Category Archives: Selling Your Home

Focus: Property sector’s prospects seen boosted by infrastructure drive

July 27, 2016
By Krista Angela M. Montealegre
National Correspondent

THE AGGRESSIVE infrastructure drive of President Rodrigo R. Duterte has boosted the prospects of the property sector, easing concerns of an overheating market and accelerating the development of residential, office, retail and hotel projects in the countryside.

Inheriting a fast-growing economy plagued by gridlocked roads and congested airports, the new administration vowed to ramp up infrastructure spending to account for up to 7% of economic output. This is in line with a broader effort to decentralize the Philippine capital and boost economic activity outside Luzon in order to achieve inclusive growth.

“Additional spending would increase the demand for money. That could ease the liquidity going into the real estate industry and in the process mitigate any possible formation of an asset bubble,” Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Gunigundo said in a mobile phone message last week.

Policy makers have repeatedly downplayed concerns of an overheating property market.

The results of the central bank’s maiden residential real estate price index in June bared a 9.2% housing inflation in the first three months of 2016 from a year ago, indicating a “vibrant” housing industry.

The government’s accelerated infrastructure spending and proposed income tax cuts — which are expected to increase the spending power of consumers — have improved the outlook for the property sector. Brokerages have issued “buy” calls on real estate firms with strong recurring income and exposure to tourism.

“It [government spending on infrastructure] will somehow ease the fears of a property bubble, as we noted excess capacities/build-up can also be seen now in second-tier areas outside of Metro Manila. With improved infrastructure condition, new demand can be generated to absorb these new build-up,” said Claro dG. Cordero, Jr., head of Jones Lang Lasalle’s research, consulting and valuation advisory services.

Rising disposable income due to a robust outsourcing industry and steady remittance inflows from overseas Filipino workers have been fueling consumer spending, driving the rapid expansion of the property market.

A bubble forms as property developers scramble to build more units in a bid to meet a projected rise in demand and is said to “burst” when purchases do not increase as expected, triggering a steep drop in prices.

“What we had was a soft landing; developers have held back on launches. In the next few years, the completed units will come to the market so we may see a more difficult leasing market,” said Julius M. Guevara, head of advisory services at Colliers Philippines.

UNLOCKING VALUE
For property giants Ayala Land, Inc. and Megaworld Corp., the new government’s thrust means townships incorporating residential, office, commercial and hotel components in new sites and enhanced values for their properties in traditional markets.

“When you have more mass transit systems and farm-to-market roads, it unlocks the value of the property. How can you price properties in far-flung areas at a premium when you have no way to get there?” Megaworld Corp. Senior Vice-President Jericho P. Go said.

For most developers, the diversification outside the Philippine capital has been happening for some time now because of the expansion of the business process outsourcing industry, with real estate companies venturing into other key urban centers such as Cebu and Davao and the fringes of Metro Manila such as Pampanga, Cavite and Laguna.

“We always had that impression that these are markets that weren’t served in the past,” Ayala Land Chief Financial Officer Jaime E. Ysmael said.

“But when infrastructure and connectivity improved significantly, we were surprised with the kind of demand they generated. We’re seeing signs of significant demand and economic activity in these new areas.”

Metro Manila’s contribution to Ayala Land’s business is now down to 80% from 90% in 2009 when it kicked off its aggressive diversification. This may go down to as much as 70%, depending on how fast these regions develop, Mr. Ysmael said.

NEW HUBS SPROUTING
In the last five years, land values in Cebu and Davao cities — which have become the centers of activity in the Visayas and Mindanao, respectively — have risen at a compounded annual growth rate of 10%, faster than the 7.5% expansion in Metro Manila.

Mall developers SM Prime Holdings, Inc. and Filinvest Land, Inc. have joined Ayala Land and Megaworld in moving to non-traditional locations, building more than 1 million square meters of retail space in areas like Cebu, Davao, Cagayan de Oro, Dagupan, Cavite, Rizal, Bacolod, Laguna, Iloilo, Tacloban, Ilocos Norte and Naga, Mr. Cordero said.

Likewise, DoubleDragon Properties Corp., Robinsons Land Corp. and Vista Land & Lifescapes, Inc. are pioneering the development of community malls in the countryside, he added.

Even foreign-branded hotels are setting their sights beyond Metro Manila, with Hilton Hotels & Resorts opening Hilton Clark Sunvalley Resort in 2017, Starwood Hotels and Resorts launching Sheraton Mactan in 2019 and Dusit International rolling out Dusit Thani Davao in 2018 and Dusit Princess Hotel Cebu in 2019, JLL Country Head Lindsay Orr said.

So far, the President and his economic team have been saying all the right things, but the trick is getting all plans off the ground as quickly as possible.

“There is a gestation period for these [infrastructure] projects to take off so the government must act fast, make an early decision — be it the airport strategy, the Angat [Dam] alternative or an energy supply chain — and build the momentum from the previous administration’s work,” AC Energy Holdings, Inc. President and Chief Executive Officer John Eric T. Francia said.

Panguil Bay Bridge project to be funded by Export-Import Bank of Korea-EDCF

Update.Ph

The national budget will fund PHP586 million of the total PHP4.9 billion cost for the construction of the pioneering Panguil Bay Bridge project in northern Mindanao, the Department of Budget and Management (DBM) said during the ceremonial signing today of the loan agreement between the Philippine Government and the Export-Import Bank of Korea-Economic Development Cooperation Fund (KEXIM-EDCF).

Considered a major infrastructure development in Northern Mindanao, the Panguil Bay Bridge will connect Tangub City, Misamis Occidental and Tubod City, Lanao del Norte and reduce travel time between Tangub and Tubod from the usual 2.5 hours to 7 minutes.

It will also significantly improve the travel time from Cagayan de Oro and Iligan to the cities of Tangub, Ozamiz, Oroquieta, Dipolog, and Dapitan in Zamboanga de Norte.

PHP4.2 billion will be funded through loan proceeds, while the remaining PHP586 million will be funded by the Philippine government.

DBM has issued the project’s Forward Obligational Authority (FOA), which gives an overview of the annual investment cost of the Panguil Bay Bridge project, particularly on KEXIM-EDCF and the Philippine government.

For this year, PHP44 million has been included in the budget of the Department of Public Works and Highways (DPWH) to cover the cost of land acquisition, administrative support, and payment of government taxes.

For fiscal years 2017 to 2019, the budgetary requirements shall be accommodated within the budget ceiling of the DPWH.

Discussions on the Panguil Bay Bridge project started in 2014 through the Investment Coordination Committee (ICC) and NEDA board. Original funding was pegged at PHP5 billion.

Upon the review of DPWH, however, the costs of direct construction, consultancy and physical contingency was decreased, which brought down the cost to PHP4.9 billion.

Asean, Mindanao sea links pushed

The National Economic and Development Authority (Neda) is pushing for the development of sea linkages between ports in Mindanao and three neighboring Asean countries to boost regional trade.

In a speech at the Second Mindanao Shipping Conference last Wednesday, Socioeconomic Planning Secretary Emmanuel F. Esguerra said that since Mindanao played a critical role in the Asean Economic Community, the following commercial routes should be established or improved: Davao and General Santos to Bitung and Manado in Indonesia; Tawi-Tawi and Tarakan, Indonesia; Zamboanga and Muara in Brunei; and Zamboanga and Sandakan in Malaysia.

Esguerra, who is also Neda Director General, said there were still concerns on Mindanao’s sea transport sector that needed to be addressed.

Among the issues included the seaports’ limited capacity in terms of berthing structures, transit/cargo shed areas for non-containerized cargo, container yards for containerized cargo and passenger terminal buildings.

Esguerra said there was also a need to slash local cargo rates since prevailing rates in Mindanao are more expensive than foreign cargo rates.

The Neda chief said the government was ramping up infrastructure development to support economic growth across the country.

“The growth-enhanced fiscal space has allowed major investments in infrastructure, with spending on public infrastructure more than tripling. The bulk of investments were slated for transportation, covering 43 percent of total infrastructure investments from 2013 to 2016 and beyond, which was estimated to reach more than P7 trillion. This should be complemented by private investments in public infrastructure amounting to about P1.5 trillion based on the status of PPP (public-private partnership) projects as of April,” Esguerra said.

The Neda chief was also bullish about the planned implementation of the Three-Year Rolling Infrastructure Program (TRIP) starting July.

The Trip for the period 2017 to 2019 was aimed at “[meeting] investment targets for public infrastructure” while “[promoting] the optimal use of public resources for infrastructure development by assuring fund allocation for well-developed and readily-implementable projects,” Neda earlier said.

“The multiyear rolling program for infrastructure would assure us that once an infrastructure program has been planned, and it is rolled out, it is going to continue to receive funding from the government. This was one of our efforts to synchronize and tighten the link between the programming and budgeting functions of the government for infrastructure projects and programs,” Esguerra had said.

According to the Department of Budget and Management, “the policy of dispersing the investment/infrastructure spending toward growth regions in the Visayas and Mindanao (such as Central Visayas and Northern Mindanao) was pursued [under the Trip] to provide the physical infrastructure support for the promotion and development of business and industries.” Ben O. de Vera, Philippine Daily Inquirer

Wao-Maguing road now open to traffic, Lanao sur guv sees boost in agri trade

LANAO del Sur – Governor Mamintal “Bombit” Alonto Adiong, Jr. of Lanao del Sur officially traversed the now passable Wao-Maguing road, also known as “The Dream Road”, in the morning of April 4, 2016 and seen to boost the agricultural sector and trade between Bukidnon and Lanao del Sur.

It took him and his convoy two and half hours to reach the municipalities of Amai Manabilang and Wao from Marawi City using the said road. In the past, residents of mainland Lanao del Sur would travel eight hours to go to the towns of Wao and Amai Manabilang of the same province and had to first pass through Lanao del Norte, Iligan City, Misamis Oriental, Cagayan de Oro and Bukidnon.

According to Engr. Mikunug Macabantog of DPWH Region 10, 11.3 kilometers of the 75-kilometer national road is still being concreted and shall be completed once the funds allotted for it from the 2016 budget is fully released.

Macabantog also said that DPWH has already requested for the inclusion of additional funds in the amount of P255 million in the 2017 national budget to fully concretize the remaining 6.5 km unpaved portion of the Dream Road and another P152 million for the construction of five permanent bridges necessary to connect the road.

Plans for the Wao-Maguing road, now jointly constructed by Fiat Construction and CDH Construction, started in the later part of the 1950s when Senator Ahmad Domocao Alonto, Sr. lobbied for the approval of the allotment of funds for the said project when he was a member of the Senate Committee on Public Works and Highways. Because Alonto was not re-elected, the budget was diverted to another province in Mindanao. When his son-in-law, Congressman Mamintal Adiong, Jr., was elected into office, Alonto urged Adiong to continue the plans for the Dream Road.

Adiong died during his second term as governor and the continuation of the Wao-Maguing Road was shelved. His sons, Bombit and Ansaruddin, continued the plan to construct the project when they got elected as governor and congressman respectively.

Governor Bombit Adiong said he was overjoyed seeing the Dream Road becoming a reality in his administration because of the history behind the said project which involved his family. He added that the Wao-Maguing Road shall make it easier for farmers of Bukidnon and Lanao del Sur to sell cheaper fresh agricultural crops to one another thereby enhancing the economy and livelihood opportunities in his province. He also added that monitoring the implementation of his programs in Wao and Amai Manabilang towns would be easier.

Congressman Ansaruddin Adiong said he shall continue doing everything he can for the Dream Road to be fully concrete by 2017 should he win the Lanao del Sur first district congressional seat once more on election day this year.

Mindanao Goldstar Daily

Added value pushed in Northern Mindanao research congress

BusinessWorld Online
Mark D. Francisco
April 1, 2016

Small-scale farmers in Northern Mindanao continue to expand into value-added products as they recognize the need to diversify income sources.

The farmers and agriculture officers of 16 local government units (LGUs) in the region took part in a two-day congress this week on Community-based Participatory Action Research (CPAR).

Under CPAR, crops and technology packages for making value-added products are introduced to farming communities by the Department of Agriculture (DA).

The program was introduced to the farmers in 2005.

At the congress that opened on March 28, the LGUs exhibited their existing processed products from rice, corn, soybean, different potato varieties, and vegetables.

Their goods include food crisps, native cakes, milk, and soap.

There was also a demonstration of potato-based farming systems and an introduction of alternative crop varieties.

DA — Region 10 Director Lealyn A. Ramos said she was elated to see how the communities have developed their own value-added food and non-food products.

“We are backing our farmers up through trainings and support in production, post-harvest, technologies, [and] market linkages, among others,” Ms. Ramos said.

The outstanding farmers groups, agriculture workers, and LGUs were given recognition during the event.

JOBS DRYING UP
Employment in Northern Mindanao’s agriculture sector, which makes up about 23% of the regional economy, has been declining due to the dry weather brought about by El Niño, according to the National Economic and Development Authority in Region 10 (NEDA-10).

In NEDA-10’s latest quarterly report released this week, the number of agriculture workers dropped to 725,000 as of October 2015, fewer by 13% than the year before.

The agriculture sector covers agriculture, hunting, forestry and fishing.

Cecilio Y. Clarete, NEDA-10 chief economic development specialist, said the decline could be attributed to the erratic weather phenomenon.

The country’s weather bureau started logging a significant sea surface temperature anomaly in April 2014, and the prevailing El Ninõ is expected to last until the middle of this year.