Inflation seen at 7% this month

By Des Ferriols Updated January 30, 2009 12:00 AM

The Bangko Sentral ng Pilipinas (BSP) expects the nationwide inflation rate to drop to as low as seven percent this month as oil prices continued to stabilize and food prices eased after the holiday season.

The BSP said yesterday that the inflation rate is projected to slow down to seven to 7.9 percent in January and to continue dropping to an average of 5.5 percent for the whole of 2009.

The nationwide inflation stood at eight percent in December but according to BSP Governor Amando M. Tetangco Jr., the rate could drop by as much as one percentage-point this month.

“The expected further slowdown in inflation would have been due to lower domestic oil prices and the peso’s strengthening during the month,” Tetangco said.

However, Tetangco said the slowdown could also be tempered by the increases in the prices of major food items such as pork.

“The BSP will continue to closely monitor price developments to ensure our policy settings are responsive to evolving scenarios,” he said.

BSP Deputy Governor Diwa Guinigundo told reporters that the bulk of the slowdown in inflation was due primarily to the drop in oil prices towards the end of the year after rising to historic highs and causing the dramatic surge in prices in mid 2008.

“Of course the slowdown was also precipitated by the appropriate monetary policy moves that we had undertaken last year,” Guinigundo said, referring to the monetary tightening that the BSP made in early 2008.

Last year, the BSP hiked its key policy rates by a total of 100 basis points as inflation rate rose to over 12 percent because of rising oil prices and the consequent adjustment of wages and transport fare rates.

By December, however, the BSP had started to ease its monetary policies, cutting the key rates by 50 basis points, lowering its overnight borrowing rates to 5.5 percent and its overnight lending rates to 7.5 percent in an effort to stimulate the economy.

Based on the BSP’s projections, Guinigundo said the downside risks to inflation appeared dominant against upside risks at this point, indicating that inflation rate would continue to drop throughout the year.

“Even core inflation is coming down and that means the demand-side pressures are also easing,” Guinigundo said.

According to Guinigundo, the BSP saw upside pressures on inflation to come from the utilities sector where rates could be adjusted upwards, particularly in water and energy bills.

Guinigundo said the state-owned National Transmission Corp. (Transco) had a pending request for an adjustment in transmission rates and the water sector is also asking for a similar adjustment.

But Guinigundo said that with the decline in oil prices, these adjustments might no longer be necessary, thus removing further pressure on the prices of basic commodities.

“There is less ground for utility firms to ask for adjustments if oil prices would remain steady,” Guinigundo said.

On the other hand, Guinigundo said there are more compelling reason for the inflation rate to continue going down, particularly the steady decline in oil prices and the improvement in food supply which supported the stabilization of food prices.

“The global slowdown is also a factor that would ease demand and therefore support lower inflation all around,” Guinigundo added. “Fortunately, the foreign exchange rate is also not adding more pressure because it is steady also.”

Developer earmarks P2.7 billion for 5 projects

By Ehda M. Dagooc Updated January 24, 2009 12:00 AM

Despite the threat of consumer spending tightening, residential developer Primary Homes is ready to splurge P2.7 billion for at least five condominium and subdivision projects in Cebu this year.

“I believe that demand for housing is going to continue for Cebu. Compared to other parts of the world, our economy [Cebu] is pretty much okay,” said Primary Homes president Stephen Charles Liu.

This year, Primary Homes, formerly known as Commonwealth Estate Inc.(CEI), is going to introduce five new residential development projects, including two pocket-size subdivisions to be built in Talamban, and Banawa.

Following the strong take up of its condominium project, Wood Crest Residences located in Banawa, the company will be introducing another condominium project to be called “La Guardia Flats” in Lahug.

According to Liu, spending for residential acquisition from the Overseas Foreign Workers (OFWs) is going to sustain, amid the ongoing massive retrenchments in the United States, and other countries.

He expressed confidence that Filipino workers especially those that are working in the United States, will be the least affected amid the lay-off and job streamlining, because majority of them are employed in

the education and healthcare sectors.

Education and healthcare have immunity to crises as these are very important sectors, and massive job streamlining in these areas are unlikely to happen. Besides, Liu said Filipinos are the most sought-after workers in the world, so they are the “last ones” to be ditched out, in times of difficulties.

Thus, spending for residential acquisition in both subdivision and condominium projects are seen to stay dynamic in Cebu.

The booming Business Process Outsourcing (BPO) sector, as well as tourism will also help strengthen real estate products’ take up in Cebu, in both residential and commercial developments, Liu said.

Primary Homes’ parent company Primary Structures Corporation (PSC), the region’s largest general contractor and builder, also operates the Primary Properties Corporation (PPC), the well known name in

commercial building leasing and one of the major building owners at the Asia Town IT Park here.

While the local market still opts to buy subdivision-based properties, the expatriates and Filipino and foreign migrants to Cebu are the consumer backbone of condominium products, he said.

In the next few months, Primary Homes will introduce Casa del Rio, its pocket-size subdivision in Highway 77, Talamban, that will offer 24 housing units targeted to the middle to lower-high-end consumer base.

Federal Land delays Cebu projects

By Ehda M. Dagooc Updated January 26, 2009 12:00 AM

Due to the volatile economic condition, Metrobank's real estate arm, Federal Land Inc., (FLI) puts on hold its planned projects for Cebu.

"This time of crisis gives us a 'breathing space'. It's time to rock out brain and spend more time on planning anticipating for better economic environment ahead," said FLI president Alfred Ty in an interview.

He said instead of pursuing its plan to start the development of idle property within the Marco Polo Plaza Cebu property, the company is still holding on and takes a pause "instead of rushing it."

While the company spends on the development of its hotel project in Metro Manila, building a Hyatt Hotel in Global City, it likewise continues to expand its land bank for its future Cebu projects.

Supposedly, FLI is going to start the construction of its expansion plan in Cebu by kicking off with its planned overlooking residential service apartments, and condominiums late last year, however the company decided to shelve off the plan due to the global economic meltdown.

Ty was referring to the two-hectare remaining property that is part of Marco Polo Plaza Cebu state, fronting the hotel, which used to be the location of the then famous restaurant "Lantaw" operated by the defunct Cebu Plaza Hotel.

Also, he mentioned that FLI is looking at properties in Cebu, including Mactan Island, and neighboring areas and provinces in Cebu as part of its land-banking moves, while expressing confidence that the economy may get better in short and medium term period.

In fact, he said that there is a good possibility that the global economic crisis will start to recover towards the middle of third quarter of this year, as countries that are severely affected like

United States and Europe have huge reserves to rescue their deteriorating economic strength.

Now, that the economic slowdown is still obvious, the company is spending more time for planning.

Marco Polo Plaza Cebu, is the first hotel development of FLI in the Queen City of the South. The company is continuously looking for opportunities for this particular plan, but nothing is yet formal.

Metrobank acquired the five-hectare property, including the hotel facility previously owned by Pathfinders Corporation due to heavy loan exposure, through foreclosure.

So far, FLI had only maximized about three hectares of the entire property. The Ty-family led by Alfred's parents George and Mary Ty was in Cebu Friday night to grace the thanksgiving ceremony of Metrobank to its Cebuano clients, as well as the official announcement of Marco Polo Plaza Cebu, as the first five-star City-based hotel in Cebu.

Unlike other giant developers that are braving the crisis, and continue to pour in investments amid the financial difficulties, Ty said the company is exercising careful moves, as the fate of the global economic meltdown is still unpredictable.

He said it's hard to speculate and give specific target timeframe for the implementation of planned projects [especially in Cebu], he said reiterating that FLI is employing "plan and see" attitude.

"We have it all figured out, but we take advantage of this time [of crisis] to plan more," he concluded.

Primehomes stays upbeat with Compostela project

Updated January 26, 2009 12:00 AM

Despite the instability of the market at this point of global economic turmoil, a new real estate player in Cebu remains upbeat that their project will be a hit in the market banking on the huge investment potential of their location in Estaca, Compostela.

Primehomes Development Corp. remains optimistic that despite the uncertainty of the economy these days, the demand for housing in the province will still be great that real estate business will most likely continue to thrive this year.

Along with this continued optimism, the company will be launching its first economic housing project called as Henaville at Compostela this month.

In a press conference, Primehomes general manager Rey Alfonso Aguilar said that the first phase of their project will be composed of duplexes priced at P1.2 million and town homes priced at P1.1 million for bare units to as high as P1.3 million for finished units.

He said that the townhomes have either one bedroom with a comfort room and a garage or three bedrooms with 2 comfort rooms and a garage.

Henaville’s land development will be undertaken by the Kevlar Development Corp. and is targeted to be completed by June of this year and the houses are scheduled to be turned over by the third quarter of this year, said Aguilar.

He said that after having officially started with the full blast marketing efforts for the units, they have so far been able to sell out all their duplex units and sell out 50 percent of their town homes in the entire Phase 1.

He said that the profile of their buyers range from local employees, businessmen, overseas Filipino workers, and start-up families.

Aguilar stressed that apart from the rest, they are the only developer who utilized top quality materials that are above the economic housing standard.

“We wanted to really add value to the units so that buyers will appreciate their investment,” said Aguilar.

Meanwhile, the company’s president Benedict Y. Que said that they believe that the current economic crisis will be a “temporary setback” and that they remain hopeful that despite the crisis, real estate business especially here in Cebu will still achieve its goals this year.

“Now is actually the high time to invest in real estate because the price rate is really low. Despite the crisis, we still have high hopes with this kind of industry,” said Que.

He said that they remain “cautiously optimistic” with their first ever housing project taking into consideration the potentials of its location in Compostela.

The company is eyeing the completion of the North Coastal Road project by the Arroyo government which will make it more accessible for their home owners and potential buyers to access their project. — Rhia de Pablo

Cebu City council okays P25-B joint venture project with Filinvest Land

By Rene Borromeo Updated January 26, 2009 12:00 AM

CEBU CITY — Gotianun-owned property developer Filinvest Land Inc. (FLI) has been given the green light to go on with a proposal to develop a portion of the South Road Properties (SRP) here.

Acting City vice mayor Hilario Davide III has assured that the Cebu City Council will not delay the approval of a resolution that will formalize the contract for a joint venture with FLI.

The members of the Joint Venture Selection Committee, headed by city administrator Francisco Fernandez, awarded to FLI the contract for a P25-billion joint venture project at the SRP which acting mayor Michael Rama can now sign following the nod of the city council.

Davide said the issue about the joint venture project with FLI will be discussed by the council on Wednesday.

Fernandez said the city council will not delay the granting of authority to Rama to sign the contract, adding “they must do their job without sacrificing the issue of transparency.”

The agreement state that within one month after the actual signing of the contract, FLI will release its initial payment for 10 hectares. The total will be paid within a period of three years.

In its proposal of FLI offers to purchase 10 hectares for P1.5 billion and to develop the other 40 hectares in a joint venture scheme with the city.

Fernandez said this is very timely, because the city needs P338 million next month to pay its loan from Japan.

Meanwhile, Fernandez said he is hoping that Cebu provincial officials will no longer pursue their intention to bid for the same area that the FLI wants to develop.

Rama has rejected the appeal of the Cebu provincial government to contest the unsolicited proposal of FLI.

Fernandez explained the province is not qualified to challenge the offer of FLI, first because it is not a private entity as provided for under the city ordinance that created the joint venture agreement.

Provincial Capitol consultant Rory John Sepulveda, in a press conference yesterday, said the administration of Governor Gwendolyn Garcia was not surprised after the Cebu City government awarded the joint venture project to FLI.

“We’re still on top of the situation,” Sepulveda noted.

He said that despite of not being able to come up with the P125-million bond the city asked from the province for the joint venture, Capitol will still move forward with its plans.

He added that the provincial executives have a game plan and that is to increase economic activity to generate more jobs.

“This is what we are going to do in response to the world economic slowdown,” he said.

Part of the game plan is to continue building roads, bridges and school buildings.

In addition he said they would continue delivering basic services to Cebuanos, especially to investors and tourists, and putting up economic enterprises.

When asked if they will file an appeal or give up on the SRP joint venture project, Sepulveda said that they will wait for its finalization before commenting on the matter.