Index to monitor risk of property bubble on track

The creation of the standard price index that will serve as official guide for valuing residential properties in the country is on track and is set for completion before its formal launching likely within the year, a Bangko Sentral ng Pilipinas (BSP) official said.

At an economic forum held in Makati City on Tuesday, Assistant Governor for the Monetary Policy Subsector Ma. Almasara Cyd N. Tuaño-Amador said the so-called Residential Property Index (Repi) has already been presented for approval by the BSP Monetary Board only recently.

The index was earlier cited by BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo as a BSP initiative helping regulators and real-estate practitioners to further monitor prices in the sector and prevent price misalignments that led to property bubbles.

“We are doing it in stages. So what is keeping us from publicly disseminating is that we have [yet] to present it to the PSA [Philippine Statistics Authority]. Since they are still organizing themselves, they haven’t formed the board yet. Once they have the board already in place, then we present it. Whenever you come up with indices—that is the process,” Tuaño-Amador said.

The BSP official explained that the RePi is focused primarily on the residential sector but that the central bank hopes to expand the mechanism to the commercial sector in the future.

She also said the index only covers prices of residential property in the National Capital Region (NCR) as there were some “difficulties” in gathering data from places outside the country’s capital. This, too, was seen broadened in coverage after the initial index had been launched.

The index is said to be a function of several indicators, including both from the supply and demand curve of the industry. In terms of supply, Tuaño-Amador cited the cost of materials and business permits as some of the considerations, while in terms of demand, they measure it through the number of applications of permits, among others.

The PSA is expected to make a critical examination of the prepared index and will make suggestions or fine-tuning measures, if any, before releasing it to the public.

The BSP has imposed more stringent monitoring of the real-estate sector a few years back, especially the banks’ collective exposure to real-estate loans and instruments. said the real estate sector is an obvious sector where bubbles form.

She said that although there had been no property bubble the past several years, there was a period of hefty investments in property prior to the 1997 Asian financial crisis.

“Because it is the largest asset that any household can own so fundamentally, it can be an obvious candidate for possible misalignments. But my thinking is that…it could be a candidate but we are not seeing signs of that [bubble] yet,” she said.

According to Amador, the rise in property prices observed in the market today is due to the structural shift of a growing population in terms of its number and in terms of income. She also cited the rise in demand from overseas Filipino workers to own residential property in the Philippines.

“What we saw was some correction in the prices of residential property in 2009 to 2010, so there was a correction and now it is growing. But it is still manageable, the demand is being driven by an organic story,” Amador said.               

“There is an increase in property prices – in residential and office spaces – but I don’t think it is getting ahead of itself,” she added.

source:  Business Mirror

International luxury hotel operators gravitate to PH

Marco Polo Hotels, Ascott The Residence, Maxims Genting, City of Dreams, Solaire Resort and Casino, Hyatt, Marriot Manila, Shangrila Hotels and Resorts, Conrad Hotels and Resorts, The Westin Philippine Plaza Manila, Hilton, Sheraton Hotels and Resorts.

These are just some of the international luxury hotel operators that would either come into the country or experience boom times from 2014 to 2017, as forecast by CBRE Philippines during a Jan. 23 press briefing in Makati. It also reported that luxury hotel accommodations would play a major role in the hospitality sector, and that MICE (meetings, investments, conventions and exhibits) locations would pick up their businesses, and gaming establishments would draw in more foreign guests.

Property analyst Enrique M. Soriano III said, “Retail and hotels will likely post solid growth as employment and spending in the domestic front continue.”

The Colliers International market overview (for 4Q 2013) predicted that in the next three years, up to 4,300 rooms would be “delivered” annually, the highest number since 1988.

“Meanwhile, local real estate firms are entering the hotel and leisure sector, as SM Prime Holdings, Ayala Land and Robinsons Land introduce their new projects slated for completion in the next three years,” noted Colliers International Philippines Research. It added that last year, 1,372 new hotel rooms opened in Metro Manila, bringing the total room inventory to 17,517.

More branches expected
Jones Lang La Salle, in its JLL 2014 property market monitor, singled out Robinsons Land Corp. (RLC), which recently opened its seventh Go Hotel branch in Iloilo City. This one has 167 rooms
JLL forecasts more of such branches to be built over the next few years as RLC has offered the brand for franchise. In particular, Singapore-based Vanguard Hotels Pte. Ltd., in partnership with Roxaco Land Corp., is set to construct at least five new branches in the next two years.

JLL also cited residential property developer Vista Land & Lifescapes Inc., which plans to venture into hotel and resort development. According to the firm, the planned venture is mainly supported by the strong performance of the tourism industry. The firm has formed a new unit that would focus on the development of hotels and resorts, likely starting in 2015.

40% at Entertainment City

Colliers International Philippines’ comprehensive report indicated that of the 4,120 rooms to be completed in 2014, more than 40 percent would be concentrated within the Pagcor Entertainment City, such as Belle Grand City of Dreams (920 rooms) and the surrounding Mall of Asia Complex, such as Radisson Hotel (500 rooms) and Tune Hotel (204 rooms). 

It also revealed a new player in the hotel and leisure market—Shanghai Jin Jiang International Hotels—one of the leading hotel groups in China, with two projects slated for turnover in 2014, the Jin Jiang Inn Ortigas (95 rooms) located beside Richmonde Hotel and the Jin Jiang Inn Greenbelt (70 rooms) located opposite New World Hotel Makati.

“As the government strives to reach its foreign tourist arrivals target of 10 million in 2016, local real estate firms are joining the hotel and leisure sector to augment the accommodation needs of foreign travelers,” reported Colliers.

It added that the Carlson Rezidor Group had partnered with the SM Hotels and Conventions Corp. (SMHCC) to launch the 150-room Park Inn by Radisson in Clark, Pampanga. This project is set for completion in 2016.

Colliers also observed that Ayala Land, through its hotel and resort corporation, had launched two new Seda hotels in its emerging mixed-use developments in Vertis North and Circuit Makati, both of which would be operational in the next three years.

RLC, for its part, aims to complete 1,200 rooms in its portfolio by 2014 by launching three Go Hotels—one in Ortigas Center, another in Butuan and one in Iloilo.

Decreased layovers
CBRE reported an 11-percent growth rate of tourist arrivals as of October 2013 (year-on-year) and possibly exceeding 4.5 million for the whole year.

Despite the increase, it estimates that the average hotel occupancy rate dipped from 67 percent in 2012 to 64 percent in 2013.

CBRE said: “This may be attributed to the increasing number of international flights to airports outside of Manila, thereby reducing the need to layover in Manila and easing the access to other major tourist destinations in the country like Boracay Island. The Mactan Cebu International Airport Authority, manager of the second largest airport in the country, reported a 15-percent increase year-on-year in the number of international flights at the airport from January to October this year from 3,972 to 4,581 flights.”

Hotel rates
Colliers also reported that growing interest in the Philippines as a tourist destination and a business investment option has been driving hotel room rates to consistently increase in Metro Manila.
It pointed to the trend that average five-star room rates had grown by 3.7 percent to $333 per night in the second half of 2013, versus the 1.1-percent increase in the first half of that year. Four-star room rates increased slightly by 1.1 percent in the second half to $273 per night.

On the other hand, three-star room rates continued to improve significantly at 9.5 percent half-on-half, 250 basis points higher than the 7-percent growth posted in the last period. This can be attributed to the increasing number of local and foreign tourists seeking quality accommodation at affordable prices. Meanwhile, corporate rates grew considerably across all classifications at an annual average of 15 percent.

source:  Philippine Daily Inquirer

Popular BPO sites driving PH property up

A robust business process outsourcing (BPO) sector—which is expected to remain strong in 2014—will drive the real estate industry further up this year.

The country’s outsourcing industry will still be one of the best in Asia. CBRE Philippines said that as more occupiers relocate to the country, expansionary growth in Metro Manila’s fringes and provinces will be seen.

Metro Cebu, Mactan and Clark were cited as becoming the preferred lifestyle and BPO sites.
For property analyst Enrique M. Soriano III, the office market would continue to grow, and demand will be dispersed out of the traditional central business districts in favor of new CBDs.

“Cebu, Davao and Iloilo will continue to book solid growth for as long as the local government leadership provides regulatory and marketing support,” said Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory.

CBRE Philippines added that BPO expansion would be among the several factors (the others being the influx of tourist arrivals and the demand for expat housing) that would speed up luxury residential property takeups.

These properties, including luxury and high-end hotels, are scarce and mostly located in Bonifacio Global City, Makati, Cebu and Boracay.

“There is potential for developers to look into investing into this market,” said CBRE.

More office buildings

Colliers International’s real estate market report in the fourth quarter of 2013 indicated the BPO industry to continue to influence the commercial office sector in the next few years.

According to the report, with the recent announcement of Tholons, a global outsourcing research and advisory firm, Manila has overtaken Mumbai as the second leading outsourcing location in the world. Colliers expects that more BPO companies will enter the country and establish operations. As a result, there would be a need for office buildings that cater to the specific needs of their prospective tenants.
Colliers added that this would be well within the forecast of the IT and Business Process Association of the Philippines  that the industry will hire 1.3 million full-time workers and earn export revenues of $27 billion by 2016. Complementary to this, Colliers forecasts that through 2014 and 2015, an average of 570,000 square meters of net usable space would be delivered to sustain the office space requirement of the O&O (offshore and outsourcing) industry.

Meanwhile: Jones Lang LaSalle’s January 2014 property market monitor revealed the following:

• Ohio-based O&O company Convergys Corp. is set to acquire Stream Global Services Inc., partly owned by Ayala-led LiveIt Investments Ltd., for around P36 billion. The acquisition is set to be finalized by first quarter of 2014.

• SilkRoad, a US-based, cloud-based human resource solutions provider, recently opened its new office in the Philippines. Its office demonstrates the Philippines’ importance as a growth source for the firm in the Asia-Pacific region, mainly due to the robust performance of the O&O and IT sector in the country, which continues to attract numerous investors.

• Alphaland Corp. is in talks with prospective buyers, particularly foreign firms, for the sale of its recently completed 34-story office building, Alphaland Tower. According to the firm, while there are numerous companies interested in leasing a portion of the building, Alphaland aims to sell the entire development. The Philippine Long Distance Telephone Co. previously expressed its interest to acquire Alphaland Tower, but has decided not to continue with the acquisition.

• The Philippine O&O sector is expected to lead the industry among the members of the Association of Southeast Asian Nations, according to a corporate executive of Teleperformance Asia Pacific. The robust performance of the local sector may be attributed to its cost efficiency, the English language proficiency of the workforce and the quality of services. The rising demand for nonvoice activity is also seen as one of the growth drivers for the O&O sector.

source:  Philippine Daily Inquirer

Laws vs erring developers gain ground in Congress

DELINQUENT subdivision and condominium developers will soon be meted heavy fines aside from a minimum 10-year jail time for failing to complete their projects and for using sub-standard materials. 

Rep. Susan A. Yap, principal
author

The proposed amendment to the current rules and regulations—particularly on the protection of buyers of property development—has been approved on second reading in the House of Representatives.

House Bill 395 that seeks to amend Presidential Decree 957 or the Subdivision and Condominium Buyers’ Protective Decree of 1976 has recently gained ground in the Lower Chamber of Congress as lawmakers press for its early passage.

Lawmakers have found the existing laws (PD 957) to be weak in deterring bad behavior among property developers and builders.

The bill dubbed “The Subdivision and Condominium Buyers’ Protective Decree Amendment of 2013” requires developers to register at their own expense all deeds of sale of subdivision lots and condominium units that have been fully paid.

In case of units sold through installment scheme, the developer and buyer would share the registration expenses proportionately.

Rep. Alfredo Benitez,
Housing Committee
chairman

The bill  empowers the Register of Deeds to cancel a property’s registration papers without the need of a court order if the buyer defaulted on his or her payment. It likewise requires developers to donate open spaces reserved for schools, places of worship, hospitals, health centers, and barangay centers to the local government in their project sites,

“Due to obsolete penalties for violations of PD957, many land and condominium developers contravene the decree knowing fully well that payment for the defiance of the law is so small,” Said Tarlac Rep. Susan A. Yap, principal author of the bill.

Negros Occidental Rep. Alfredo Benitez, chair of the House committee on housing and urban development, said that the bill would provide protection to real estate buyers who end up holding the empty bag when developers do not deliver on their promises made during the pre-selling of their projects.

“A certificate of registration does not vest the owner or dealer of a project the authority to sell without the necessary license to sell,” Benitez said.

The bill would raise to P50,000 the administrative fine for each violation of any of the provisions of the decree or of any rule or Lawmakers has found the existing laws (PD 957) to be weak in deterring bad behavior among property developers and builders.

These includes failure to complete the  project and or titles to the property sold to buyers, inability to refund the purchase price, and failure to follow construction specifications or poor workmanship resulting to sub-standard units or to construction defects.

For multiple violations,  offenders would be slapped with a P500,000 penalty and jail term of four years for the first offense; P750,000 penalty and 7 years imprisonment for the second offense; and P1 million penalty and 10 year imprisonment and revocation of business permit and licenses for the third offense.

Violators would be levied an additional fine of  P500,000 for every house and lot or condominium unit sold from illegal advertising.

Real estate bubble seen to threaten Asia in ’14

Although investment professionals in the Asia-Pacific are optimistic about global prospects in 2014, most are increasingly concerned about asset bubble risks in the region’s property markets, according to a survey by the CFA Institute.

Based on the 2014 global market sentiment survey conducted by CFA (Chartered Financial Analyst) Institute, an international association of investment professionals, 56 percent of them expected the global economy to expand this coming year. It represented a significant shift in sentiment from that of last year when only 32 percent of respondents held such view.

About 68 percent of respondents in the Asia-Pacific are worried about asset bubble risks in their respective markets, with 52 percent seeing it coming from the real estate sector. In the Americas, only 49 percent saw such a threat emerging.

Also, respondents see little change in the level of integrity in the global capital markets, although Asia-Pacific respondents are more optimistic about this than their counterparts in the Americas, Europe, the Middle East and Africa. 

The annual survey measured the opinion of 6,561 CFA charterholders and members globally, more than 1,000 of whom are in the Asia-Pacific.

“The number of our members who expect the global economy to expand has nearly doubled in the last two years. However this is no time for those in finance to become complacent,” said John Rogers of CFA Institute. “The survey reflects that investor trust has been eroded. We must embrace ethical behavior at all levels.”

source:  Inquirer

Architecture, planning and design: Recommendations toward a more resilient Philippines

In my over 40-year experience as an architect and urban planner, I have been quite vocal about our country’s lack of focus to consistently provide resilient and sustainable infrastructures and buildings to combat the prevalent issues in planning and housing in our cities, especially since our country is the third most vulnerable to natural disasters. We should look at disaster prevention as a basic tenet in environmental planning, architecture, urban development, construction and education through policies and measures that suit the individual characteristics of each community, town, and city.

Last year, the Philippine Institute of Environmental Planners (PIEP), together with the Japan Foundation, hosted a National Convention aimed at planning toward sustainable communities. The convention put forth a shift from the old perception of urban development into the new generation of sustainability, prioritizing people and environment first before economy. As President of PIEP for 2013 and 2014, this year’s National Convention theme tackled Disaster Preparedness and Sustainable Development, in light of the recent disaster event that affected the Central Visayas region last October 15, a national convention that we held the day Super Typhoon Yolanda devastated the Visayas region. It is our hope that this year’s convention will stress the urgency toward a more resilient Philippines by confronting the challenges facing environmental planners and the private sector groups and how the PIEP could play an active role in the development process of local communities.

Being situated in a region within the Pacific Ring of Fire primarily calls for vigilance in disaster preparedness. Protection of life and the enhancement of the built environment are the foremost responsibilities of architects, urban planners, and engineers. In its stand of pushing its accountability toward Nature, God, and Country, Palafox Associates prepared a brief list of recommendations on urban planning, architecture, and engineering to address hazards toward safer cities, towns, and communities. These recommendations were expounded and further developed hand-in-hand by the government, the people, and the experts. The past administration was given this list after the catastrophic storm Ondoy that crippled most of Manila. In the first week of the subsequent administration, the same recommendations were reiterated.

In the midst of several disasters and emergencies, awareness must be given due priority. These are among the essential steps toward a more progressive economy, tourism, and national growth.

The 10-year program
One of the most important parts of the recommendations that we sent Malacañang in 2010 after the devastation of Ondoy and the earthquake in Haiti was a 10-year program. To be accomplished from 2010 to 2020, the program is an initial plan and tentative scheme toward safer cities, towns, and communities. The government must promote flood-proof, fireproof and earthquake resistant measures by designating open spaces as evacuation places in urban areas, develop and strengthen urban facilities which can be used as comfortable disaster-proof living zones by creating individual citizen awareness for disaster prevention and response.

Among the adaptation and mitigation measures proposed by Palafox Associates is the regular deepening of silted lakes, rivers, creeks, and other waterways, coupled with pollution abatement measures and proper solid waste management. This way, our water bodies can hold more floodwater and reduce flood levels. In line with this, the hills and mountains near the catch basis should be reforested to help absorb more floodwater.

But more importantly, however, is the need to update Daniel Burnham’s 1905 plan for Metro Manila, the 2004 MMEIRS Report, the 1976-1977 Mmetroplan, and the 2003 Manila Megalopolis Concept Plan 2020 to serve as guidelines for the LGUs, national government, and the citizens to follow.

Immediate action needed
However, since mitigation measures like flood control and drainage infrastructure being made by the government will most likely see results more than 10 years from now, adaptive measures are the immediate response our country needs since we get flooded every year and earthquakes, fires, and other disasters may happen anytime.

In this case, it is imperative that we try to provide immediate mitigation measures since our country gets its fair share of natural disasters. By identifying the areas that are liable to disasters, auditing the codes, and controlling development in these areas by imposing restrictions and regulations will help save hundreds of lives every year. Creating flood zoning overlay maps using the area’s 100-200 year flooding history to separate living spaces from flood-prone areas. Special attention should be given to the Laguna Lake and Pasig River, where essential adaptive infrastructures should be constructed, among them, the construction of the Parañaque spillway and road dikes around Laguna Lake. When constructed, the spillway will flush out floodwaters out of the low-lying areas during typhoons more quickly and thus prevent lasting damage to properties.

Earthquakes and floods
In the aftermath of the Bohol and Cebu earthquake last October 15, it has been brought to light how some of the buildings affected in the earthquake were not structurally fit enough to withstand a high intensity earthquake. These brittle skeletons were laid bare after the earthquake and exposed the grim truth that cheap, substandard materials and shortcuts in labor procedures were employed in the structures, worsened by the bureaucracy and red tape in securing building permits. There may be building officials and government engineers who do not review the structural calculations/seismic analysis of particular projects reportedly because of bribes.

When designing a building/ establishment, performance-based design should be used, among them, implementing an “under reinforced system” on the structural design of a building/establishment to see the cue of failure/cracks on the concrete before it reaches its maximum tolerable stage, follow technical specifications provided by the structural engineer. Routine inspection and structural audit of all buildings particularly the old ones in our cities and provinces should be done, and if found unsafe, should be immediately put up for demolition.

Seismic evaluation and rehabilitation designs of existing buildings using carbon fiber and dampers should be integrated. Developers should also identify the location of earthquake fault lines within the vicinity so that structural engineer can make adjustments in their structural design.

Since earthquakes and tsunamis go hand-in-hand for those living in coastal areas, there should be a provision for the construction, improvement, and security of residents in case of tsunamis. Anti-tidal wave facilities like breakwaters and embankments and geotechnical studies should be included as well. In terms of infrastructure, evacuation sites should be at least 10 hectares and 1 square meter per evacuee, and construction of quakeproof conduits with utility tunnels, safety devices and facilities should be done as well.
For flood-prone areas in the country, necessary infrastructures include securing water supply stations within 1.5-2 km from every household, roads should have permeable pavements, parks and apartment complexes should enable non-building spaces as flood control lakes to serve as multi-purpose flood-control lakes, and buildings should have underground water holding capacities.

Due to the rising sea level, our country can minimize flood damage to lowlands by finding out past flood records and promoting vertical and adaptive architecture. By enabling the sewerage systems to store rainwater and installing filtration boxes, it helps strengthen drainage systems in urban areas.  To prevent landslides caused by heavy rainfall in mountain and hillside villages, sand-arresting works and reforestation through tree planting is needed.

The biggest challenge architects, designers, engineers, and planners face in developing countries today is redefining the architecture and planning of the rapid urbanization to meet the demands of the growing economy and population. As the number of disasters brought about by climate change, inadequate infrastructure, and obsolete practices in planning, zoning, and urban development increase, our response to the built environment will reflect how we perceive our immediate surroundings as well as our roles as its caretakers and stewards for future generations.

source:  Manila Times Column of  by Felino A. Palafox, Jr.

Bacolod-based call center firm expanding

BACOLOD CITY — Locally based PanAsiatic Call Centers, Inc., which is also known as PanAsiatic Solutions, plans to hire 4,000 more workers with the planned opening of its second center here early next year.

Siony T. Hijara, PanAsiatic site director and general manager, said in a recent interview here that this plan will bring the company’s total work force to 7,000.

She said positions will be open to residents of Bacolod as well as those from other cities and towns of Negros Occidental.

“We hire everybody to the ranks and promote them from the inside, so we promise them a career,” Ms. Hijara said.

PanAsiatic — which offers sales, customer care, technical support and back-office services — started operations here in 2010. By the end of last year, the company had a work force of 3,000.

Ms. Hijara said the company plans to start operations of its second center — located near its headquarters and the Bacolod Government Center in Barangay Villamonte — by February next year.

On its Web site, PanAsiatic said it has served a number of “Fortune 500 companies across the globe…”

The company said its competitive thrust has been “to fill the gap in the service market for a world-class call center operation at competitive rates.”

“You no longer need to go to the top players in the space and pay top dollar to get optimal levels of cost, quality, reliability and service,” according to its Web site.

Ms. Hijara said the company recruits under its Barangay ACHIEVE program, which channels job openings for customer service representatives and operations support staff through barangay officials who then identify possible candidates.

Since 2010, she said the company has celebrated many milestones such as partnership with the city government of Bacolod and the province of Negros Occidental, completion of its chapel, and construction of its second building. -- C. G. Samillano

source:  Businessworld

Builders pressed on HLURB compliance

THE COUNTRY’S leading organization of socialized and low-cost housing developers recently called on its members and other developers involved in the efforts to provide decent mass housing to submit not later than March 31, 2014 an inventory list of their unconstructed socialized housing components for these to be credited in their socialized housing compliance.

Pursuant to the directives of Housing and Land Use Regulatory Board (HLURB), the Organization of Socialized Housing Developers of the Philippines, Inc. (OSHDP) led by its President, Lawyer Christopher Ryan T. Tan, OSHDP made the call following the recent issuance of HLURB Memo Cir. 19, series of 2013.
The circular requires developers of socialized housing projects to submit to the HLURB Regional Field Office, where the housing project is registered or located, a written declaration on these constructed housing components.

Otherwise, these may no longer be used or credited in the developers’ compliance with the Balance Housing requirement under Section 18 of R.A. 7279, the Urban Development and Housing Act of 1992.
Under this rule all housing subdivision developers shall build an equivalent of 20% of the total units or of the cost of the development into socialized housing to cater to the needs of the homeless underprivileged, Atty. Tan explained.

For his part, Engr. Jefferson S. Bongat, OSHDP chairman, mentioned that the HLURB Circular applies to the following cases:

a) Utilization of the unconstructed housing components of the socialized housing projects after the issuance of their license to sell through joint venture with developers of main subdivision projects; and
b) Utilization of unconstructed housing components of socialized housing projects which were devolved as advance compliance for future main subdivision projects of the same developers.

source:  Manila Standard