Monday, November 26, 2012

Cebu steel bar maker forms property unit

Businessworld:  CEBU CITY -- Steel bar manufacturer Worldwide Steel Group, Inc. has formed a property development unit to take advantage of a booming real estate market fueled by demand from business process outsourcing (BPO) here.

Worldwide Central Properties, Inc., with an initial capitalization of P100 million, is also seen to complement the group’s businesses, said Alan Kent Ong, company president. The group has been manufacturing and distributing steel bars and other construction materials for 36 years.

“Our mission is to build communities. We’re taking it a step further by not just providing construction materials but also building homes for our customers,” Mr. Ong said in a briefing last week.

The firm’s first project will be a two-tower residential condominium dubbed as Sundance Residences in Banawa, Guadalupe, the most populous barangay in Cebu City.

Mr. Ong said he believed the real estate boom in Cebu “will still continue for a few more years because of the growing BPO industry, the housing backlog and increasing OFW (overseas Filipino workers) remittances.”

Sharon Anne G. Ong, vice-president for marketing and sales, said their first project will rise on a 3,200-square-meter family-owned property in Banawa.

The first tower, estimated to cost P450 million, will have 208 units in 12 storeys and a retail component. Construction will start middle of next year and is targeted to be completed in 2015.

Ms. Ong said the units, which will be priced starting at P1.8 million for a studio, will be designed for the middle to upper middle class segments.

“We are looking at the second generation of families living in the Banawa and Capitol area,” she said.

Amenities will include a pool, kiddie pool, day care center, and a sky garden with fitness center and family entertainment center on the 14th floor.

The project’s design team includes architect Antonio Trillanes, Jr. for the condominium and furniture designer Kenneth Cobonpue for amenities.

The company also plans to develop a two-hectare property in Lapu-Lapu City on Mactan Island into a residential subdivision. “This is still in the planning stage. But we’re looking at (launching this) late next year,” Mr. Ong said.

Worldwide Steel started in 1976 as Cebu Worldwide Hardware & Electrical Supply. It later formed Worldwide Home Depot, Cebu Diamond Industrial & Manufacturing Corp. and Worldwide Polytech Industries, Inc. -- Marites S. Villamor

Manila rising, and so are rents

Businessworld - MANILA’S CHANGING skyline demonstrates a city coming up in the world.

The Philippines’ capital is in the throes of a property boom described as the best in two decades, reflecting increasing confidence in an economy that only recently began shedding its image as one of the region’s basket cases.

Nowhere is it more obvious than at Bonifacio Global City, carved out from Manila’s biggest army base. Originally sold by a cash-strapped government in the mid-’90s, building only got underway in earnest during the last six years after Ayala Land, Inc. took ownership.

"Work here is 24 hours," said Renel Reyes, an engineer and property manager overseeing a 30-storey tower due to be completed by the year-end.

Soon to be home for Nickel Asia Corp. and local conglomerate Aboitiz Equity Ventures, Inc., NAC Tower is just one of several tower blocks under construction.

Located near Makati, the main business district that grew up in the 1970s, Bonifacio is a project in progress, but rents at P800 per square meter ($19.5) are already catching up with its older, established, but saturated rival.

Though rents paid in Makati have recovered almost 30% in the last three years, they are still way below the peak of P1,200/sqm ($29) paid before the global financial crisis hit in 2008, data from property manager and consultancy Jones Lang La Salle Leechiu (JLL) shows.

That makes renting in Manila’s business districts far cheaper than Hong Kong, Shanghai or Singapore. But then infrastructure remains a drawback, as anyone arriving at Manila’s airport quickly realizes.

Still, as Bonifacio lures companies tired of Makati’s cramped spaces with its sprawling parks, luxury hotel chains and Italian supercar makers have followed the money. Lamborghini opened its first Philippine showroom, side by side with Ferrari, in Bonifacio, while Hyatt and Shangri La hotels are opening there soon.

Office space in most new buildings are snapped long before completion. At the NAC Tower, for example, only six floors remain un-let, but Mr. Reyes said they have potential takers.

Take up of new office space this year is set to hit a record 400,000 to 450,000 sqm, up as much as 25% from last year, according to Jones Lang and CBRE Philippines, another of the country’s biggest property manager and advisers.

"Pre-leasing is back," said Rick Santos, chairman of CBRE. "We are now experiencing the best real estate market in the Philippines in the last 20 years."

The primary driver of demand for office space comes from business process outsourcing (BPO) firms catering for European and American multinationals that want to cut costs.

With one of the region’s fastest growth rates, GDP grew 6.1% in the first half, the Philippines has shown resilience in the face of falling demand in the West and China that other more export driven economies must envy.

Analysts say the Philippines could achieve its first investment grade sovereign debt credit rating in the next 12 months.

Strong private and public consumption has underpinned growth, while inflows of foreign capital have driven the stock market to new peaks and the peso to near five-year highs.

An anti-corruption drive launched soon after President Benigno S. C. Aquino III came to power in 2010 has help the Philippines’ image.

Low inflation, low interest rates, and a ready supply of reliable, English-proficient labor are strong draws.

The vibrancy is evident in Bonifacio, where shops are open until midnight and fast-food chains and coffee shops cater round the clock, mainly for call center employees.

The BPO sector accounts for 80-90% of office space take up in the country, and is a major source of employment for the country’s nearly half a million new college graduates annually. The industry is forecast to double its current employee base of more than 600,000 by 2016, fuelling sustained growth in demand for office space.

But steady growth in demand from the traditional front office market such as banks, insurance firms, and representative offices is also fuelling the property boom.

CBRE’s Mr. Santos saw the Philippines, known as the world’s call center capital, fast becoming Asia’s back office banking hub.

JP Morgan Chase, HSBC, Bank of America, Citibank, ANZ and Deutsche Bank have all transferred critical back office processes to Manila in the last five years, while Wells Fargo is among the more recent newcomers.

Rents are expected to stabilize in coming years as new office space totalling at least 1.3 million sqm become available in 2013 to 2015, according to Jones Lang, with little danger of property bubbles as supply is just keeping up with demand.

Outside Manila, a similar transformation is unfolding, with industrial parks, especially those close to the capital and devoted to manufacturing, drawing more foreign firms than ever before, despite cribs about the high price paid for power.

"What we are seeing now is the re-emergence of manufacturing, which is really good for the economy because manufacturing employs people that the BPO industry won’t employ," Lindsay Orr, Jones Lang chief operating officer, said. -- Reuters