PHILIPPINE REAL ESTATE and RELATED NEWS in and around the country . . .

Property sector seen to sustain boom

By Mary Ann LL. Reyes (The Philippine Star) Updated July 01, 2011 12:00 AM
MANILA, Philippines - The world’s largest commercial real estate services firm expects the Philippine property market to remain upbeat, largely due to good fundamentals both as far as the local economy and the real estate sector are concerned, as well as poor conditions in many neighboring countries.

CBRE Philippines chairman and CEO Rick Santos said in a briefing that the Philippines remains an attractive place for locators, with the country having some of the lowest lease rates in the region. “The Philippines has some of the highest yields and demand for office space in Asia. The local office sector also has one of the best fundamentals in the region. We are seeing the start of a projected upscale in the Philippines,” he emphasized.

Aside from good fundamentals in the economy and in the real estate sector, Santos noted that the cost of office space in Manila is around 12 to 14 times less than that of Hong Kong. “It is very cost effective here,” he said.

The average lease rate for office space in the Philippines is around $20.2 per square meter per year compared to Hong Kong’s $89.92 and Kuala Lumpur’s $28.32.

The downcycle in the United States that has resulted in more businesses looking to outsource their business processes to countries like the Philippines will also augur well for the latter in the coming years, Santos added.

He said he expects office take-up in the Philippines to exceed 300,000 square meters this year compared to Singapore’s 150,000 square meters.

“We have not seen this much interest in Asia, and more particularly the Philippines, in recent years,” Santos stressed.

He noted that the Philippine real estate sector remained as a major contributor of growth, with the domestic economy still performing better than some of its neighboring countries. “Countries like Thailand and Japan are laggards due to its population already being adult, not to mention the calamities in Japan that are causing challenges and negative growth numbers, and the upcoming big election in Thailand,” he said.

Santos likewise noted that tourist arrivals are picking up in the Philippines. “Within the rest of Southeast Asia, the Philippines is back on the map as as investment destination. The key, however, is to keep inflation rates under control. But interest and mortgage rates are coming down, banks are awash with liquidity, and the country has a strong banking sector,” he said.

“We see great metrics in the business process outsourcing (BPO), tourism, remittances, gaming sectors in the Philippines. There is so much good new here,” he added.

For his part, CBRE vice chairman for global corporate services Joey Radovan noted that the Philippine BPO global share has much potential to grow to as much as 15 percent from eight percent as of last year.

The local BPO sector posted revenues of 4.2 percent of gross domestic product (GDP) in 2010. “Revenues reached $8.9 billion and are expected to triple to $25 billion by 2016,” Radovan said.

He also revealed that total number of BPO employees amounted to 525,182 with projections of an additional 500,000 over the next five years, translatingto the need to build close to three million sqm of office space.

Radovan also characterized the Philippine office sector as one with rising lease rates and falling vacancy rates.

He said Manila office rents are the second lowest in the Asia-Pacific region in the first quarter of this year at $20.2 per square foot per year.

“Office lease rates of major business districts continue to improve. Vacancy rates are also falling in all major Metro Manila business districts. There is also sustained office demand for both BPO and traditional offices,” he added.

CBRE Philippines reported that the Metro Manila office market is experiencing a steady rise in lease rates as vacancy rates continue to fall to single-digit levels as of the second quarter of 2011.

Real estate bulls predicting demand to exceed 2007 peak

by Jenniffer B. Austria and Julito G. Rada
[ ] June 30, 2011

THE property sector could grow by 5 and up to 15 percent this year, driven by the increasing demand for office, residential and commercial space, real estate consultant CB Richard Ellis chairman Rick Santos said Wednesday

The office space take-up this year might exceed the record 300,000 units posted in 2007, he said.

“It will be the best year ever for commercial office space leasing,” Santos said, adding the call center industry was expected to grow by 15 percent.

The average office lease rate is now P697 a square meter a month at The Fort, P520 a square meter in Alabang, and P516 a square meter in Quezon City.

Richard Ellis also expects the rental yields in Makati’s luxury residences to increase to 10 to 13 percent this year.

Property giant Ayala Land made similar projections, saying its Alveo Land was expected to generate P1 billion in sales from the newly launched mid-rise residential development in Clark, Pampanga.

Alveo Land division manager Aries Gonzales said the company posted P370 million in one-day sales for its Marquee Residences in Clark. More than 30 percent of the 199-unit project was sold in the first day of pre-selling, he said.

Alveo is building an eight-story building and another 13-story building within a 1.3-hectare gated compound in Clark. It is offering a 53-square meter unit at P4 million to P5 million, a 73-square-meter, two-bedroom unit at P6 million to P7 million, and a 105-square-meter, three-bedroom unit at between P8.5 million and P10 million.

Marquee Residences is Alveo Land’s third project in Pampanga. It follows the three-story shopping Marquee Mall and the 35-hectare Marquee Place subdivision, which is more than 70 percent sold.

Alveo reported having sold 1,200 units in the year to June, which compares with the 685 units it sold in the first half of 2010.

Alveo chief operating officer Robert Lao said Alveo Land would also be launching residential projects in Cebu, Davao and Tagaytay within the second half of the year.

“We are bringing cosmopolitan living to other parts of the country,” he said. With Bloomberg

Andrew Tan acquisition allots P20B for Boracay, Tagaytay projects

[ ] July 1, 2011
Andrew Tan-led Global-Estate Resorts Inc. (GERI) is allotting P20 billion for two major tourism-oriented projects in Boracay and Tagaytay.

Both projects – Boracay Newcoast in Boracay and Twin Lakes near Metro Tagaytay – will feature an integrated, master-planned layout and world-class resort offerings and amenities, the company said.

GERI, formerly Fil-Estate Land Inc. in which Tan bought majority control late last year, owns the single largest piece of land in Boracay spanning 14 percent of the island. The property, which includes an 18-hole championship-grade golf course, will be developed by GERI and other Alliance Global Inc. (Alliance Global) subsidiaries into a large-scale, master-planned project.

The group plans to invest P15 billion in the project. Alliance Global is the holding company of Tan’s listed companies.

GERI is positioning Boracay Newcoast as a "catalyst" for the area’s tourism growth, the company said, adding that it plans to redefine leisure and holiday experience help attract 350,000 more tourist each year.

GERI intends to build four world-class hotels with a total of 1,500 rooms at Boracay Newcoast, tapping three international brands plus Alliance Global’s own to manage the hotels.

In 2010, tourist arrivals in Boracay reached 779,666, up by a fifth from the previous year. Tourism receipts also hit P14 billion last year.

In Metro Tagaytay, GERI will pour P5 billion into the 1,149-hectare community project Twin Lakes, positioned to be a medical and educational tourism destination.

Twin Lakes will be built in phases, with the initial phase overlooking the Taal Lake. It will feature a vineyard and chateau, a hotel and spa, a shopping village, residential villas and condominiums, and a sports and country club, the company said.

Succeeding phases will include a golf course, a diverse set of residential communities, international hotels, plantation estate, botanical gardens, lake-view manor, mountain-inspired lodging and facilities, health and wellness centers, boarding schools and retirement villages complete with modern medical amenities.

Sale of Baguio Convention Center stalled

[ ] June 30, 2011

The state-run Bases Conversion and Development Authority said non-payment by Camp John Hay Development Corp. of rental obligations has stalled the efforts of the Baguio City government to purchase the Baguio Convention Center from the Government Service Insurance System.

BCDA vice president Dean Santiago, said that agreements between the state pension fund and city hall had been finalized in 2003 and 2004.

As stipulated, the funds to buy the P250-million center will come from the city government’s 25 percent share of lease rentals which BCDA is able to actually collect from Camp John Hay, according to Santiago.

He noted further that under the agreement, BCDA would directly remit to the GSIS, the share of Baguio City from actual rental payments of Camp John Hay for the payment of the Baguio Convention Center.

On record, BCDA made a P50 million downpayment to GSIS on Feb. 11, 2004, and another P50 million on Sept. 3, 2008 for the property.

Santiago said Camp John Hay’s failure to pay rent to BCDA has put in jeopardy Baguio City’s chances to acquire the 10,000-square meter property consisting of the convention building and facilities, the lot and an adjoining parking space.

“CJHDevco’s refusal to pay its rental obligations to BCDA is prejudicial to the people of Baguio City,” Santiago said, adding that CJHDevco has P2.4 billion in restructured arrears plus P382 million of unpaid lease due from December 2009 to June 2011.

He said the non-payment of rentals has resulted in the city government’s failure to make the annual payments to GSIS, causing interest charges to balloon to P128 million.

Santiago said total obligations for the Baguio Convention Center property stood at P328 million, consisting of P200 million for the principal and P128 million in interest.

But he said the balance due GSIS was now P218 million after BCDA recently remitted to the GSIS P60 million, waiving interest charges of P50 million.

“BCDA is committed to remit to the GSIS the remaining balance from the actual collections it receives from the CJHDevco until the Baguio Convention Center property is fully paid,” Santiago said.

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