Vol. XXI, No. 239 [ Business World Online ]
Monday, July 7, 2008 | MANILA, PHILIPPINES
A PLANNED second-half sale of the government’s Food Terminal, Inc. property may be deferred given a weaker real estate market, Finance Secretary Margarito B. Teves said.
"The market for real estate has softened. So we might consider, depending on how the market moves in the next few weeks and months, if it is more prudent to defer the sale of FTI," Mr. Teves told reporters at the sidelines of the Bangko Sentral ng Pilipinas’ 15th anniversary celebration last Thursday.
Just the day before, one of Mr. Teves’ deputies, Finance Undersecretary Crisanta S. Legaspi, announced that the government would be adopting an outright sale for the FTI complex. The "one-time disposition" she told reporters, would likely be held in the second half given the government’s need to pump-prime the economy.
Mr. Teves, however, said the government was wary that lack-luster demand following early signs of cooling in the real estate sector might result in lower bid prices.
"We would like to have a compensating asset to allow us to meet or even exceed our projected proceeds from privatization this year considering that we expect larger amount of spending to take place for the entire year," he said.
The government needs to raise P30 billion from privatization as part of the P1.236 trillion in revenues needed to fund this year’s budget. Selling FTI - previously valued at P15 billion - would cover half of the target.
Finance Undersecretary Gil S. Beltran has said the government can actually sell more assets depending on market prices. "It is just choosing the assets we want to sell or not. It depends on the price," he said.
Mr. Teves last month said the government was open to selling more than the programmed privatization target. Its 40% stake in oil giant Petron Corp. is expected to be sold by November, pending approvals from President Gloria Macapagal-Arroyo and Philippine National Oil Co.
The government has been trying to sell FTI - formed in 1969 as the Greater Manila Terminal Food Market - since 1997. Nothing has happened since two failed bids in June and December 1997, when the complex was offered for sale at P155 per hectare.
State pension fund Government Service Insurance System (GSIS) has offered to buy the property for P7 billion. GSIS President Winston Garcia has said it would be impossible for the government to sell at a higher price since a lot of infrastructure work is needed to make FTI more accessible.
Property firms and analysts, meanwhile, said there would be interest in FTI.
Claro Cordero Jr., Jones Lang LaSalle Leechiu senior manager, said it would be a "good land banking exercise" for those who are "cash rich" right now.
"Definitely, the value of that property will increase in the next few years as we see new infrastructure developments in that area, not to mention that it is perfectly positioned near the airport, highway and soon-to-be renovated railroad."
Victor Asuncion, research head of CB Richard Ellis Philippines, said a sale would "attract interest from investors but you have to clear the squatters to give the winning developer a free hand.
Lucio Tan-led Eton Properties Philippines, Inc. President and COO Danilo E. Ignacio said interest would "depend on the condition" of the property. — Gerard S. dela Peña
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