Tuesday, August 2, 2011

Dwindling office space in Ortigas CBD drives up rental rates

DWINDLING OFFICE space in the Ortigas business district has caused rental rates here to rise by as much as a fifth as locators continue to prefer the area over new commercial complexes being developed elsewhere in Metro Manila, a property consultancy this week said in a statement.

Office rent in the Ortigas business district has risen by as much as 20% from year-ago levels due to dwindling space. -- Jonathan L. Cellona
Business process outsourcing (BPO) firms are seeking new space in the country’s second-largest business district even as supply rates struggle to match current demand, said Sheila Lobien, director of real estate services firm Jones Lang LaSalle Leechiu (JLLL).

Despite the emergence of new business districts in Manila as well as Marikina, Pasay, and Quezon cities, Metro Manila’s office spaces remain concentrated in Makati City, totaling one million square meters, and Ortigas, where there is close to 800,000 square meters, JLLL said.

“The supply of new office space in Ortigas simply has not matched the rapid pace of construction of new buildings in the Bonifacio area and Makati,” Ms. Lobien said, claiming that only one building -- the so-called 17-storey iSquare -- will be coming on-stream in the area before 2013.

This explains why rental rates have been rising by 15% to 20% in Ortigas since late last year and may continue to rise.

“This, however, does not make the place (Ortigas) less attractive. In fact, the Ortigas district is highly attractive to BPOs seeking an area with three power grids which ensure the availability of electricity even during emergencies,” Ms. Lobien said.

Companies are likely to rank Ortigas among its top location choices due to easy transportation routes to adjoining Marikina and Quezon cities via the Metro Rail Transit Line 3, as well as the presence of commercial establishments, Ms. Lobien said.

Ortigas is also accessible to most residential areas in Metro Manila, she added.

According to the Ortigas Center Association, Inc., Ortigas Center spans the cities of Pasig, Mandaluyong, and Quezon and covers 1.082 million square meters in area. The district is bounded by Ortigas Avenue on the northeast, Meralco Avenue on the east-southeast, Shaw Boulevard on the southwest and Epifanio de los Santos Avenue on the northwest. -- Franz Jonathan G. de la Fuente

Posted on July 27, 2011 07:21:09 PM


Wednesday, July 27, 2011

National land use policy pushed
By Marianne V. Go (The Philippine Star) Updated July 28, 2011 12:00 AM Comments (0) View comments

MANILA, Philippines - Passage of a national land use policy is being urged by multi-sectoral groups as the 15th Congress begins.

Following a meeting of the Working Group on Sustainable Rural Development of the Philippine Development Forum yesterday at the Mandarin Hotel, Sen. Juan Miguel Zubiri acknowledged that the passage of a National Land Use Act (NLUA) would be “difficult, but not impossible.”

However, he remains optimistic that with the filing of such a measure during the second regular session of the 15th Congress there is a good chance that the bill will be tackled.

He said Senate President Juan Ponce-Enrile has prioritized the passage of the NALUA during the current second regular session of the 15th Congress.

Zubiri pointed out that “ticklish” issues that would likely be raised during the discussion of the bill would include delineation of “protection areas, production areas and settlement areas.”

Agriculture Undersecretary Segfredo R. Serrano likewise supports the passage of the NLUA to be able to harmonize and unify policies on protection, production and settlement areas.

Serrano admitted that the failure of some plans of the governmen to take off has been due to the lack of a comprehensive land use plan.

Dr. Walter Salzer, co-convenor of the PDF-WGRD, also noted the “discord” that has hampered development in the Philippines.

Passage and adoption of a comprehensive, harmonized and orderly land use plan law would help promote faster development, he pointed out.

Dr. Salzer cited the chaotic number of laws governing land use and the need for one single organization to implement land use utilization instead of the current overlapping mandate of several agencies.

The German Society for International Cooperation (GIZ), through its Environment and Rural Development (EnRD) program is helping the the national and local government units to use participatory land use- development planning (PLUP) to draw a roadmap for the development of their respective barangays.

Land use development planning aims to make the communities understand the various elements such as their geography, environment and climate change in allocating areas for development as production zones, free areas, residential, hazard areas, recreation and public areas.

The lack of a practical land use development plan in the Philippines, according to former Department of Environment and Natural Resources (DENR) Undersecretary and now environmental planner Elmer Mercado, has already shown haphazard development in urban and rural areas -- with competing allocations for industrial, mining, residential and protective areas.

With the effects of past destructive developments such as clear-cut logging and climate change now resulting in increasing flooding, landslides and related disasters, Mercado stressed, the need for land use planning becomes more urgent for the future.

The GIZ’s model aims to encourage land use planning from the ground up, rather than coming from the top going down.

However, for land use planning to be adopted nationwide, Mercado stressed the need for Congress to finally act and pass a National Land Use Act (NLUA) which has been languishing in the legislative mill for several years now.

The NLUA bill in Congress, according to Mercado, has only two more years to be acted upon by the current Congress before it ends and a new bill would again have to be re-filed by the next Congress.

Monday, April 18, 2011

Investors keen on PH housing market, REITs

MANILA, Philippines—The prospects of the real-estate sector in the Asia-Pacific region remain bright despite the steady stream of demand from investors—for both physical assets and shares of property developers—that have kept prices high in recent months.

This rosy outlook includes the Philippines, where the backlog in the housing sector and the possible introduction of real estate investment trusts (REITs) make the market attractive to foreign investors, said a fund manager who specializes in real-estate investments.

In particular, Panna Capital founder Brett Gordon singled out the affordable housing market as being attractive to investors, along with “pre-IPO opportunities” for growing private developers who have yet to list their shares on the Philippine Stock Exchange.

“The implementation of the REIT law in the Philippines is also going to be very interesting,” said Gordon during a recent conference for Asia-Pacific journalists sponsored by Swiss investment bank UBS.

REITs are publicly listed entities formed for the purpose of investing in income-generating real-estate assets like residential and commercial developments. This is particularly attractive as an investment vehicle for foreign funds, which are prevented by the Constitution from directly owning real-estate assets in the country.

“(The REIT law has) been stalled a number of times now, but if that comes into effect, I expect to see a growing institutional market for real estate in the Philippines,” he said.

“Asean [the Association of Southeast Asian Nations] is massively overlooked as a growth story, especially on the residential side,” added Gordon who, previous to his founding of Panna Capital, was in charge of real-estate investments at Dutch pension fund giant APG Investments.

Earlier this year, he was named the top-ranked real-estate investment manager in Asia by the Reuters Extel Survey.

Gordon singled out Indonesia and the Philippines as being attractive real-estate investment markets because “the demographics are ‘to die for,’” referring to the young population with growing disposable incomes and attractive prevailing mortgage rates offered by banks, as well as the high margins earned by developers.

According to data from Panna Capital, the Philippines has 35 real-estate companies on its investment radar screen with a combined market capitalization of $16 billion, compared with the total of 409 real-estate firms with a $202-billion market capitalization for the entire “emerging Asia” zone.

In the Philippines, Gordon cited the performance of Ayala Land Inc. due to the earnings prospects provided by its housing projects and its Bonifacio Global City project.

Lastly, FYI for related information on the new real estate law, RA 9646, please proceed to www.RA9646.com, the online repository of updated information on Real Estate Service Act of 2009 (RESA).

source: Philippine Daily Inquirer, April 10 2011

BSP cuts OFW remittance growth forecast

The Bangko Sentral ng Pilipinas (BSP) has slashed the projected growth in the amount of money sent home by Filipinos abroad this year and sees further slowdown next year due to the ongoing tensions in Middle East and North African (MENA) states as well as the magnitude 8.9 earthquake and killer tsunami in Japan.

BSP Deputy Governor Nestor Espenilla Jr. said in a speech delivered on behalf of BSP Governor Amando Tetangco Jr. at the economic briefing organized by the Security Bank that monetary authorities expect remittances from oversees Filipino workers (OFWs) growing by seven percent to a record level of $20.1 billion this year from $18.76 billion last year.

This was lower than the original growth target of eight percent to about $20.2 billion this year.

“Remittances in 2011 are expected to remain resilient amid possible downside risks such as the turmoil in the MENA region and natural disasters in Japan,” Espenilla stressed.

He clarified that while remittances from Japan account for 4.7 percent of the total remittances, the natural calamities in Japan may even encourage greater demand for OFWs once reconstruction efforts commence

He added that the impact on actual remittance flows could be limited if conflict in the MENA is contained to those currently affected.

For 2012, Espenilla added the monetary authorities expect OFW remittances to grow at a slower pace of five percent to about $21.1 billion.

The revised projections, according to him, were presented to the BSP’s Monetary Board last April 14.

OFW remittances posted its slowest monthly growth in nine months in February after expanding by 6.2 percent to $1.5 billion from $1.41 billion in the same month last year.

However, the monthly growth recorded in February was the slowest since May last year when remittances posted a monthly growth of 6.5 percent. The growth in OFW remittances has likewise slowed down for the third straight month after posting a 10.5 percent growth in November to 8.1 percent in December, to 7.6 percent in January, and to 6.2 percent in February.

Despite the slowdown, the BSP is confident that remittances would remain robust this year as monetary authorities penned an eight percent growth in the amount of money sent home by Filipinos abroad to their loved ones in the Philippines.

In the first two months of the year, the BSP chief said the amount of money sent home by overseas Filipinos climbed 6.9 percent to $2.98 billion from $2.78 billion in the same period last year as remittances from sea-based Filipino workers jumped 12.7 percent while that of lnd-based workers grew 5.5 percent.

Filipinos in the US, Canada, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, and Italy accounted for 80.2 percent of the total remittances in January and February.

In fact, the state-run Philippine Overseas Employment Administration (POEA) processed 43,360 job orders for service, production as well as professional, technical, and related workers in the first quarter of the year for deployment in Saudi Arabia, United Arab Emirates, Qatar, Kuwait, and Taiwan.

OFW remittances went up by 8.2 percent to a new record level of $18.76 billion last year from $17.35 billion in 2009 exceeding the revised eight percent growth forecast set by the BSP for 2010. Originally, the BSP penned a six percent growth for OFW remittances last year but revised the target due to the strong demand for skilled Filipino workers abroad.

Lastly, FYI for related information on the new real estate law, RA 9646, please proceed to www.ra9646.com, the online repository of updated information on Real Estate Service Act of 2009 (RESA).

source: Philippine Star, April 18 2011

BONIFACIO GLOBAL CITY: A cash cow indeed

BUSINESS & LEISURE By Ray Butch Gamboa (The Philippine Star) Updated February 26, 2011 12:00 AM Comments (0) View comments

Whenever I get a first-hand account from the Bases Conversion Development Authority (BCDA) of the proceeds of their dispositions, I inevitably get light-headed. The dizzying amounts, in the billions, they so casually and nonchalantly report on should be enough to pluck us out of indebtedness as a nation, I thought. But why have we not gotten far, in spite of it?

Definitely, it’s not for lack of diligence and professional management from this group of dedicated men and women who see the agency’s projects through. Their records have been made public, available for perusal by anybody who cares to look, and their Executive Vice President, Ms. Aileen Zosa speaks for the agency as clearly and as definitive as one can wish for.

In 2010, they generated proceeds of P3.2 billion, a hefty amount in itself, but in 2009, they generated more than P5 billion. The 43 percent contraction is largely because many of the properties were released to the market in 2009, and one can’t expect to flood the market with a lot more the following year. Prudence dictates that you give the market sufficient time to absorb the real estate bulk just released.

Aileen reports on the P26 billion they have generated. These mainly came from joint projects/lease proceeds with Ayala Land, Market Market (lease only), Mega World on North Bonifacio (joint venture) for eight hectares, McKinley Hill (joint venture), Jusmag property (P873 million for the next twenty years). Within the next six years, this figure would reach P30 billion, P9 billion of which would be generated from 2011 to 2016.

Between 2011-2021, they expect proceeds of P14 billion from fixed and secured revenues, which means that this is only a minimum figure. Talking on the upside, the figure could definitely go much higher, depending on the market conditions, but it cannot go lower than P14 billion.

Of the expected proceeds of P30 billion proceeds and counting another P50 billion in proceeds, the BCDA has a clear mandate on the issuances of proceeds. RA 7197 stipulates that for sale of assets, the following are the beneficiaries: the AFP Modernization Program, the National Shelter Program, Commission on Higher Education, Judiciary Reform Program, and the BCDA programs.

Leases are covered by Executive Order 309 which gives 50 percent of proceeds to the AFP Modernization Program (again!) and 50 percent to the BCDA.

If you’re wondering where the additional P50 billion earlier mentioned came from, it is from the disposition of the Bonifacio and Villamor properties which as of January 2011 came out to P50.8 billion. Of this, P21.19 billion went to the Armed Forces of the Philippines for the relocation and replication of the military facilities affected by the sale. P9.49 billion went to the modernization trust fund (again!!), P464 million was remitted to the National Treasury for the contiguous municipalities that were affected by the sale of Villamor and Bonifacio, and another P690 million for non-military facilities affected by the developments in these areas. Other government programs got benefited to the tune of P7.2 billion, bringing the total to almost P33 billion. The rest were retained in the BCDA coffers to fund their programs in Subic and Clark which they estimate to run to P10.3 billion, leaving them a balance of P11 billion. Most of this went to direct expenses incurred by the agency in their development/disposition of assets, but the agency hastened to add that almost half of this P11 billion was paid to the BIR for taxes and various fees. Curiously, BCDA was declared tax-exempt, but the BIR chose to tax them heftily nevertheless. Well, out one pocket and into another.

Aren’t these figures mind-boggling? Seeing how the proceeds have contracted substantially in the last year, many would fear that the lands for conversion are actually drying up. Fear not—thankfully they haven’t. They still have over 60 hectares of prime land for disposition. These come mostly from Bonifacio South where the Jusmag property is. We’re talking of 33 hectares in this property alone and the Supreme Court had to rule on the legitimate ownership of this huge tract of expensive land over a year ago. The BCDA went into a joint venture with Mega World for this one.

The rest of the Bonifacio South property is where the B & S property is. This one is 33 hectares, home to the Philippine Marine Corporation Headquarters, the Bonifacio Naval Station and some Philippine Army properties.The BCDA has actually started to dispose of these properties, though they are all still under policy review by the President’s office. Pres. P-Noy reportedly prefers leases over direct sales. Whatever it is they finally decide on, BCDA is confident they will be able to dispose of all 33 hectares by the end of the present year.

Beside the 33 hectare property of the B & S is another 25 hectare property which an entity called the Navy Officers Village Association (NOVA) is laying claim to. The government maintains that this entity got their title through a fake proclamation, and they have elevated the case to the Supreme Court.

Many of us do not realize that in the Bonifacio Global City development (joint venture with Ayala Land and the Campos group called the Fort Bonifacio Dev. Corp.), the government through the BCDA owns 45 percent of it. The Ayala-Campos consortium owns 55 percent. Although the land in Bonifacio Global City has been exhausted, BCDA’s part of the development has been converted into shares. These shares will eventually form part of the disposition proceeds if the government wishes to sell its stake of 45 percent.

Noteworthy here are the allocations for the AFP Modernization Program. Aside from the huge share they got from the multi-billion joint ventures, they get 50 percent of all lease proceeds, which are continuing. Talk about mind-boggling.

(P.S. – All this money and they can’t even support a road safety program.)

Monday, January 24, 2011

Zonal valuation adjustments to hike property taxes, prices

REAL ESTATE prices and taxes are bound to go up in most parts of the country once new zonal values are finalized by the Bureau of Internal Revenue (BIR), officials said last week.

"We are updating them (zonal values) again ... Most of them will likely go up because of developments in most areas," BIR Deputy Commissioner Nelson M. Aspe said in a phone interview Sunday last week.

District and regional offices of the BIR all over the country are now conducting public hearings on the proposed zonal values -- the worth of a property for taxation purposes, some of which have not been updated for 10 years.

For the country’s top commercial areas -- Manila, Makati, and Quezon City -- zonal values are expected to rise but those in areas hit by calamities such as Marikina are likely to remain the same or even go down, regional BIR officials said.

Makati and Quezon City revenue district officials declined to say how much the increases would be. For Revenue District Office (RDO) 33 covering Intramuros-Ermita-Malate in Manila, however, data obtained by BusinessWorld showed zonal values could rise by 35-40%.

BIR Commissioner Kim S. Jacinto-Henares, in a telephone interview last week, said zonal values were used to prevent the undervaluation of properties to avoid the payment of higher taxes.

"In selling your property, it has always been the zonal value or the selling price, whichever is higher," that is used as the basis for computing the required capital gains, documentary stamp, estate and income taxes, she explained.

These taxes are paid by the seller of the property. The adjustment in zonal values means the 6% capital gains and 1.5% documentary stamp taxes will have higher base prices -- that is, in case zonal values rise -- resulting in higher taxes to be paid by the seller, Ms. Jacinto-Henares said.

"For the estate tax, transfer of properties will be costlier," she added.

Ma. Victoria A. Villaluz, president of the Tax Management Association of the Philippines, said properties can be sold "lower than the zonal value" but in computing the taxes, the BIR’s "basis will be the zonal value, not the selling price."

Zonal value differs from the market value, or the price on a property agreed on by seller and buyer.

Victor J. Asuncion, executive director for research and consultancy at CB Richard Ellis Philippines, said real estate prices could also be expected to rise in Cebu and in Clark Field in Pampanga where "developments are expected to spur demand in buying properties."

"In Mindanao, of course, you will have to classify where the war is. The war is in Basilan, so there is possibility that zonal values will likely stay there but that is not true for the rest of Mindanao," Mr. Asuncion explained.

"More often than not, BIR does not adjust zonal values downwards. What [it does] is to hold them and wait until inflationary pressures pull them up again."

The BIR’s Mr. Aspe said updating of zonal values should be done "every three years" but "tedious process" prevents the bureau from doing so. In April 2010, then Internal Revenue Commissioner Joel L. Tan-Torres issued Revenue Memorandum Order 41-2010 ordering RDOs to update their zonal values "not later than June 30, 2010."

BIR data showed that out of 115 RDOs nationwide, only 13 were able to comply: Urdaneta, East Pangasinan; Tabuk, Kalinga-Apayao; West Makati; Bacoor, North Cavite; two districts in Calamba, Laguna covering Calamba City and the cities of Los Baños and Sta. Cruz and Victoria and Pila towns; Batangas City; Lucena City; Gumaca, Quezon province; Binalbagan, Negros Occidental; Catbalogan, Western Samar; Zamboanga Sibugay; and Zamboanga City.

Iluminada V. Lucero, officer in charge of the BIR’s Asset Valuation Division, last Tuesday said RDOs in East Makati, South Makati, Las Piñas-Muntinlupa, San Jose, Antique and Kalibo, Aklan, submitted updated zonal values last month but these were returned for a discrepancy check. She did not elaborate.

"It is a continuing program. There’s really no deadline for these RDOs to submit updated zonal values," Ms. Lucero said.

Before reaching the BIR national office, the proposed zonal valuations have to undergo a series of public hearings at both the district and regional levels.

Mary Anne A. Sumpay, secretariat of the technical committee on zonal valuation at the Quezon City regional office, said "public hearings have already been conducted" on the proposed increase in zonal values for Novaliches, Pasig East, Mandaluyong and Cubao.

"Two RDOs in Marikina and Pasig West, meanwhile, asked to retain their zonal values due to the ‘Ondoy’ tragedy," she added.

In 2009, tropical storm Ondoy struck Metro Manila, destroying around P11 billion worth of property, particularly in Marikina, Pasig and Pateros.

Minerva P. Podreo, member of the technical committee on valuation at the BIR regional office, said "most" zonal values in Makati would increase by "different percentage levels". Out of the four districts in Makati, only RDO No. 48 or East Makati was able to revise its zonal values last year.

A hike in zonal valuations would help the BIR collect more taxes although Ms. Jacinto-Henares said "there is no estimated collection target" as far as national property taxes are concerned.

The BIR, which accounts for about 70% of the government’s programmed tax revenues, is behind its 2010 collection goal based on official data, collecting only P753.3 billion as of November against the P783.03-billion target.

Final December and 2010 collection figures are scheduled to be released within the week, although Mr. Aspe earlier this month said the bureau may have missed its P73.78-billion December goal by "more than P1 billion".

Market Developments

is a rapidly growing industry in Singapore, Thailand, Malaysia and India
. The Philippines is fast catching up with a $25.3-million revenue posted in 2010, with foreigners contributing 60 percent of the revenues.

In the same year, the health and wellness industry hit a record of US$ 2 trillion. Research also shows that the Philippines has an even bigger potential in attracting medical tourists because of its culture of hospitality, quality healthcare services, competent medical practitioners, and cheaper medical treatments.

source: http://www.mb.com.ph/articles/300457/centuria-medical-breaks-ground 012511

Investments in electronics

break all-time record at $2.32 B in 2010

MANILA, Philippines – Electronics investments in the country broke all time high record as fresh capital grew 380 percent in 2010 to $2.318 billion from $484 million in 2009, the Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) reported.

“This is the highest in the Philippine semiconductor and electronics industry’s history,” SEIPI president Ernie Santiago said in a statement.

This is also the 7th year the industry hit over $1 billion in investments. The $1 billion investments in the industry were previously registered in the years 2007, 2000, 1997, 1996, 1995, 1994.

Santiago further said there were 100 companies that registered their investments in the country last year.

Of these firms, ten are expansions while the rest are new projects. It is expected that these investments will generate 24,552 new direct jobs which include engineers, technicians and operators.

As a rule of thumb, Santiago reported that every one direct job, there are seven indirect jobs created.

Santiago also reported that during the SEIPI meeting with President Benigno Aquino III last year, the industry expressed its desire to double up exports in six years - from $ 22 billion in 2009 to $50 billion in 2016.

The electronics industry exports had a strong start and encouraging finish in 2010.

Its exports this year, too, are expected to hit over $31 billion or at least $9 billion to $10 billion increase over its 2009 exports of $22 billion.

“The industry is bullish for 2011,” Santiago said noting that the electronics sector will continue to be the driver of growth of Philippine exports.

SEIPI is projecting 10% growth for 2011 as no global electronics ‘crash’ appears to be looming for early 2011, Santiago said.

SEIPI, the leading and the largest organization of foreign and Filipino semiconductor and electronics companies in the Philippines, will present the industry’s strong performance in 2010 and its promising outlook for 2011 during SEIPI New Year’s Fellowship Night on Friday, January 28, at M/S Philippines, Manila Hotel.

source: Bulletin, Jan 25 2011