Banks’ real estate exposure rises 6.8%

By Lawrence Agcaoili (The Philippine Star) | Updated February 29, 2016 - 12:00am

The BSP traced the increase to the 7.6 percent rise in real estate loans to P1.2 trillion in end-June last year accounting for 86.6 percent of the real estate exposures of the Philippine banking system. File photo

MANILA, Philippines – The real estate exposure of Philippine banks increased  6.8 percent in the second quarter of last year compared to  the first quarter amid the steady rise in real estate loans, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

Data showed the real estate exposures of universal, commercial, thrift banks, and trust departments reached P1.4 trillion at the end of the second quarter in 2015.

The BSP traced the increase to the 7.6 percent rise in real estate loans to P1.2 trillion in end-June last year accounting for 86.6 percent of the real estate exposures of the Philippine banking system.

On the other hand, investments in real estate securities used to finance real estate activities inched up 1.4 percent to P182.6 billion and accounted for 13.4 percent of the real estate exposures in end-June last year.

Despite the increase, the BSP said the non-performing real estate loan ratio of big banks and small banks improved to 2.3 percent in end-June 2015 from 2.6 percent in end-March last year.

“The non-performing real estate loan ratio has been on a downward trend since end-December 2013,” the BSP said.

The bank regulator said it would continue to monitor the real estate exposures of universal, commercial and thrift banks as part of its broader role of assessing the quality of the banks’ exposures to the different sectors of the economy.

“Maintaining high loan quality is essential to the promotion of financial stability, which is a key policy objective of the BSP,” the central bank added

Initial results of a stress tests conducted by banks validated the assessment made by the BSP that there are no risks from the real estate market.

BSP Deputy Governor Diwa Guinigundo earlier said initial results of the real estate stress tests conducted by banks showed the capital adequacy ratio (CAR) of banks would remain above the central bank requirement, even if 25 percent of their real estate loan portfolio turns sour.

“At this point we don’t see any signs of stress in the real estate sector,” he said.

The bank regulator has tasked banks to submit data on their real estate portfolio to include exposure in socialized housing as well as debt incurred through the issuance of bonds to finance real estate activities.

“We have now a more comprehensive definition of the exposure to real estate. It’s more dependable,” he added.

Based on the new definition of the exposure of banks to real estate, Guinigundo explained that stress tests conducted by big banks revealed their CAR would still be above the 10 percent requirement set by the BSP and the eight percent threshold set under the Bank for International Standards (BIS).

“Even if they factored in a 25 percent souring of the loans on real estate, they are still above the 10 percent regulatory capital that we imposed on the banks,” Guinigundo added.

Aside from the BIS methodology, he revealed the regulator also used the International Monetary Fund (IMF) identification of asset bubbles.

“Those two tests will show that we are far from the so-called danger level,” he added.

The CAR of big banks stood at 15.48 percent on a solo basis and 16.42 percent on a consolidated basis as of end-June last year reflecting their continuous effort to maintain adequate capital buffer against unexpected losses that may arise during times of stress.

The BSP stepped up its watch over the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to the  property industry.

The BSP has set the cap on real estate loans at 20 percent of the bank’s total loan portfolio.

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Makati houses cost over P200m

posted February 27, 2016 at 11:20 pm by

Roderick T. dela Cruz [thestandard.com.ph]

A typical house and lot in Makati City’s premier subdivisions costs more than P200 million, according to a research by online real estate portal Lamudi Philippines.

Lamudi Philippines, in its white paper presented to journalists, says Makati City is the most expensive housing market, both for residential condos and landed houses, based on more than 60,000 property listings on its website.

Rodel Ambas, head of content at Lamudi Philippines, says the average price of houses in Makati stood at P217.3 million as of the first quarter of 2015.  Home prices in Makati actually varied, based on gated communities, starting from P35 million in Magallanes Village and P76 million in San Lorenzo Village to P80 million in Bel-Air, P200 million in Dasmariñas Village, P236.3 million in Urdaneta Village and P382.9 million in Forbes Park.

 

 Lamudi Philippines chief executive Jacqueline van den Ende

(Photo credit to Lamudi Philippines)

Makati City is way ahead of the second most expensive housing market, Muntinlupa City, home to Ayala Alabang Village, where the average home price was P55.8 million.  Taguig City, where McKinley Hills Village is located, ranks third with P34.4 million, followed by Mandaluyong, which is known for Wack-Wack Village with P21.1 million.

Completing the list of cities with highest home prices are Pasig (P19 million), San Juan (17.7 million), Cebu City (15 million), Quezon City (14.6 million), Tagaytay (P13.4 million) and Parañaque (12.2 million).

The prices are based on actual listings at lamudi.com.ph, the top online real estate website used by homebuyers, sellers, developers and brokers.

“These ten Philippine cities now have an average home price of over P10 million,” Ambas says.

He says to buy homes in these cities, a family needs to be earning millions in a year.  He says in Parañaque City, the least costly among the 10 cities, a buyer should be earning P4.8 million a year to afford the monthly mortgage for a P12-million home, using the 2.5 rule. 

He says according to this rule, a homebuyer can afford to mortgage a home that is 2.5 times of his or her annual income.  “If you are making P50,000 a month or P600,000 per year, multiply that by 2.5, the amount of property that you can afford is ….P1.5 million, which is extremely far from the prices in the 10 cities we mention,” he says.

“That rule is something to keep in mind when looking to buy a property in the future,” says Ambas.

The Lamudi white paper also shows that Makati and Taguig are the most expensive condo markets in the Philippines.

As of the first quarter of 2015, Makati’s average condo price was P139,503 ($3,090) per square meter, while Taguig condos had an average asking price of P125,031 per sqm ($2,770).

Ambas says the consolation is that Makati remains a bargain when compared to other key cities in Asia.  Condo price in Hong Kong is around $22,814 per square meter, while properties in Singapore sell for $15,251 per square meter.

Lamudi Philippines co-founder and chief executive Jacqueline van den Ende says the numbers are based on the property listings on the company’s website as of the first quarter of 2015.  Lamudi, which is present in 34 countries, considers the Philippines as one of its top markets, she says.

Lamudi Philippines acquired MyProperty.ph last year to have a dominant position in the online real estate market in the country.   Van den Ende says along with Mexico, the Philippines will receive the bulk of the $31.4-million fund raised by Lamudi Group from investors recently.

“Lamudi Philippines, all around the globe, is the number one focus country for Lamudi.  Why? Because the timing here is just right. Our real estate market is booming.  More importantly, we are ready to move online here,” she says.

Lamudi is a part of the Rocket Internet Group of Germany, the one behind other successful e-commerce ventures in the Philippines such as Lazada, Zalora, FoodPanda and Carmudi.  “The whole shift from offline to online is going very rapidly and that is driving the success for many e-commerce companies...And the Philippines is the number one focus country because it has a lot of potential in e-commerce and online business,” she says.

Van den Ende, a Dutch citizen, says to support the expansion of Lamudi in the Philippines, the company appointed German investment banker Benedict Faber as the chief operating officer.

“In 2016, we want to expand the dominant position of Lamudi and MyProperty, which have a market share of 55 percent of total online real estate market, or almost two to three times bigger than our closest competitor. MyProperty has 150,000 listings while Lamudi has 60,000 listings.  We want to really ensure to get every single property for sale or for rent on to the website, so that we are true to our mission of bringing transparency to the real estate market in the Philippines,” she says.

“Together, we have 1.5 million people searching for property on our sites every month,” says Van den Ende.

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Vista Land expansion shows no signs of slowing

Posted on February 28, 2016 08:26:00 PM

By Krista A. M. Montealegre, Senior Reporter [ businessworld.com ]

 

VISTA LAND & Lifescapes, Inc. (Vista Land) is increasing its footprint to over 100 cities and municipalities this year, although the country’s largest homebuilder is keeping a close eye on the troubles in the Middle East that may possibly affect sales to overseas Filipinos.

 

MANUEL PAOLO A. VILLAR -- BW FILE PHOTO

Vista Land President and Chief Executive Officer Manuel Paolo A. Villar said in an interview last week the developer is “doing more launches” as part of its growth strategy despite the challenges in the real estate industry.

“In bad times and good times, we will be expanding in the provinces. Definitely we’re not going to stop expanding in the provinces this year. We are going to be, from where we are right now, to about 100 cities and municipalities by the end of the year,” Mr. Villar said.

Vista Land, owned by billionaire Manuel B. Villar, Jr. said in a regulatory filing in September it has established presence in 92 cities and municipalities across 35 provinces.

Mr. Villar cited the slight oversupply in the vertical segment of the market and the repatriation of overseas Filipino workers from the Middle East as the major concerns in the industry.

“History points to it not being bad as some people anticipated but you never can tell so its something we should be looking out for,” Mr. Villar said. Vista Land gets bulk or 55%-60% of its sales from overseas Filipinos.

There have been worries the escalating tensions in the Middle East would adversely impact Filipino workers and cause a corresponding drop in remittances.

Money sent home by overseas Filipino workers (OFWs) reached $25.767 billion for the entire 2015, reflecting an increment that breached a downward-revised 4% full-year target and 4.6% more than 2014’s $24.628 billion. A sizeable chunk of remittances came from OFWs based in the United States, Saudi Arabia and the United Arab Emirates.

Should the situation in the Middle East worsen, Mr. Villar said the strengthening US economy may offset its impact on the residential industry.

Vista Land expects its earnings this year to get a boost from the consolidation of Starmalls, Inc. to its books after completing the acquisition of 88.25% of the mall and office developer.

“By the end of 2016, we’re expecting Starmalls to have a very rapid growth. We will have a growth surge in 2016. There will be a significant impact from Starmalls,” Mr. Villar said.

The merger of Vista Land and Starmalls will accelerate the transformation of the former from a purely residential developer into the country’s fourth biggest integrated property developer.

Vista Land grew its nine-month earnings by 18% to P5 billion from P4.25 billion on higher double-digit growth in revenues from its core housing projects. Real estate revenues jumped 13% to P16.7 billion in the January to September period.

Shares in Vista Land were unchanged at P4.40 each.

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Property projects seen to boost usage of MCX

Posted on February 25, 2016 08:46:00 PM

 By Daphne J. Magturo, Reporter

 THE AYALA group’s P2.01-billion Muntinlupa-Cavite Expressway (MCX), which it bagged under a public-private partnership (PPP) auction, is about to hit half of its traffic volume capacity just half a year after it started operations, helped by the aggressive property developments in the area.

 

THE MUNTINLUPA-CAVITE Expressway is one of the latest public-private partnership projects opened to the public. -- MCX FACEBOOK ACCOUNT

“Our first milestone is to exceed the 25,000 [daily traffic volume] so hopefully that will come in the next couple of years,” AC Infrastructure Holdings Corp. President and Chief Executive Officer John Eric T. Francia said in an interview on the sidelines of a recent forum in Makati City.

The four-kilometer toll road, formerly known as the Daang Hari-South Luzon Expressway (SLEx) Connector Road, became operational on July 24 last year. It can accommodate 50,000 motorists everyday.

“The average now is over 20,000. We have not yet reached 25,000 but we’re close,” Mr. Francia said.

“Obviously the development of that area is fast growing, so once people build houses and mixed-use developments -- the real estate developers have been so aggressive in pushing for their projects there -- that will drive traffic volume.”

The toll road will link the city of Muntinlupa and the province of Cavite to Metro Manila and the rest of Southern Luzon.

Ayala Corp.’s real estate arm Ayala Land, Inc. owns properties along the stretch of Alabang Road to Daang Hari, including commercial complex Alabang Town Center as well as residential projects across its various brands.

The Public Works department earlier said the toll road will also provide new access to the National Bilibid Prison property in Muntinlupa City, which the government intends to redevelop into a mixed-use area with commercial, residential, and institutional components.

Public Works Secretary Rogelio L. Singson had said in July last year that the catchment area population of the toll road is three million, specifically in the areas of Imus, Dasmariñas, Bacoor, Muntinlupa, and San Pedro.

The MCX will cut travel time by an average of 45 minutes and decongest traffic in the Cavite, Las Piñas, and Muntinlupa areas.

Aside from MCX, AC Infrastructure also won two other PPP projects: the P64.9-billion Light Rail Transit Line 1 Cavite Extension and P1.72-billion contactless Automatic Fare Collection System for the LRT-1, LRT-2 and the Metro Rail Transit Line 3.

So far, contracts for 12 PPP projects cumulatively worth some P217.4 billion have been awarded since the infrastructure flagship was launched in the third quarter of 2010.