Wednesday, December 25, 2013

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 MalacaƱang 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 ParaƱaque 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.

Sunday, December 22, 2013

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

Thursday, December 19, 2013

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

CBRE: PH industrial property market surged in 3rd quarter

THE INDUSTRIAL property market “was slow-moving for quite some time and now it has been picking up pace.”

Leading real estate advisory and services firm CB Richard Ellis Philippines (CBRE) disclosed this current scenario for the country’s industrial and manufacturing sector in its 3rd quarter market review.
The rise in manufacturing activity has led to increasing demand in leasing industrial real estate properties.
In 2013, warehouse transactions showed a typical area range of 3,000 square meters to 10,000 square meters with lease terms from 1 to 5 years while manufacturing leasing transactions showed a typical area of 5 to 10 hectares with lease terms ranging from 15 to 25 years.

“The manufacturing sector of the country is generating renewed interest globally and is proving to be a re-emerging growth industry. CBRE added.

Manufacturing is a capital intensive industry requiring massive tracts of land which is the primary reason for the long lease terms. Industrial property transactions at these scales are expected to translate into future expansions and fuel overall manufacturing growth.

During the second quarter of 2013, manufacturing yielded the second highest growth of all economic sectors with a 10.3% year-on-year growth rate and 9.7% on the third quarter.

This positive growth has been a result of expansion of firms to the country and increased production volume from heightened global demand.

“Multiple agencies of the government have recognized the importance of the industry for long-term economic growth and are collaborating with the private sector to increase the expansion of manufacturing and industrial firms to the country”. CBRE said.

Volume of production index in September grew by 16% year-on-year with chemical products and furniture & fixtures topping the list.

Freeport zones Clark and Subic and the CALABARZON region are the major manufacturing hubs of the Philippines. These are strategically located in the fringes of Metro Manila with nearby seaports and airports for easier access to transport goods domestically and globally.

One of the main concerns of firms expansion are costs, indeed the Philippines posts relatively higher electricity costs compared to our neighboring countries. However, as per any country, each has its own strengths and handicaps.

Although the country lags behind power costs, it is globally competitive in industrial land values and has a definitive advantage in quality labor pool. The Philippines has the lowest median age in the region of 23.4 with labor productivity on the uptrend. Specifically for manufacturing, labor productivity grew by 3.84% and 4.46% in 2011 and 2012, respectively

Japanese and Korean Firms have shown recent interest on investing in the country’s manufacturing and infrastructure sectors.

Companies such as Canon, Brother, Murata, Bandai, Fujifilm and Cemedine have alreadyannounced their manufacturing-related investments in the country.

The Philippines is a globally competitive manufacturing hub for its strategic location, strong macroeconomic fundamentals, favorable demographics and cost effectiveness.

Other highlights of the latest Metro Manila Market review of CBRE includes:

• Expanding Office Market Show Strong Performance
Nearly 500,000 sqm of office space is expected to enter the market in 2013, of which 45% have come online in the third quarter.

• Residential Developers Continue To Tap Bond Markets
As domestic liquidity presents growth prospects for the economy, capital markets have been tapped in developing residential projects.

• Investments Unfold in the Third Quarter
In recent years, however, the economy is rerouting towards becoming more investment-led and industrialized.

• Upcoming Holidays Spike Up Global- Local Retail Partnerships
Joint agreements between local businesses and global brands continue to expand in the retail market as the holiday season draws near.

source: Manila Standard

Watch this space


At the start of the year, property consultancy firm CBRE Philippines said in its annual market outlook that the Philippine real estate industry will have bright prospects throughout 2013.


Sustained growth was projected for the residential, gaming, leisure and business process outsourcing (BPO) or office sectors due to strong investor confidence arising from good macroeconomic factors and low interest rates.

True enough, the local property sector has continued to grow this year. Claro Cordero, Jones Lang LaSalle Philippines' research, consulting, and valuation head, gave an overview of the property industry's performance.

"The local property sector sustained its positive performance in 2013, supported by the continued growth of the major property demand drivers---that is, the offshoring & outsourcing (O&O) and BPO industry for the office or commercial sub-sector; the remittances from overseas Filipinos for residential and retail sub-sectors; and continued interest and potential on tourism for the hotel sub-sector," he said in an email to BusinessWorld.

A healthy economy, growing domestic consumption, and a sustained inflow of remittances---which, according to Mr. Cordero, encouraged more international retailers to set up shop in the Philippines---buoyed the retail property sector.

"The sustained demand has supported the moderate growth of rents in retail mall developments," he said. "In 2014, new malls and retail expansions are expected to complete, considerably adding to the current retail stock."

The hotel industry, anticipating increased tourist arrivals because of the Philippines' renewed tourism campaign, continued to start and develop more projects. Mr. Cordero expects the Metro Manila hotel supply, in particular, to "increase even further" in the next several years.

"The majority of the upcoming hotel accommodations will be located in the Entertainment City within Bay City," he said. "There are also a number of hotels coming on stream in the established business districts of Makati, Ortigas and Bonifacio Global City (BGC)."

Aside from a steady flow of remittances, a relatively low-interest rate environment and flexible financing schemes helped the residential condominium market's performance, according to Mr. Cordero. "In the next few years, residential condominium supply is expected to further rise, potentially doubling the current stock in Metro Manila by 2016."

FOREIGN FORCE

More investors and expatriates were also encouraged to establish offices in the Philippines, which then increased the demand for high-end apartments in premium residential areas near and within the central business districts.

In an email to BusinessWorld earlier this year, CBRE Philippines explained how foreign expatriates contributed to the increased demand for high-end residential condominiums.

Initially, expatriates in the country were limited to renting, but with the rapid appreciation of values for luxury developments---particularly residential condominiums---it has become more cost-effective for longer-staying expats to buy these units to live in, and eventually, for investment. The Philippines allows foreign expats to own up to a maximum of 40% of the property's entire sellable floor area.

They also explained that more restrictive realty laws in neighboring Asian countries have made the Philippines a more attractive destination for foreign expats.

In Hong Kong, the government's imposition of higher rates on stamped duty taxes---an effort to control the properties' rapidly increasing prices---have stymied investments in residential units. Meanwhile, in Singapore, banks have imposed a lower loan-to-value ratio top of higher rates on stamped duty taxes, forcing potential buyers to cough up a larger outlay for acquisition of properties through financing.

This has led investors to look for properties elsewhere, and the Philippines, which gained investment-grade ratings from Fitch Ratings, Standard & Poor's, and Moody's this year, has become one of the more feasible options.

Julius Guevara, associate director for valuation and advisory services at commercial real estate consultancy firm Colliers International, believes the demand for high-end real estate coming from expats in the Philippines is "only being addressed."

This market has traditionally driven the high-end market, he explained, especially in central business districts. Because of an expanding economy, the growing BPO sector, and bleaker prospects abroad, foreigners have been flocking to the Philippines, increasing the demand for high-quality dwelling space.

According to him, rental growth in posh villages such as Forbes Park has been escalating steadily since lack of land prevents new exclusive subdivisions from being built near the central business districts. While there has been a strong demand for condominiums in the past few years, these projects were mostly focused on studio-type to one-bedroom units. The demand coming from foreign expatriates is for larger units.

"Luxury condo development has been growing the past couple of years, but we will see their completion in another four to give years," he said in an email earlier this year. "As of now, there will still be some unmet demand for this segment; this is reflected in the low vacancy rates in premium properties in Makati, Rockwell and Bonifacio Global City."

OUTLOOK ON OFFICES

The growing O&O industry, said Mr. Cordero, contributed to the resiliency of rental rates in the commercial office property sector.

"The healthy demand for office space has buoyed the moderate growth of rents and capital values of Grade A office space," he said. "Consequently, property developers were encouraged to launch new office projects in different districts in Metro Manila, further increasing the level of upcoming office supply in the next few years."

At a press briefing held last month, Joe Curran, general manager of commercial real estate services firm Cushman & Wakefield's (C&W) local arm, also noted that office spaces have fared well in driving growth in the local property sector.

According to C&W research, Manila has posted a highly competitive vacancy rate of 4.3% as of the third quarter this year, and it remains one of the locations with the lowest vacancy rates in Asia-Pacific's emerging markets. It has also outperformed the rest of the countries in the Asia-Pacific region in terms of net absorption, which totaled to an estimated 482,126 square meters, with new supply of 332,786 square meters coming in during the same period.

Manila also ranked above markets such as Mumbai and Bangalore in India, mostly due to the healthy demand driven by the IT-BPO sector.

"This means companies are continuously increasing their head counts, and they are expanding not only in Metro Manila but in other cities in the Philippines as well," said Mr. Curran at the event.

In real estate, vacancy rate is the percentage of all available units in a rental property that are unoccupied at a particular time. This means low vacancy rates denote strong rental sales, while high vacancy rates indicate weak rental sales. Absorption rate, on the other hand, is the rate at which available units are sold in a specific real estate market during a certain period of time. A high absorption rate, therefore, suggests a rapidly shrinking supply of available units.

Taguig and Makati have witnessed 59% and 29% of the absorption, respectively, with Makati posting the lowest vacancy rates and highest year-on-year change of 11% in terms of weighted average rental values. C&W said that incoming office supply over the next two years is estimated at 1.2 million square meters in key areas around Metro Manila, with BGC accounting for 42% of new supply.

"The Fort is continuously being a top player in the office space sector, attracting both outsourcing and non-outsourcing firms," said Mr. Curran.

The performance of Metro Manila's office sector, compared with that of other cities in the region, is a testament to how strong the market is today, added Mr. Curran.

C&W expects that in the next three to five years, "green" buildings will become more ingrained in the industry. The Philippines will also enter a "tenant's market" phase since investors will be inclined to buy strata-titled office spaces, which allow for several unit owners across a single property.

Completions are expected to be thin in the first half of 2014, said Mr. Curran, as developers are set to complete projects only by the end of the year, perhaps well into 2015 and 2016. While C&W expects this to put pressure on prices and vacancy, the stable growth of the BPO industry will continue to fuel office space expansion in key locations in the country.

SOARING, BUT SOBER

Last November, Bangko Sentral ng Pilipinas governor Amando Tetangco, Jr., to quell worries about a possible real estate bubble in the country, explained that current real estate activity translates to presence of demand.

"Property developers don’t build if they don’t think there’s demand," he said in a previous BusinessWorld interview. "They have changed their business model. Pre-Asian crisis, if they are building a four-tower development, they build at the same time. Now, it’s one tower at a time."

Despite, or perhaps even because of, the optimism about the property industry, Mr. Cordero still cautions against overzealous building.

"Developers should be able to read market signals by undertaking thorough studies and analyses, to know when excessive building may actually not work in their interest to protect market values," he said. "Well-paced building and development plans can contribute to sustainable and lasting market growth."

source:  Businessworld
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