acceleration in public spending could help clear some of the project backlog and further stimulate the economy.

Economic activity in the coming year is also set to be fueled by presidential elections in May 2016. A recent report by Standard Chartered Bank predicted the election campaign would spur an influx of investment in the manufacturing, government services, private services, transport, communications and storage sectors, in particular.

According to the bank, the ramp up in public spending, alongside higher household consumption levels, could add between 0.1 and 0.3 percentage points to GDP in 2016.

Source: Oxford Business Group/ January 7, 2016/ http://www.bworldonline.com/content.php?section=Economy&title=philippine-year-in-review-2015&id=121092

Debt-to-GDP ratio drops to 45.3% in September

The country’s debt-to-gross domestic product (GDP) ratio as of the end of September dropped to 45.3 percent, slightly lower than last year’s ratio of 46.4 percent.

Department of Finance (DOF) Undersecretary and chief economist Gil S. Beltran said the continuing drop in the debt-to-GDP ratio indicates the country’s stable financial situation to pay off its debts while funding economic and social projects.

Domestic debt-to-GDP ratio is at 29.6 percent, while external debt-to-GDP ratio is at 15.7 percent.

The debt-to-GDP ratio is an economic indicator which shows, among others, a country’s ability to pay off its debt from wealth generated by the economy itself, instead of merely borrowing more money to pay off maturing debts. The fiscal space generated by the government’s higher revenue collection has brought down the debt-to-GDP ratio. This year the budget deficit remained below the target of 2 percent of GDP.

“Compared with the target deficit equivalent to 2 percent of GDP, the end-September actual deficit of 0.27 percent shall enable the government to provide fiscal space to push economic growth to higher levels in the last quarter, even with the ongoing global financial volatilities and threats of El Niño phenomenon,” Beltran said in an economic bulletin.

The DOF said that, despite the lower budget deficit for this year, which amounted to P25.5 billion as of September, government expenditures continued to pick up, especially for projects that have economic and social impact, like infrastructure and social services.

This is expected to continue through 2016, with the government’s proposed budget, including provisions for infrastructure spending next year, equivalent to 5 percent of GDP, while budgets for social services going up by 471 percent from the budget allocated for such services in 2010.

From January to September, total expenditures amounted to P1.63 trillion, or 12 percent higher than comparable figures last year.

Source: by David Cagahastian / http://www.businessmirror.com.ph/debt-to-gdp-ratio-drops-to-45-3-in-september/