Property market booms in 2012 with no bust in sight until 2016

2012 has been very good for the Philippine property market, backed by a glowing economy, overseas Filipino remittances, and business process outsourcing (BPO) as main drivers to a development boom.

 

Despite fears of a bust, there is an overwhelming confidence among government officials and indsutry stakeholders holding on to the belief that there is no end to what is now happening in the market.

 

“We have previously noted that a major driver of this growth is the demand for office space due to the strong outlook of the BPO sector,” Socioeconomic Planning Secretary Arsenio Balisacan told reporters in a briefing on the third quarter GDP in late November.  

 

“Also, favorable economic conditions led more individuals to purchase residential properties,” the Economic Planning chief added. He pointed out that the property market posted “strong expansion” this year, as “major players... Ayala Land, SM Prime Holdings and Megaworld posted double-digit revenues in terms of real estate and rent of commercial spaces.”

 

All-time low interest rates could also spur a reality shift toward a country of homeowners from a nation of renters, an industry insider noted. The ripple-effect could also lead to changes in the real estate market, inclduing the rise in green buildings and the call for the development of the silver market that caters to senior citizens and retirees.

 

Nation of owners

 

Change is happening, a “democratization” in the real estate sector “based on low interest rates and financing schemes,” Rick Santos, chairman and CEO of real estate services and advisory firm CBRE Philippines told GMA News Online.

 

Global property manager, broker, and marketeer Colliers International noted the growing demand to property ownership will be sustained largely by “the younger age set”– a trend developers are already catering to with major player Century Properties expanding into the “affordable market” that includes its P4.1-billion The Residences at Commonwealth

 

Data from global real-estate services firm Jones Lang LaSalle Leechiu (JLLL), 129,920 residential units are currenly available in Metro Manila, of which 3,690 are high-end at P120,000 per sqm and the rest are mid-range at P50,000-P110,000 per sqm. 

 

The bulk of condominium units developed in 2012 were in the P1.5 million-P3 million and P3 million-P6 million per unit range, with the lower range expected to account for 56 percent of the total by 2018.

 

This year, most residential condominium developments were concentrated in the Metro Manila's Pasig, Mandaluyong, Quezon City, and Makati areas, each receiving around 20 percent of total developments. Makati put up the most high-end to luxury condominium units at 6,099.

 

Metro Manila has a 54-percent share of existing retail supply, which is projected to drop to 52 percent next year. 

 

The rental average of ground floor and upper levels now stand at P1,028 per sqm in Metro Manila and P700 nationwide.

 

What housing bubble?

 

Despite the general trend of rising prices, “There is no bubble in the Philippine property development market, because what is built is leased,” was JLLL's fearless assessment.

 

The housing bubble that struck the US in the mid-2000s – the subprime mortgage mess that spurred the global economic depression – after banks began offering home loans left and right, even to high-risk borrowers with no financial backing to pay the amortization on the houses, which were then reassessed below fair market value and resold at a lower price.

 

Such scenario has nil chance of plaguing the country – at least until the next handful of years – said JLLL associate director for markets Philip Añonuevo, adding that “the holding power of Filipino buyers is longer.” 

 

The Philippine economy, which clocked at 7.1 percent in Q3 2012 – the fastest in Southeast Asia – helped boost confidence and investments among property suppliers and buyers and leasing companies, a trend JLLL swears would likely last until the next presidential election in 2016.

 

Cause for optimism

 

Washington DC-based Urban Land Institute (ULI), which advocates responsible use of land and creating sustainable communities, found much cause for optimism in the Philippine property sector. Its survey on emerging real estate trends in the Asia Pacific raised Manila by six notches to 12th among 22 cities in terms of investment prospects for 2013. Manila also ranked ninth in city development prospects.

 

In retail property buy/hold/sell recommendations, 40 percent of respondents urged a buy, 51 percent a hold, and 9 percent a sell. 

 

Among leading Asia Pacific cities, Manila was judged “generally good,” with ULI noting that markets have “performed well in the past couple of years as a result of a growing economy, a transparent and business-friendly government, and the country’s ongoing success – an ‘eye opener’ – in attracting foreign clients in its [BPO] facilities.”

 

The survey also cited the large casino development in Pasay City as an impetus to development and boosting tourism – once completed.

 

However, the bar on foreigners' “holding majority land ownership... continue to deter international investors.” Ample liquidity from domestic sources is also dampening the need for locals to partner with aliens. 

 

JLLL's Añonuevo urges the government to incentivize firms to head south or north as an option to decongest the increasingly cramped and disaster-vulnerable Metro Manila.

 

JLLL national director for markets Lizanne Tan noted Cebu was the leading business location after Metro Manila, with rents nearing those in the National Capital Region except for Makati, but with lower salaries. 

 

Foreign investment opportunities

 

ULI's study found opportunities for foreign investors in the gaming and BPO sectors. “Both present large opportunities,” ULI said, “with the latter accounting for some 70 percent of new office take-up in Manila.”

 

JLLL also reported that BPOs were still the top buyers of office space in 2012. In the first 11 months of 2012, demand grew 18 percent to 425,000 sqm year-on-year.

 

Non-BPOs bought 100,000 sqm or 25 percent of current demand, said Sheila Lobien, JLLL director for project leasing.

 

She said average Grade A rents in Bonifacio Global City and the Makati central business district have risen 15 to 20 percent since 2009 “due to a high level of leasing activity across all districts” that include Alabang, Ortigas, Eastwood, Pioneer, and Araneta Cyberpark.

 

Global City is becoming the hot location, with multinational Coca-Cola and homegrown Aboitiz Group “bracing for expansion and moving to new corporate space,” Añonuevo noted. The Philippine Stock Exchange would move to its headquarters there in 2016.

 

The massive entertainment district development in the Manila Bay Area has inspired tourism-geared development. In May, JLLL tracked 10,536 hotel rooms in the pipeline from 2011 to 2016, and 5,000 more have since been added in six months.

 

Añonuevo said growth areas to look out for include the privatized Food Terminal Complex and the University of the Philippines area on Commonwealth Avenue.

 

The silver market

 

In November, the Retirement and Healthcare Coalition formed by the European, American, Japanese, and Korean chambers of commerce urged local property developers to look into developing for the  growing “silver market.”

 

By 2030, 25 percent of the world’s population will be comprised of retirees, many of them “looking for homes outside their own countries,” said Coalition executive director Marc Daubenbuechel.

 

Agence France-Presse reported that the Philippine Retirement Authority already counts nearly 21,000 retirees, mostly Chinese, Korean, Taiwanese and Japanese, in its retirement incentive program. But the Philippines is behind Malaysia and Thailand when it comes to aggressively pursuing second-home silver buyers. — BM/VS, GMA News

Citi, HSBC see bright prospects for PHL economy in 2013

For this year, Citigroup raised its gross domestic product (GDP) growth forecast to 6.3 percent from 5 percent and to 6.1 percent from 5.3 percent in 2013, citing accelerated government spending and stable domestic demand.

British bank HSBC also revised its 2012 forecast to 6.2 percent from 5.7 percent although for 2013, the forecast was pared down to 4.9 percent from 5.7 percent given the continuing external headwinds.

Both Citi and HSBC expected the Bangko Sentral ng Pilipinas to keep its key interest rates on hold at 3.5 percent for the next policy rate-setting.

Minda Olonan, head of Philippine equity research at Citi, said the Philippines would benefit from more pronounced growth drivers such as excise tax reforms, accelerated bidding of key public-private partnership (PPP) projects and a credit-rating upgrade. She said public infrastructure could be the medium-term “game changer.”

“Better fiscal health is enabling the government to be more proactive in stimulating the economy. Aside from the PPP infrastructure agenda, the government is embarking on a P325-billion multi-year flood works and drainage program, a spending that is larger than the P233-billion cost of the PPP projects. We believe this may lift the country’s investment/GDP ratio that will eventually accelerate economic growth,” she said in a Dec. 7 research.

Citi believes that banks, property, consumer, utilities and conglomerates will benefit from the investment spending dividend. The bank’s top picks on a 12-month view are Ayala Land, SM Investments, Philippine Long Distance Telephone Co., Ayala Corp. and Puregold Price Club Inc.

HSBC economist Trinh Nguyen said a major force behind this year’s growth has been the country’s strong institutions, specially the BSP.

“Monetary officials have alleviated price pressures by successfully sterilizing capital inflows to contain money supply growth. Closely monitoring rice supply as well as bolstering food sufficiency policy has also helped,” she said.

“A slowdown of inflation to 2.8 percent year on year in November in spite of accelerating growth reflects the institution’s sound management of the economy,” Nguyen said, adding that benign inflation has given monetary officials the space to cut rates by 100 basis points in 2012.

But Nguyen said the BSP was not the only champion behind the country’s strong performance. “President Aquino’s efforts to increase efficiency of fiscal spending and revenue collection gave the government the room necessary to counter-balance the global slump with increased expenditure. A look at the breakdown of growth shows that private consumption, government spending and investment have contributed to growth thus far in 2012,” she said.

While external headwinds persist and likely drag down the Philippines’ electronics exports, HSBC expects growth to remain robust in 2013 on the back of strong fiscal spending, low interest rates and resilient remittances.

She said monetary officials would likely hold rates at the next meeting to assess the impact of the recent acceleration in growth as well as the 100-basis-point cut so far this year. “Inflation will likely be benign in first half of 2013, thanks to contained food and oil prices, allowing the BSP to support growth,” she said. “Though external conditions remain weak, strong domestic demand will keep the BSP vigilant and hold rates.”

(Story courtesy of Doris Dumlao of Philippine Daily Inquirer)

ESPN names Marquez punch KO of the year

MANILA, Philippines – Calling the punch both "aesthetically pleasing" and "historically significant," Juan Manuel Marquez's short right-hand counter that floored Manny "Pacman" Pacquiao in their fourth bout was named the best knockout of 2012 by ESPN.

"If any 2012 knockout was better than Marquez’s finish of Pacquiao, none was bigger," wroteESPN.com’s Dan Rafael. 

Manny Pacquiao of the Philippines (front) is knocked out by a punch from Juan Manuel Marquez of Mexico during the sixth round of their welterweight fight at the MGM Grand Garden Arena in Las Vegas, Nevada December 8, 2012. Photo by Steve Marcus, Reuters.

Pacquiao and Marquez had a long history dating back to 2004, when their first fight ended in a draw. Since then, Pacquiao won the 2008 and 2011 rematches via controversial decisions, although Marquez maintained that he was the rightful winner of all three fights.

"When Pacquiao agreed to fight Marquez for the fourth time on December 8 at the MGM Grand, he said the key reason was because so many people had doubts about the previous outcomes," Rafael said.

"Heading into the fourth fight... both men promised to be more aggressive and go for the knockout. They were desperate for a definitive result. Neither wanted to leave it in the hands of the judges again," he added.

"Pacquiao and Marquez lived up to their promise and put on the best fight of their epic series, which delivered as definitive an outcome as possible: Marquez landing a picture-perfect right hand that knocked Pacquiao out cold with one second left in the sixth round."

Marquez floored Pacquiao for the first time in their saga in the third round, although Pacquiao shook it off and even forced Marquez to take a knee in the fifth round. The Filipino was controlling the action in the sixth round when he walked right into Marquez's counter-right hand.

Pacquiao would crash face-first into the canvas, where he would stay motionless for around two minutes. When referee Kenny Bayless waved off the fight, Marquez climbed the ropes and celebrated as the mostly Mexican crowd inside the MGM Grand went wild.

"The knockout was as aesthetically pleasing as it was shocking and historically significant," Rafael wrote.

"Obviously, it's the 2012 ESPN.com knockout of the year."

Pacquiao would later admit that he never saw the punch coming. He would not attend the post-fight press conference and instead went to a hospital for a CT scan; results of his tests came back negative.

Marquez, meanwhile, finally got the vindication he desperately wanted. “I threw the perfect punch,” he said.

It was the first time that Marquez won Knockout of the Year honors. Pacquiao previously won the award in 2009, thanks to his knockout of Ricky Hatton. In 2011, Nonito "The Filipino Flash" Donaire took the award for his knockout of Fernando Montiel.

Donaire's third-round stoppage of Jorce Arce in their December 15 clash was also a top contender for the award this year.

Also gaining recognition was Danny Garcia's fourth-round knockout of Erik Morales in their October 20 rematch.

"Garcia dominated the first three rounds before ending it in the fourth with a picture-perfect, ferocious left hook that landed so cleanly, Morales nearly spun all the way around before dropping like a rock," Rafael wrote.

"He came to rest with his body hanging over the bottom ring rope. Referee Benjy Esteves didn’t bother to count... Garcia may never throw a better punch for the rest of his career."

Filipinos among most generous, study says

MANILA, Philippines - Filipinos are among the most generous people in the world, according a new study made by a charity foundation.

Even while the world has become a less generous place, the Philippines was among the top 5 nation devoting the most amount of time to charity work, with the country having the largest number of people in Southeast Asia volunteering their time, the UK-based Charities Aid Foundation (CAF) said.

"Volunteering is particularly commonplace there, with more people volunteering (44%) than in any other country in [Southeast Asia]," the report said. "Indeed, the Philippines is ranked fifth globally for its participation in volunteering. The Philippines has a World Giving Index score that exceeds (by four percentage points) its five-year average."

The Philippines placed 17th overall worldwide in the 146-nation World Giving Index 2012 that was led by Australia, Ireland, Canada, New Zealand, and the USA.

In terms of giving money, the Philippines placed 47th, with 32% of Filipinos donating cash to charity.

The Philippines also placed 26th on helping strangers.

Greece and Montenegro were the least generous countries, the report said.

The CAF said the world becoming a less generous place last year mirrors global economic patterns.

According to the report, the proportion of people giving money to good causes, volunteering or helping a stranger all fell last year and were also down on 2007.

CAF, which romotes charitable giving and provides financial services and social finance to not-for-profit organizations, compiled the report using Gallup data on more than 155,000 people in 146 countries.

The report found out that the average proportion of people across 146 countries donating money to charity fell from 29.8% in 2007 to 28% in 2011.

The percentage of people helping strangers was 45.1% in 2011 – down from 47.0% in 2007, while the proportion volunteering their time was down from 21.4% in 2007 to 18.4% in 2011.

CAF said charities must become more entrepreneurial and less reliant on government funding and on groups such as theirs. - With reports from ANC, Reuters

Donaire is ESPN's Boxer of the Year

MANILA, Philippines – (UPDATE) Nonito "The Filipino Flash" Donaire was the "easy pick" for ESPN's "Boxer of the Year" after a sensational 2012 that saw him solidify his position as one of the sport's top pound-for-pound fighters. 

Donaire, the World Boxing Organization (WBO) and RING super bantamweight champion, was named Boxer of the Year by ESPN, beating other top contenders including Juan Manuel Marquez, Danny Garcia and Robert Guerrero.

"It might sound strange, but no, Manny Pacquiao was not the best fighter from the Philippines in 2012,” wrote ESPN’s Dan Rafael. "That honor goes to 'The Filipino Flash,' junior featherweight titlist Nonito Donaire, who had a year for the ages."

"Donaire (31-1, 20 KOs) began the year having vacated his bantamweight belts and preparing to move up to junior featherweight. Four fights later, in an exceptionally busy year by modern standards for an elite champion, the quick-fisted and powerful Donaire stands atop the 122-pound division," Rafael wrote.

Rafael said Donaire "was the easy pick for 2012 ESPN.com Boxer of the Year."

"Donaire easily handled the move up in weight, winning all four of his fights in dominant fashion. He dropped each of his foes – scoring seven knockdowns in all – won twice by knockout and collected two world titles," Rafael wrote.

'The Philippines' best boxer'

In his first fight of the year, Donaire defeated Puerto Rico's Wilfredo Vazquez Jr. by split decision to claim the vacant WBO belt. He then decisioned South Africa's Jeffrey Mathebula in July to claim the International Boxing Federation belt.

In October, Donaire knocked out top Japanese boxer Toshiaki Nishioka in the ninth round, then capped off his year with a sensational third round knockout of Mexican warrior Jorge Arce last December 15.

"It was the exclamation point on a year in which Donaire seized the mantle from Pacquiao, his idol, as the Philippines' best boxer and continued to assert himself as one of the best fighters in the world, period," Rafael wrote.

Rafael also commended Donaire for being the first and only boxer in the world to undergo random drug testing with the Voluntary Anti-Doping Association on a year-round basis.

"This in an era when every great performance unfortunately comes under the suspicion of possible
performance-enhancing drug use – except, of course, Donaire's," he said.

Donaire becomes the second Filipino fighter to claim the award, after Pacquiao, who won in 2006, 2008 and 2009.

Edged Marquez, Garcia

Mexico's Marquez became a contender for the Boxer of the Year award after his stunning sixth-round knockout of Pacquiao in their fourth encounter last December 7, a punch that Rafael called "the shot heard 'round the world."

"In the most stunning scene of the year, Marquez earned the first definitive result in his epic four-fight series with Pacquiao," he wrote. "Marquez may trail the all-time series 2-1-1, but the knockout in their welterweight fight is the most memorable moment from the four fights."

Rafael also noted that the knockout was "one of the most significant moments in boxing in recent years."

Undefeated American Danny Garcia was also a contender for Boxer of the Year after winning all three of his fights in 2012. He decisioned Mexican legend Erik Morales in March, knocked out Amir Khan in July, and then knocked out Morales in their rematch in October.

Meanwhile, Robert "The Ghost" Guerrero also had a strong 2012 after proving himself to be a true contender at the welterweight division. Guerrero defeated Selcuk Aydin and the decisioned former champion Andre Berto.

Another Filipino fighter, Brian "The Hawaiian Punch" Viloria, was also a contender for Boxer of the Year.

"'The Hawaiian Punch' scored knockouts against quality opponents in both of his 2012 fights. In May, Viloria retained his flyweight title by stopping Omar Nino Romero in the ninth round to exact revenge from a previous loss and no-contest,” Rafael wrote.

"In November, in an exceptional fight, Viloria stopped Hernan 'Tyson' Marquez to unify 112-pound titles."

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