MANILA, Philippines –The Bangko Sentral ng Pilipinas (BSP) said Monday, January 11 that initial results of a stress tests conducted by banks validated the assessment made by the central bank that there are no risks from the real estate market yet.

The 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% of their real estate loan portfolio turns sour, BSP Deputy Governor Diwa Guinigundo said.

“At this point we don’t see any signs of stress in the real estate sector,” he said.

The BSP has tasked 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.

(READ: BSP to require banks to submit data on real estate loans)

“We have now a more comprehensive definition of the exposure to real estate. It’s more dependable,” he added.

New definition
Based on the new definition of the exposure of banks to real estate, the stress tests conducted by big banks revealed that their CAR would still be above the 10% requirement set by the BSP and the 8% threshold set under the Bank for International Standards (BIS), Guinigundo said.

Apart from the BIS methodology, he revealed the regulator 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.

As of end-June 2015, the CAR of big banks stood at 15.48% on a solo basis and 16.42% on a consolidated basis, 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 measure approved by the BSP’s Monetary Board 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%to P861.22 billion ($18.28 billion) in end-November from P708.88 billion ($15.05 billion) in end-September last year.

The sector accounted for 17.5%of the bank’s total loan portfolio that amounted to P4.91 trillion ($104.21 billion) as of end-November last year.

The BSP has set the cap on real estate loans at 20% of the bank’s total loan portfolio.

'More prudent'
Guinigundo said 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's very comforting to know that our developers have become more prudent, more discreet with respect to their expansion plans,” he said.

The BSP is set to release a residential residential real estate price index (RREPI) soon since the lack of data on property prices and affordability indicators make it difficult for the debt watcher to assess the effect of credit growth on the real estate market.

The RREPI would help the central bank in addressing concerns of a “bubble” in the country’s residential real estate sector, brought about by the improving purchasing power of Filipinos.

As early as 2014, the BSP was contemplating on launching the index that would track property prices in Metro Manila and nearby provinces. The monitoring would also be expanded to cover other key cities in the country.
​

Source:  BSP /  Photo Credit:  Rappler

(First of a series)
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.”

1. 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.
2. 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.

1. 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.

1. 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.


January 2, 2016/ By: Tessa R. Salazar/http://business.inquirer.net

MULLING investing in real estate this year? Global online agent Lamudi gives five areas, where individual investors could most possibly get the most returns even beyond 2016.

These are: suburban apartments and townhouses, residential lots, strata-titled offices, townships outside Metro Manila, and upscale condos in major business districts.

Suburban apartments  and townhouses
These are among the most-searched property types by Filipinos, Lamudi said, especially in the suburban areas of Quezon City, Parañaque, and Las Piñas.

“These properties are very much in demand among renters, especially starting families,” the online agent said.  “One of the reasons is that these property types provide much larger spaces (including parking space for multiple vehicles) than condos, yet they are more affordable than stand-alone houses.”

Potential returns here are handsome, according to Lamudi.  “To give would-be buyers and investors an example, three-bedroom door apartments in Parañaque average P3.5-4 million, or monthly rents of Php18,000 to Php25,000. On the other hand, townhouses in Quezon City can be had for as low as P2.8 million to as high as P17 million,” Lamudi said.

Residential lots
Lamudi said one reason residential lots are highly sought-after is that these properties’ values tend to appreciate quickly.  “Unlike high-rise condos, where a seemingly infinite number of units can be built within a relatively small plot of land, there is only a limited amount of land developers can convert into subdivisions or gated communities,” Lamudi explained.  “This is the reason why there aren’t a lot of them within really prime locations in Metro Manila.”

One example, it cited, is Alabang West by Megaworld subsidiary Global-Estate Resorts Inc. (GERI)—a gated enclave situated between the cities of Muntinlupa and Las Piñas.

According to GERI, land values in the 62-hectare township surged 19 percent in the 11 months since its launch, from P47,000 to P56,000 per squar meter.

The property firm also announced that 80 percent of Alabang West’s 788 residential lots, as of late 2015, have been sold.

The same can be said for Ayala Land’s Vermosa project in the cities of Dasmariñas and Imus, Cavite, Lamudi added.
“Within this estate is The Courtyards project, a high-end gated community, where an average lot measures approximately 693 square meters,” the online agent said.  “This low-density community, upon completion, will have about seven to eight lots per hectare.”

Strata-titled offices
Strata titled buildings are those that have multiple unit owners across a single property. The concept originated in Australia to allow corporate ownership structures in multi-level apartment buildings. The word “strata” means “levels.”
Lamudi said strata titled offices are perfect for individual investors, since they can buy units and have them rented out to various companies.

This, it said, is what differentiates strata-titled offices from those intended for information technology and business process outsourcing firms, which are built and owned by real estate developers and rented to third-party companies.
“Many people liken them to residential condos (hence, the term ‘strata-titled’) as they are similarly owned and managed,” Lamudi explained.  “For property buyers looking to diversify their investment portfolios, strata-titled offices makes sense.”

Similarly, in its third quarter 2015 report, global property advisor Colliers International said decreasing land-bank options are pushing up capital values of office buildings in the central business districts of Makati, Bonifacio Global City, and Ortigas.
Among strata-titled developments now in the market are: Alveo Land’s Alveo Financial Center along Ayala Avenue, Makati, which has 363 units and sells P223,000 per square meter on average; and  The Stiles in Circuit Makati, which has 283 units and sells for about P198,000 per square meter, according to Lamudi.

Also in Makati is Century Properties’ Century Spire, a 60-storey tower to rise in Century City and with about 283 office units for sale. The average price, Lamudi pegged, is P203,000 per square meter.

Other for-sale strata-titled office towers in Lamudi’s list in Metro Manila include: Avida Land’s Capital House in Bonifacio Global City, with 222 units at P142,000 per square meter; Daiichi Properties’ One World Place, also in BGC, with 283 units at P136,000 per square meter; and Filinvest Land’s Parkway Corporate Center in Alabang, with 390 units at P168,000 per square meter.


Townships outside  Metro Manila
“With land values in Metro Manila becoming very expensive, property developers are looking further afield for their next big-ticket projects,” Lamudi noted.

Among these projects, it noted, are Century Properties’ Azure North in San Fernando, Pampanga, where the developer plans to duplicate its Azure project in Parañaque, and Ayala Land’s Alviera in Porac, Pampanga and Vermosa projects in Laguna and Cavite.

“These developers are banking on their previous success to push these projects forward and all look to perform well in 2016,” Lamudi said. “Ayala Land, for example, will be spending P70 billion over the next decade on its Vermosa project, which when completed will include office, retail, hotel, residential, and educational segments.”

According to Lamudi, developer Ayala Land Premier started marketing residential lots in The Courtyards section of Vermosa in 2014, and has since sold P4 billion worth of inventory.


Upscale condos in major CBDs
Metro Manila’s condominium boom is far from over, according to Lamudi, although noting that developers are holding back on their new launches due to massive supply, especially in the mid-market segment.

“This does not mean that no opportunities are available in the condo market,” it stressed. “On the contrary, high-end condos, especially larger ones, are expected to perform well both in capital appreciation and rental rates.”

According to Colliers, condo vacancy rate is lowest for luxury condos in Makati, expected at 5 percent to the third quarter of 2016.

“This is due in part to Metro Manila’s leasing market, driven primarily by expats and the BPO sector,” Colliers said. But then, another global property advisor, Jones Lang Lasalle, reported that rents for Metro Manila luxury condos continue to grow, albeit moderately, on the back of strong demand from expatriate employees of multinational corporations.

January 19, 2016 8:10 pm/by MARICOR ZAPATA deskman/ http://www.manilatimes.net/

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.


By ALBERT CASTRO/January 14, 2016/http://www.malaya.com.ph/business-news

It goes without saying that 2015 is looking to be quite a good year for Philippine real estate. Although condo sales were not on par with what was recorded in 2012 (considered a banner year for Metro Manila’s condo market), other segments of the industry are posting stellar growth, particularly houses and office real estate.

1. If you want a cheap condo, look at Las Piñas
 
At a Php 49,849 per square meter, buying a condo in Las Piñas is likely to be cheaper than anywhere else in the metro. At the opposite end of the scale, Makati is the most expensive, with condos in the area costing an average of Php139,012 per sqm. This means that a 60-sqm condo in Las Piñas will set a buyer back Php2.99 million, while the same in Makati will cost Php8.34 million.
 
2. 59% of houses for sale in Makati are worth more than Php100 million
 
It goes without saying that Makati is the Philippines’ priciest city to buy any type of real estate. In fact, Lamudi data shows that 59 percent of all listed properties in the city in the first quarter of 2015—most of them in swanky neighborhoods and exclusive communities—have asking prices of more than Php100 million.
 
3. Outside Metro Manila, Cebu City tops the pricy list
 
In the Queen City of the South, half of all listed houses for sale are priced Php8.5 million and up, making is the most expensive housing market outside Metro Manila. In fact, some homes here are fetching as high as Php150 million, rivaling opulent houses in Ayala Alabang and San Juan’s Greenhills Village.
 
4. How much salary do you need to afford a condo?
 
To afford a 60-sqm condo in Metro Manila, a buyer needs a monthly salary of Php128,323, according to Lamudi’s calculation. This assumes that the buyer spends not more than 30 percent of his monthly income on mortgage repayments (including principal and interest) and makes a 20 percent down payment on the property, following most banks’ 80/20 loan-to-value ratio. The average price of condos in Metro Manila is Php90,633 per sqm.
 
5. Houses rule!
 
House-hunters by a huge margin are still researching about houses or landed properties online. About a quarter of all searches for for-sale properties conducted in Lamudi from January to June of 2015 involved houses, compared to just 2.28 percent for condos.
 
6. An average family needs 32.25 times of its annual income to afford a home in Metro Manila
 
Based on Metro Manila’s median house price of Php8.8 million, an average Filipino family with an annual household income of Php273,000 (according to data from the 2012 Family Income and Expenditure Survey) will need 32.25 times of their annual income in order to afford a home in Metro Manila. City-wise, Caloocan offers the most affordable homes: median home price here (Php787,750) is 2.88 times of the annual household income.
 
7. Quezon City most popular among online property-hunters
 
Quezon City—Metro Manila’s largest city—had the greatest volume of online search traffic, according to Lamudi’s onsite data for January to June 2015. Search volume for the city grew, on average, 22 percent per month during the same period.
 
8. Metro Manila condos getting smaller
 
Looking at its listings data, Lamudi found that 42 and 41 percent of Metro Manila’s for-sale and for-rent condo inventories have floor sizes measuring 50 sqm or smaller—an apartment size many would consider as “shoebox.” This finding has been corroborated by a research conducted by Colliers International. According to its 2014 fourth quarter report, of the more than 30,000 preselling condo units expected to be delivered in the Makati CBD, Fort Bonifacio, Rockwell Center, Ortigas Center, and Eastwood City from 2015 to 2018, 75 percent are studio and one-bedroom units, ranging in size from 18 to 90 sqm.
 
9. Cities outside Metro Manila have highest surge in search traffic
 
Bacolod tops the list of Philippine cities that experienced a spike in search traffic in the first quarter of 2015, increasing 279 percent from the fourth quarter of 2014 (October–December) to the first quarter of 2015 (January–March). Bacolod is followed by Antipolo, Tagaytay, Baguio, Davao, and Bacoor, whose search traffic surged 118, 105, 95, 88, and 80 percent, respectively.
 
10. Quezon City has the most affordable office spaces for rent
 
Companies looking for an affordable office space to rent should head to Quezon City to find cheap commercial properties. Lamudi data show that office rents in Metro Manila’s largest city average Php503.79 per sqm per month.
 
11. And Taguig and Makati have the most expensive
 
Taguig and Makati offer the most expensive office rents anywhere in Metro Manila. According to Lamudi, office rents in these two cities average Php763 and Php635 per sqm per month, respectively. Makati’s priciest office spaces command monthly rents as high as Php1,400 per sqm, while Taguig’s go as high as Php1,000 per sqm per month.
 
12. Women drive house-hunting
 
In the Philippines, women are the primary users of real estate websites. According to Lamudi, 64 percent of online property seekers in the Philippines are women. This finding is consistent with research conducted in the West, which has shown that women are the primary users of online property portals. This makes the Philippines one of few Asian countries where women are on equal footing with men in terms of educational, economic, and political opportunities—and in making homebuying decisions.
 
13. Size matters in investment condos
 
If you buy and hold, go for bigger condos, those with three bedrooms or at least 150 sqm. Although these condos are definitely more expensive than smaller ones, they offer good returns in terms of capital appreciation. According Colliers International Philippines, luxury three-bedroom condos in the three markets it monitors (Makati CBD, Bonifacio Global City, and Rockwell Center) are expected to appreciate in value by between 5.1 and 6.3 percent by the end of 2015.
 
14.  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.


January 14, 2016 /http://www.malaya.com.ph/business-news

WHILE 2016 has just begun, preparations are now being made to hail the Year of the Fire Monkey with a bang, when the Chinese celebrate their lunar New Year on February 8.

The whole nation is thrilled on what lies ahead this year, particularly on the political front, since this will mark the denouement of the Aquino administration and a new leadership will take over Malacañang Palace for the next six years.

With the national polls heating up, however, the economy and its growth-driving industries, especially real estate, are expected to weather the political noise.

Philippine economic development is seen in the expanding property sector as housing projects, commercial centers, workplace buildings, hotel and gaming facilities, as well as economic zones are being built one after the other not only in Metro Manila area, but also in other parts of the country.

This trend is seen to continue across all real-estate industry segments this year and beyond, most notably in the residential and office sectors.

Residential market
THE perennial housing backlog keeps on pushing the residential market’s growth, as the National Economic and Development Authority estimated the need of Filipinos for a “decent roof” is pegged at around 800,000 units per annum.

Since close to 400,000 households or almost half can still afford to buy dwelling units annually, this segment of the real estate remains the most competitive and profitable at present.

The towering heights of opportunity for both the developers and buyers still abound in vertical projects or condominiums.

In fact, the condo market accounts for the biggest share of all licenses to sell at 27 percent, according to the nine-year average of Housing and Land Use Regulatory Board (HLURB) data.

Leading the pack of developers is the SM Group, which intends to sell an annual average of 20,000 units starting 2016.
This initiative solidifies the Sy family’s market share in the condo space, said Pinnacle Real Estate Consulting Services Inc. Director for Research and Consulting Jojo Salas.

In their recent Market Insight Report, he also noted DMCI Group’s announcement that it would launch nine projects this year, with 14,000 units and estimated sales value of P50 billion.

The Consunjis also intend to generate recurring income when it launches its 36-story office project along Pasong Tamo in Makati City.

This will offer more than 40,000 square meters (sq m) of leasable area, subject to approval of permits and licenses.
Salas said the Ayala Land Group and Ortigas and Co. have packaged their housing projects with mixed-use and township developments.

Other developers are also ramping up the kick-off and completion of their projects to meet the predicted demand.
Lamudi Philippines reported that Century Property is on track to finish the construction of its luxury residential condo—the Trump Tower—by December.

Once completed, this 56-story tower in Makati City, composed of over 250 units, is the first Trump-branded condo not only in the country, but in Southeast Asia.

The property web site also revealed the scheduled opening this year of high-end 67-floor tower Shang Salcedo Place, which houses 749 units and top-class amenities.

Apart from condominiums, other residential types also offer good business and investment potentials for both the players and end-users.

Like vertical housing projects, economic housing comprises 27 percent of all licenses to sell, based on HLURB figures.
Meanwhile, socialized dwellings, as well as open-market subdivisions and townhouses account for 24 percent and 22 percent, respectively.

Pinnacle’s report shows the Ayala Group has focused on the economic housing by strengthening its projects under the Amaia brand.

It’s timely given the recent hike of the loan limit for this type of residence from P1.25 million to P1.7 million, as approved by the Housing and Urban Development Coordinating Council.

As for the socialized market, Bella Vista brand has been playing in this category, the study added.


Office segment
AS the economy surges, there’s still more room for expansion in the office sector of the real-estate industry.
Jones Lang Lasalle (JLL) Managing Director for Singapore and Southeast Asia Chris Fossick said new office supply is expected to be high in Manila in 2016 at 870,000 sq m, growing by 10 percent to 20 percent.

He said that most of the new buildings are in the central business districts (CBDs) of Makati and Bonifacio Global City (BGC) in Taguig, where there has been a shortage.

This year’s supply until 2018, however, is close to the five-year historical take-up from 2011 to 2015.

With the projected spike in the office-space inventory, a moderate hike in rental rates is likewise projected—this time at 4 percent, as 18 percent of the new supply in 2016 has been already precommitted.

This trend could still be attributed to the ever-expanding business-process outsourcing (BPO) industry, as some locators are moving up the value-chain and require more centrally located premises, Fossick said.

Based on data from the Philippine Statistics Authority, the office segment accounts for 29.4 percent of the real-estate demand in the country, largely driven by BPO at 11.3 percent.

Industry sources see the outsourcing sector to generate $25 billion in total revenues by end of the year.

Given the top figure, the BPO industry is projected to soon overtake dollar remittances by overseas Filipino workers, most likely in two years, according to an HSBC economist in a recent briefing. Job-wise, it is targeted to hit 1.3 million full-time employees in 2016, which translates to 5.2-million-sq-m office requirement.

Hence, the industry is now gearing up the “Next 10 Cities,” such as Baguio, Davao, Dumaguete, Iloilo, Lipa, Metro Bulacan (Baliuag, Calumpit, Malolos City, Marilao and Meycauayan City), Metro Cavite (Bacoor City, Dasmariñas City and Imus City), Metro Laguna (Calamba City, Los Baños and Sta. Rosa City), Metro Naga (Naga City and Pili), and Metro Rizal (Antipolo City, Cainta and Taytay).


Investment opportunities
AT the start of the new year, many of those planning to move to a new home or considering buying a property must be wondering what 2016 could bring to them.

In view of this, Lamudi Philippines takes a look at what are potentially good real-estate investment deals in the market today.

For one, Strata-titled offices are a good take, according to the real-estate portal.

Contrary to the BPO office towers constructed and rented out by property developers to outsourcing firms, they can be purchased by individual investors and buyers to lease to companies.

For those who want to diversify their investment portfolios, this property type makes a good business sense since there is a lack of supply of office space in the metropolis, particularly in major CBDs, placing an upward pressure on rental fees.

What’s more, the decreasing land-bank options in Makati City, BGC and Ortigas Center are also raising capital values of office buildings, based on Colliers International’s third quarter 2015 report.

Some of the strata-titled developments now available in the market are Alveo Financial Center along Ayala Avenue, which has 363 units and sells on average P223,000 per sq m; The Stiles in Circuit Makati (also of Alveo Land), with 283 units for P198,000 per sq m; Century Spire in Century City (Century Properties), with 283 units for P203,000 per sq m; Capital House in BGC (Avida Land), with 222 units for P142,000 per sq m; One World Place in BGC (Dai-ichi Properties), with 283 units for P136,000 per sq m; and Parkway Corporate Center in Alabang (Filinvest Land), with 390 units for P168,000 per sq m.

Apartments and townhouses are also worth investing in as they are two of the most searched property types by Filipinos at present.

Location-wise, suburban areas like Quezon City, Parañaque and Las Piñas are a top choice among the would-be investors.

Such properties are very in demand among renters, most especially for starting families, since they provide bigger spaces than condos yet they are cheaper than standalone houses.

A three-bedroom door apartment in Parañaque, for instance, averagely costs P3.5 million to P4 million, or charges P18,000 to P25,000 as monthly rent.

Because land values in Metro Manila are costly and constantly rising, real-estate developers are setting their sights outside for their next big-ticket township projects.

Among these developments include the Azure North in San Fernando, Pampanga, where Century Properties plans to duplicate the success of the same project in Parañaque; and Ayala Land’s Alviera in Porac, Pampanga; and Vermosa in Laguna and Cavite.

These developers are banking on their previous success to push these projects forward and all look to perform well in 2016, according to Lamudi Philippines.

Residential lots in subdivisions are also highly sought after given their rapid value appreciation.

Property values in the 62-hectare township called Alabang West of Global-Estate Resorts Inc., to wit, increased from P47,000 per sq m to P56,000 per sq m, or 19 percent  in the 11 months since its launch.

Around 80 percent of the 788 residential lots in this project have been already taken up.

While there is a bit slide in the mid-condo market due to massive supply, high-end vertical housing developments, especially larger ones, are projected to perform well both in capital appreciation and rental rates.

Colliers said that vacancy level is lowest for upscale condos in Makati City, which is expected at 5 percent to the third quarter of 2016.
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This could be attributed to Metro Manila’s leasing market, driven primarily by expatriates and the BPO sector.
JLL reported that luxury condo rents in the metropolis keep on growing, though modestly, due to strong demand also from expatriate employees of multinational corporations.


by Roderick Abad - January 4, 2016/ http://www.businessmirror.com.ph/

Philippine Credit RatingsLast April 24, 2015, Standard & Poor’s Financial Services (S&P) reaffirmed the BBB Stable long-term sovereign credit rating of the Philippines, the highest rating ever recorded in the country’s history. This set the country’s credit rating a notch higher than the minimum investment grade status granted to it by S&P on May 2, 2013, making the Philippines more internationally competitive and attractive to investments.    

A BBB Stable credit rating for the country means the Philippines has an adequate capacity to pay its debts fully and on time. “Stable” means the rating has a “stable outlook”; it is likely not to change within a year. This credit rating is also projected to be sustained and further upgraded in the coming months, as a result of the stable economic progress due to the reforms the country experiences thus far. This grade gives the Philippines a good financial reputation to potential foreign investors for 2015 and the years to come.   

Aside from S&P, Fitch Ratings (Fitch) and Moody’s Investors Service (Moody’s) are also two of the major credit rating agencies in the world. Fitch granted a BBB- Positive Investment Grade rating last September 24, 2015 while Moody’s granted the Philippines a Baa2 Stable Investment Grade rating last December 14, 2015.

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Credit Ratings Interpretation

Sources: Standard and Poor’s, Moody’s, and Fitch.
http://www.gov.ph/report/credit-ratings/
​

THE HOUSING and Urban Development Coordinating Council (HUDCC) said an extension to the expiring Rent Control Act will take effect for two years from the start of 2016.
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“The HUDC Council implements the continued regulation of rent to cover all private residential units in the country with monthly rent of (up to) P10,000,” HUDCC Resolution No. 1, approved on June 8, read.

“After the expiration of Republic Act No. 9653 or the Rent Control Act of 2009 on December 31, 2015, rent control shall continue for a period of two years or from January 1, 2016 to December 31, 2017 using the inflation rate for 2014 of 4.1% as basis for adjustment,” according to the resolution, which was published in a newspaper earlier this month.

Under the resolution, the maximum rent increase for any residential unit is not more than 4% for those paying a monthly rent ranging from P1 to P3,999 per month and 7% for those paying P4,000 to P10,000, as long as the unit is occupied by the same lessee.

“When the residential unit becomes vacant, the lessor may set the initial rent for the next lessees: Provided further that in the case of boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rent more than once per year shall be allowed,” it said.

The regulation will not apply to new residential units offered for lease which will be constructed after the approval of HUDCC Resolution No. 1.

HUDCC Secretary-General Cecilia S. Alba, in a text message to BusinessWorld, cited a study the council commissioned which showed that 82.5% of renters or 1.27 million out of 1.5 million pay less than P4,000.

“For the rate of increase for this group, inflation was identified as the basis,” she said.

“However, so as not to disenfranchise those who are already covered by the rent control, the HUDC Council resolved to continue covering them at the existing rate -- at 7% for those renting not higher than P10,000,” Ms. Alba said.

The Rent Control Act grants HUDCC the authority to regulate the rental of certain residential units, to determine the period of regulation and its subsequent extensions if warranted, to determine the residential units covered and to adjust the allowable limit on rental increase per annum, taking into consideration, among others, the National Statistics Office census on rental units, prevailing rental rates, the monthly inflation rate on rentals, and the rental price index.

The law also mandates that the rent of any residential unit of up to P10,000 per month in the National Capital Region and other highly urbanized cities, or up to P5,000 in all other areas, shall not be increased by more than 7% annually as long as the unit is occupied by the same lessee.

In 2013, the HUDC Council approved a resolution which extended the period of regulation for the Rent Control Act coverage at status quo rates until Dec. 31, “in light of the required validation and additional data for a more comprehensive recommendation such as the Wholesale Price Index for Construction Materials, Real Estate Price Index and Depreciation Costs, among others.”

HUDCC said the Philippine Statistical Research and Training Institute has concluded a comprehensive study on rental regulation and has submitted its recommendation to the council.

One of its recommendations is to regulate rental increases of residential units below P4,000 at no higher than the rate of inflation. -- 

By:  Kathryn Mae P. Tubadeza
​December 28, 2015
​http://www.bworldonline.com/content.php?section=Economy&title=rent-control-extension-to-take-effect-in-january&id=120735