Real Estate and Housing Industry

[3cr]

The "new economy" in our midst
Posted by Dave Llorito
Philippines Without Borders
http://davidllorito.blogspot.com/200...our-midst.html

BEST new BPO locator of the year: Dell Philippines. Best midsized BPO company of the year: Leverage Systems Technologies. Most innovative BPO of the year: Transprocure Corp. Fastest-growing BPO company of the year: Teletech. Best BPO employer of the year: Convergys Philippines. And the BPO company of the year: Accenture.

People might be wondering if the brave new world of the “new economy,” a buzzword that has been associated with the information revolution, has reached our shores. We say “yes,” and the companies mentioned above are among the best in our midst, at least for the year 2007.

On Thursday evening the Canadian Chamber of Commerce—in partnership with the Business Processing Association Philippines (BPAP) and other organizations, including this paper—gave out several awards in recognition of their contributions to the economy.

The awards are rightly helping the public become more aware of their contributions because right now this segment of the Philippine economy is giving lots of excitement and promise to young entrepreneurs and workers. It has even started to create a positive impact on other sectors of the economy, including real estate, wholesale and retail, and even food and beverage manufacturing.

Nowhere is its impact more visible than in the property sector. Following the Asian financial crisis, office vacancy rates in the country’s urban centers like Makati and Ortigas went as high as 50 percent. As the “new economy” crept in, office vacancies went down so fast that even property developers were caught nearly napping.

These days, vacancies in prime and grade A office—those really nice and carefully designed office spaces with accreditation from the Philippine Economic Zone Authority—are all of just over 1 percent. That explains the frenetic construction in Makati, as well as in Fort Bonifacio. It’s likely that construction activities will really move faster this year.

If the predictions of its drumbeaters prove true, we are going to see this segment of the economy employing close to a million workers and generating more than $12 billion worth of services exports. At that size, the industry, property consultants say, would require close to 3-million square meters of office spaces. Hence, developers have to rush because if they fail to supply the spaces required by the BPO, the industry might suffer office-space shortages.

Right now, existing supply of offices plus those in the pipeline until 2010 would total 1.6-million square meters. That would mean a shortage of about 1.4-million square meters. It’s a kind of problem this country should be happy to have.

A million workers for the industry might seem too ambitious, but if one looks at the profile of these industries, there are reasons to be optimistic. They are highly labor-intensive. Teletech, for instance, has more than 10,000 employees. Convergys has 11,000. Many others are employing close to these numbers, and the list of companies keeps growing.

We mentioned the winning companies above to highlight how far the Philippines has gone in terms of developing its capabilities in these emerging knowledge-driven industries. The winners came from varied sectors, including software development, procurement-transaction processing, customer care, global management consulting, legal support and publishing, among many other activities. The judges, we have learned, really had a hard time determining the winners, an indication that what we have here in the Philippines are highly competitive and dynamic global players.

It should not be a surprise because way back in 2000, when the Department of Trade and Industry started plotting out measures to attract call centers, there was practically no BPO to speak of, except maybe some animation companies that have been here in the Philippine since the ’80s. Now, estimates from the BPAP indicate that the industry employs about 250,000 people and earns more than $3 billion a year. In 2007, assuming the same frenetic growth it has achieved in the last five years, the industry might yet generate US$4.9 billion.

The term “new economy” emerged in the ’90s as a way to describe the economies of advanced countries that underwent transformation from being industry-led to services-led, driven by information technology. Enthusiasts then thought that with extensive use of information technology, economies would enjoy steady growth and low unemployment. Others came even to declare that the business cycles of boom and bust had ended and that economies, having found Shangri-la, will prosper forever.

That proved illusory with the dot.com bubble in 1995-2000 that saw many technology stocks crashing down to terra firma when it burst. The global recession that followed discredited the “new-economy” prophets. Nevertheless, the term new economy continues to gain currency as global companies took to heart its doctrine that companies should “focus on their core competencies” and outsource the rest through the use of information technology.

In the new economy, profits are supposed to come from company intangibles like brands, intellectual properties, technical capabilities and reputation. Routine functions like back-office operations, manufacturing, and customer care could be outsourced elsewhere, preferably in low-cost locations in the developing countries.

That’s how we came to have all these outsourcing companies in our midst. And their presence is expanding rapidly. It’s new metamorphosis is the knowledge-process outsourcing (KPO) where local MBAs, engineers, and economists perform analytics like risk analysis for global corporations and organizations. And if we continue to play our cards well, we might yet end up duplicating India’s success in this business.

Playing our cards right means that the country should maintain its competitiveness in this sector. There’s no doubt that the private sector is mobilizing their resources to meet the challenge. The Ayalas, for instance, are investing billions putting up the buildings needed by the BPO. The conglomerate is also investing heavily in the industry, especially in KPO. There are indications that Rockwell Land of the Lopezes is also moving in the same direction.

The only kinks so far are in the public sector, where efforts to restore the importance of English in the classrooms through legislation has not been moving. We still haven’t heard of any major initiative to reform and upgrade the country’s education system. We have yet to see how the government is improving the country’s capability in the sciences and mathematics. Malacañang, as well as our educators in the private sector, therefore, should look at these issues as soon as possible, so we could sustain the momentum in embracing the new economy.

[meerc]

Philippines' property sector is red-hot

The talk at a recent dinner party in Hong Kong hosted by one of Europe's largest banks for a group of wealthy clients was centred - surprisingly - on the Philippine property sector.

I can't remember the last time investors like this have waxed so lyrically about the Philippines,' said a banker, who asked not to be named. Booming demand for office space and condominiums has resulted because of a rise in outsourcing to the Philippines, as well as the purchasing power of the country's more affluent overseas workers.

The upsurge, say developers and market analysts, shows no signs of flagging. The sector's upbeat prospects are vividly reflected in the share prices of property companies, which have risen by an average of 17 per cent so far this year, nearly double the advance of the Philippine Stock Exchange's main index.

'The property market is now very much on the radar screen compared to four or five years ago, when nobody even considered this place,' said Mr Lindsay Orr, country head of real-estate services group Jones Lang LaSalle.

The expansion of foreign companies' 'offshoring' of business functions such as call centres and back-office work to the Philippines has been breathtaking, eclipsed only by India.

This has created huge demand for large office space in prime areas of Manila over the past years, which developers are scrambling to meet. The chances of finding rentable floor area for a sizeable outsourcing centre in the business district of Makati are practically zero these days.

Call centres typically need at least 32,000 sq ft of space. New rents in Makati rose 15 to 20 per cent last year. 'They'll probably do the same in 2007,' said Mr Orr. In the district's top addresses, landlords are raising office rents by as much as 30 per cent for new tenants, with some hitting 1,000 pesos (S$ 32) per sq metre.

Thought that is far lower than in most Asian financial centres, it is sky-high by local standards, Still, despite a large pool of educated English speakers, rents and salaries here will need to stay competitive as other countries ramp up their outsourcing sectors. With no large office buildings opening in Makati this year, new operations are looking for space in other parts of the capital, especially nearby Fort Bonifacio, a former military camp, as well as cheaper regional centres.

The second city of Cebu is now fast establishing itself as an outsourcing centre, as are smaller cities like Iloilo and the pleasant university town of Dumaguete, all in the central Philippines. A decade ago, the Asian financial crisis put paid to the last major rally in the property market here.

But this time around, said the Philippine Central Bank's Governor Amando Tetangco, the market is being dri- ven by real demand: 'It's different from 1997, when the rise in property prices was due largely to speculators.'

When Net Group, a property developer focused on projects for outsourced operations, completed its 22-floor Net Square building in Fort Bonifacio last July, it reportedly signed up tenants for the entire leasable space of 194,000 sq ft six months before it was finished. Blue-chip developer Ayala Land has managed to pre-lease over half of its 506,000 sq ft complex in Makati before the ground was broken on the project. The US$ 64 million Dela Rosa E-Services Building is set to open in late 2008.

Going by current estimates, future demand for leasable space for outsourced operations as well as so-called build-to-suit deals for specific clients will be mighty. The Business Processing Association of the Philippines reckons that by the end of the decade, 950,000 people will be employed in outsourced operations, nearly a four-fold rise on the current level.

'We're getting around six to eight visits a week from mostly American companies sizing up whether to outsource to here or to India,' said association executive director Mitch Locsin. 'About half are choosing the Philippines.'

Based on the association's projections, analysts reckon that by 2010, an additional 26 million sq ft of office space will be needed. That represents roughly the entire office stock in Makati today. But only around three million sq ft is currently under construction across the Philippines. Even so, mega projects are coming off the drawing board.

Ayala Land wants to replicate India's campus-type IT developments in the Philippines, starting with a 37ha site in Manila's Quezon City. Early next year, it plans to break ground on a US$ 191 million technology park with shops and residences built around 10 office complexes. Mid-priced residential condominiums, with units typically costing S$ 80,000 to S$ 160,000, are the property market's other main driver.

The demand here is being spurred by Filipino professionals working overseas and, lately, enticingly low mortgage rates. Some eight million Filipinos - a tenth of the population - live and work overseas. Many are in low-paying jobs, but an increasingly large number are nurses, engineers and other professionals.

That trend is being closely watched by property developers. As long as the remittances of overseas workers keep growing, there should be no let-up in demand, said Mr Victor Asuncion, research director of property consultants CB Richard Ellis Philippines.

The Philippine Central Bank expects overseas workers to wire home a record US billion (S$ 22 billion) this year. A sizeable chunk of that is expected to be spent on real estate. Remittances are also keeping shop tills ringing at home, and that is driving the construction of new malls.

With an eye to buyers from overseas, developer Megaworld now has 40 sales offices in countries with sizeable Filipino diasporas. The company, which pioneered the mid-end condominium market in the 1990s, expects 40 per cent of sales for middle-income housing to soon come from overseas earners.

Its biggest project is a 9,000-unit, 20-tower complex called Manhattan Gardens, on a 5ha site in Quezon City. The first tower, set for completion in late 2011, has been 90 per cent pre-sold. The surge in demand from overseas workers is also partly demographic.

'Many professionals who went overseas in the 1970s and 1980s are retiring and buying pro- perty in the Philippines as second homes and investments,' said Ayala Land spokesman Paulo Campos. Filipinos are also taking advantage of local mortgage deals, which have never been better. Some banks are now offering 25-year mortgages at fixed annual rates of 11 per cent.

The boom is clearly reflected in the earnings and share prices of the country's five major developers: Ayala Land, Fil-Estate Land, Megaworld, Robinsons Land and the SM Group of tycoon Henry Sy.

Megaworld is pencilling in a 40 per cent increase in net profit this year after earning 2.04 billion pesos last year. Condominiums are the only property that foreigners may own in the Philippines, though ownership restrictions may be relaxed.

President Gloria Arroyo, her economic managers and many in the business community favour loosening a number of restrictions to attract more foreign investment.

Reference:Straight Times

[j.r.]

wow! heady times indeed! it's good 2 know even non-Filipinos r noticing the trend!

[-TC-]

You may go to http://groups.google.com/group/myrealestateph to download the full pdf file there or right click and save the link provided below.


COLLIERS INTERNATIONAL QUARTERLY RESEARCH REPORT PHILIPPINES

Philippine Property Market Overview
Market Conditions at July 2007
Market Forecast to July 2008

EXECUTIVE SUMMARY

Property Indicators: Reflating Land Values

• We are now reflating land values due to 1) increased pricing power of developers in both office and residential segments, 2) impressive take-up in residential pre-sales market and 3) pre-lease take-up in the office market considering that Manila has not historically been a strong pre-lease market.

• At the close of June, developable land in the CBD is estimated at an average of P235,000 per sq.m. – up by nearly 6% QoQ. In the alternative business district of Ortigas, our estimates point to an average land value of P114,750 per sq.m. Reportedly, a one hectare property in Ortigas was sold during the quarter for approximately P100,000 per square meter.

• For the period of January to March 2007, licenses approved by the HLURB slightly fell by 15% YoY to 75,764 units as against 89,113 units in the same period last year.

Office: 2007 Rents Up 20%

• The stock of office accommodation in the CBD will remain stagnant in the course of 2007 at 2.647 million square meters. A slight relief is expected in early 2008 with the completion of less than 10,000 square meters for the Ayala Center Glorietta 5 Building.

• At the close of June, CBD-wide vacancy fell to 3.4% from the previous quarter’s 3.7%. We expect the vacancy rate to further ease to less than 3% by the end of 2007. For the first six months of the year, the estimated absorption of office space in the Makati CBD was recorded at 12,281 square meters. Half year absorption represents 45% of our full year forecast of 27,281 square meters.

• Reflecting a tight supply market, the Premium Grade segment escalated by nearly 20% in the first six months of the year to an average of P1,018 per sq.m. per month. Rental levels are now at the peak 1997 levels. Expectations are for rents to further increase by 5% to 10%in the course of 2007 to an average of P1,062 per sq.m. per month.

• Premium Grade office capital values are up by nearly 9% in the first half of 2007 to an average of P105,000 per sq m. In the remainder of the year, our capital value forecast is P115,800 per sq.m.

Residential: Easing Rent Escalation in Some Locations

• For the first six months of 2007, net take-up for residential condominiums in the Makati CBD was estimated at 580 units. We expect full year take-up at 697 units – down by 5% YoY from 737 units in 2006 due to the lower quantum of residential units completing this year.

• Residential vacancy in the Makati CBD eased to 7.1% from the previous quarter’s 9.3%. In the course of 2007, expectations are for vacancies to further ease to 6% due to the easing supply pressure as Columns Tower 2 is the only project slated for completion during the year.

• Rents for luxury 3-BR units in the Makati CBD escalated by nearly 10% in the first six months of 2007 to an average of P519 per sq.m. per month or P135,000 per unit. Rents are just 5% off from the 1997 peak of P538 per sq.m. per month.

• Rockwell rents escalated by 2.3% to an average of P622 per sq.m. per month or P140,000 per month for a 3BR unit. However, it appears that rents are starting to cool down after the nearly 10% increase in rents throughout 2006.

• Fort Bonifacio residential rents have expanded by a meager 1.1% to an average of P559 per sq.m. per month or P162,000 per unit. Market expectation that the location would be flooded with an influx of new supply starting this year is starting to have a cooling effect on rents.

[-TC-]

http://showbizandstyle.inquirer.net/...ticle_id=76520

OFWs at the forefront of RP’s complete real estate event
By Charles E. Buban
Inquirer
07/14/2007

MANILA, Philippines -- She considers this event unprecedented and so far, the most challenging task she has helped organize.

Indeed, for Rosemarie Basa, the upcoming Philippine Real Estate Festival 2007 -- of which she chairs -- promises to be not just a venue where the vibrancy of the country’s real estate industry will be showcased but also a celebration of restoration of the market’s confidence.

“This four-day event happening from July 26 to 29 at the World Trade Center in Pasay City is something to look forward to. I consider this a landmark event since we were able to gather all the major stakeholders in both government and private sectors,” she said.

Basa added that hundreds of exhibitors have already confirmed and will be holding or participating in seminars on real estate, financing, career development, marketing, strategic planning and business opportunities scheduled during the event.

“The PREF 2007 also included in its program the staging of the 1st Miss Philippine Real Estate beauty pageant, the 14th anniversary celebration of Citizen Crime Watch/PNP Day, the 1st BizNews Asia Real Estate Who’s Who (BREW) Awards Night, the Fiesta Chinoy Day, as well as the 1st Kasaysayan ng Bahay (History of the House) Pilipino design competition,” Basa informed.

Timely

Basa believes the holding of the PREF 2007 is very timely considering that the country’s economic indicators are now at an all-time high.

“An extensive analysis of these indicators could well lead into a concrete picture of the role the real estate industry is currently playing to reach this remarkable economic sustainability and development that the country is enjoying right now,” she explained.

Basa shared that a recent data from the National Statistical Coordination Board revealed that the property sector had recorded the fastest growth rate among various monitored industries in recent months.

“In the fourth quarter of 2006, for example, gross revenues of the real estate sector grew by 40 percent compared to the same period in the previous year, which marks the 15th consecutive quarter of double-digit growth for the sector since 2003,” she reported.

OFW remittances

Basa attributed the industry’s strong performance to overseas Filipino workers (OFW) remittances -- estimated at $14 billion (about P643 billion) this year -- wherein a significant percentage will go to buying properties or be spent on home improvement,” she said.

This is why PREF 2007, Basa informed, has included holding free seminars on a wide array of topics on practical investments -- from managing on a tight budget to detecting fake land titles.

“We want to ensure the security of their investments, so we have invited all the national organizations and their members who are not only legitimate industry players but have the capability to offer their homebuyers the best package. On top of that, we will offer free international phone calls to families of OFWs here if they want to coordinate with their loved ones abroad on the prospect of buying properties here,” Basa said, adding that the different embassies and government agencies will be at the venue to entertain queries.

Basa said this is the reason a huge number of developers, contractors and realty-related service providers have already signed up for the event.

“We have reached out to several national organizations to join this event and they did after realizing that the PREF 2007 is not just a project of one group or individual. We also got confirmations from several key government officials as well as business leaders who will be sharing their expertise.

Indeed, this is one event that will gather all the groups and individuals as well as honor them for being responsible to the this enduring success that the Philippine real estate industry is reaping nowadays,” she said.

[jonno]

With the country on the verge of a property boom; let's be proactive and ensure that nothing like in 1997-98 would ever happen again. HLURB should be given more funding, power, teeth to ensure property buyers/investors are protected. Rules, rights, regulations of buyers, developers should be posted on HLURB website (currently, HLURB want you to "buy" their books for more info). I still know a lot of foreigners/balikbayans who wanted to invest in the property market here in the Philippines but unfortunately has no confidence on the "safety" of buying properties here. Many of them have checked the HLURB website but have found no relevant info that would ease their apprehensions. For example, the list of developers with License to Sell on HLURB website is updated only yearly.

Also, why don't the government set a compulsory "must know" information that real estate companies should include in their property consultants training?? We can't just have people selling products worth millions of pesos with them not having enough information about rules/ regulations/rights and other relevant stuff that concerns buyers/investors and property developers.

[pushstars]

Is HLURB the regulatory body for this? I think government should provide a mechanism in where consumers and developers are protected from risks. I think they should focus on to avoid projects not being completed and consumers being protected from this.

[jonno]

Exactly right. And that's exactly the point man, even us are not even sure who's in charge of which. What's more for foreigners who wants to invest in properties here? How can they know it's a legit project? As far as I know, it's the HLURB that is in charge of issuing Licenses to Sell for developers. If you log on to their site however, they only update these lists once a year as if upgrading a website would cost millions of dollars. This would of course give room for scam developers to go on with their fraud dragging along with them legit developers because of the buyers distrust.

[allan_dude]

Originally Posted by dvbaicrviser

Dubai World focuses on Philippines

Staff Report (Gulf News)
Published: July 14, 2007, 23:31

Dubai: Dubai World, the holding company for Nakheel, DP World and several other Dubai entities, is looking for potential projects in the Philippines.

Dubai World chairman Sultan Ahmad Bin Sulayem held talks with Philippines President Gloria Macapagal Arroyo on Friday to explore investment opportunities.

The talks covered Dubai World's interest in exploring investment in the Philippines in areas of ports, free trade zones, property development and the hospitality sector, according to a company statement.

The visit was arranged by the governor of Cebu Province, Gwendolyn Garcia, following her visit to Dubai in June, when she met senior Dubai World executives.

"Dubai World sees immense potential for growth in this country and we will actively explore the investment opportunities that are emerging here. The Philippines market will be considered an important part of our growth strategy for Asia," Bin Sulayem said in Manila.

Bin Sulayem was accompanied by UAE Ambassador to the Philippines Mohammad Ibrahim Al Juwaid, DP World chief executive officer Mohammad Sharaf and other officials.

---

Dubai World eyes Philippines projects
by Safura Rahimi on Sunday, 15 July 2007

Dubai-based holding company Dubai World is looking at investment opportunities in the Philippines after a recent visit to the South Asian nation.

Talks between Dubai World chairman HE Sultan Ahmed Bin Sulayem and president of the Philippines, HE Gloria Macapagal Arroyo, covered the Dubai company's interest potential projects in the Philippines.

The company expressed interest in exploring infrastructure development programmes and investment in areas of ports, free zones, property development and the hospitality sector.

"Dubai World sees immense potential for growth in this country and we will actively explore the investment opportunities that are emerging here. The Philippines market will be considered an important part of our growth strategy for Asia," HE Sultan Ahmed Bin Sulayem said.

"We are very excited about the prospects of our visit to the Philippines, especially to Cebu. We want to do something in this beautiful island, and strengthen the bonds between the UAE and the Philippines. During our talks we identified several potential areas for investment and we will be studying them in depth to develop viable investment options," he added.

The government-owned company has been planning for major investments in Asia to increase its already extensive presence in the region.

The firm said Thursday it is looking to tap into the rapitdly growing economies of China and India by purchasing or expansding port facilities in the two booming nations.

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Dubai World seeks to invest in Philippine market
MENAFN - 15/07/2007

(MENAFN) The Chairman of Dubai World, the holding company which owns Nakheel, DP World and several other Dubai entities, said that the company is looking for potential projects in the Philippines, Gulf News reported.

Dubai World chairman, who held talks with Philippines President, said that the company is interested in exploring investment in the Philippines in areas of ports, free trade zones, property development and the hospitality sector.

He added that Dubai World sees immense potential for growth in the South East Asian country and will actively explore the investment opportunities that are emerging there.

---

Sultan Bin Sulayem Meets President Arroyo of the Philippines (press release)

The President of the Philippines, HE Gloria Macapagal Arroyo, received the Chairman of Dubai World, HE Sultan Ahmed Bin Sulayem, at her palace and expressed her support for any investment opportunities that the Dubai-based holding company could create in her country.

The talks covered Dubai World's interest in exploring investment in the Philippines in areas of Ports, Free Zones, property development and the hospitality sector.

The visit was arranged by the Governor of Cebu Province, Gwendolyn Garcia, following her visit to Dubai in June, when she discussed investment opportunities with senior Dubai World Executives.

Mr Bin Sulayem, who led a high-level delegation on the courtesy visit to the Malacanang Palace on Friday (July 13), said:

“We had a very successful meeting with Her Excellency, President Gloria Arroyo and we welcome the support she has promised to Dubai World’s involvement in infrastructure development programs in the Philippines. Dubai World sees immense potential for growth in this country and we will actively explore the investment opportunities that are emerging here. The Philippines market will be considered an important part of our growth strategy for Asia.”

Mr Bin Sulayem was accompanied on the palace visit by the UAE’s Ambassador to the Philippines, Mohammed Ibrahim Al Juwaid, Mohammed Sharaf, CEO, DP World, Peter Wong, DP World’s Asia Pacific Director, and Suhail Al Banna, Executive Vice President of DP World’s Asian Terminals.

Following meeting with the President in Manila, the Dubai World Chairman and other senior executives of DP World traveled to Cebu, where they attended a series of official functions.

Their discussions with Governor Garcia and her aides focused on building business relationships between the two sides.

Mr Bin Sulayem said:

“We are very excited about the prospects of our visit to the Philippines, especially to Cebu. We want to do something in this beautiful island, and strengthen the bonds between the UAE and the Philippines. During our talks we identified several potential areas for investment and we will be studying them in depth to develop viable investment options.”

During his visit Mr Bin Sulayem also addressed a business gathering organized by the Cebu Chamber of Commerce and Industry

[Sinjin P.]

Real estate industry fears ‘consumer finance crisis’
By Ehda Dago-oc
Monday, July 16, 2007

While dollar earning Filipinos have caused the dynamic economy in the Philippines, the continued strengthening of the peso to the US dollar may cause a “consumer finance crisis” especially for real estate and retail.

In an economic briefing organized by China Trust (Philippines) Commercial Bank Corporation, Rolando Avante, the bank’s executive vice president and treasurer, warned that a growing concern on the declining of consumer demand, as OFWs are now keeping their money, instead of spending, due to the lesser value of their dollars.

Avante warned that in the middle-range real estate industry, wherein growth is fueled by the OFW market, a decline of demand in this particular segment is seen as dollar dominated income of Filipinos working abroad is now getting smaller, while they (OFWs) don’t get increases in the salaries.

Significantly, he said amortization of the real estate products does not change, and value of their income has declined, “it is worrisome, because OFW don’t get increases,” he warned.

Economic observers have seen a “red light” in the consumer demand for the Philippines, while the Philippine peso is seen to take stronger hold against the greenback.

He hopes that small and medium real estate developers have already taken their preparatory measures, in case consumer shock will happen.

For bigger developers on the other hand, he said these companies have already put in place preparatory shields if ever OFW market will take a slower movement.

The Philippine peso had already appreciated by 20 percent from P56 last year up to P45 levels these days. He said there is possibility that peso will continue to climb breaking P44 if the entry of dollar will not be well defended.

Aside from the growing entry of dollar remittances to the Philippines, there are also foreign bond investors, like the Japanese who are taking advantage of the strong peso, selling their yen to dollar dominated bonds, and invest it in the Philippines. This has pushed further the dollar reserves in the country.

Avante reported that in his own bank, they have three to four real estate developer clients, which have developments in middle-range housing projects, from P500,000 to P1 million, expressed observation of slower consumer demand from the OFW market.

The Philippine real estate industry, which has been affected heavily in the 1997 regional economic crisis, has experienced a rebound in the recent years, primarily because of the dollar-earning Filipino market.

He reiterated that the strong peso, although an indication of a good economic landscape in the Philippines in the macro level, could also triggered a slight fall down in the consumer demand—in the dollar-earning consumer based.

Generally, he said the Philippines is slowly building a good impression in the outside investors, because it has successfully taken out the “political risk” factor, meaning the environment much better, although it’s not yet the “ideal”.

[tigidig14]

sa taas ng upa madaming magiging squatter sa pnas

[-TC-]

ABCs of real estate investing

Philippine Star
Friday, July 20, 2007

A series of lectures on the different how to’s of Investing in Real Estate will be conducted by Urban Institute of Real Estate for prospective investors, developers, landowners and realty professionals who are expected to gain sufficient insights and confidence to finally implement proposed real estate investments. As real estate is now showing strong recovery, participants will learn the ABC’s of real estate principles and avoid costly mistakes that were normally suffered by inexperienced investors, and guiding them to a pleasant and successful real estate business.

Numerous issues concerning real estate investment such as opportunities, legal aspects, joint ventures, governmental rules, property management, taxation and marketing would be discussed in this series of seminars which would be conducted every Mondays and Wednesdays, 1:30 to 6 p.m., starting Aug. 8 to Sept. 10 at the Maximo Function Room, Second Floor, Max’s Restaurant, near exit of Glorietta 2, Ayala Center, Makati City.

The topics, which may be attended separately and are all stand alone are as follows:

Aug. 8 — Investing in Real Estate: Opportunities, Techniques & What are Needed to Learn before Investing;

Aug. 13 — Management of Rental Properties: How to Maximize Income of Rental Properties;

Aug. 15 – Joint Ventures and Syndications for Real Estate Projects;

Aug. 20 – Property Development Principles and Updates on HLURB Rules and Regulations;

Aug. 22 – Taxation of Real Estate Transactions;

Aug. 27 – How to Start and Manage A Successful Real Estate Brokerage Company;

Aug. 29 — How To’s of Real Estate Appraisal;

Sept. 3 — Real Estate Finance and Investment Analysis;

Sept. 5 — Making Big Money in Distressed Properties; and

Sept. 10 — Buying & Financing Your First Home.

This Lecture Series is accredited by DTI for CEP compliance and will have as lecturer Engr. Enrico Cruz, who has almost 40 years in real estate, engineering, construction, management and education. Cruz is also a licensed real estate consultant and 1st and 8th placer in the real estate appraiser’s and broker’s board examinations respectively, and was invested as a “Real Estate Fellow” by the Philippine Council of Real Estate Educators.

For other details or advance registration, Urban Institute may be reached a 681-0928 or 796-8019 or CP #0916-426-9174 OR CP No. 0921-683-9431 or by email at urbanet@pacific.net.ph.

[3cr]

Court favors Parañaque government’s land claim
PhilStar
http://www.philstar.com/index.php?Me...id=20070726140

Hundreds of informal settlers living on privately owned land in Parañaque City will soon be able to call their homes their own after a local court granted the city government a writ of possession in an expropriation case filed more than a year ago, Mayor Florencio Bernabe said yesterday.

He lauded the decision penned by Parañaque City Regional Trial Court (RTC) Branch 274 Judge Fortunito Madrona.

Some 200 families have been living on the 12,772-square meter property owned by Teoderico and Fidela Santos in Barangay Sto. Niño for the past 20 years.

“The property will be developed and subdivided into lots for distribution to the informal dwellers and ascertaining the legitimacy of the beneficiaries,” Bernabe said.

Madrona issued the writ of possession after 19 months of hearing, Bernabe’s petition to give the informal settlers the opportunity to own the land they have been occupying for 20 years.

Records show that the city government filed the petition in January 2006 and deposited P1,341,060, representing 15 percent of the property’s supposed value based on the tax declaration.

According to Bernabe, Madrona found that the city government sufficiently complied with the 1997 Rules of Civil Procedure and the Local Government Code in its bid to claim the land in behalf of the informal settlers.

Bernabe said the owners are still contesting the land valuation and are asking for a higher price, prompting the court to name commissioners who will look into the issue to ensure that the Santoses are justly compensated.

“Providing land to the city’s landless is one of my continuing priority programs designed to improve the quality of life of the disadvantaged sector and to stem one of the major causes of urban blight,” he said.

[raf]

Originally Posted by Jhaelnis

Real estate industry fears ‘consumer finance crisis’
By Ehda Dago-oc
Monday, July 16, 2007

While dollar earning Filipinos have caused the dynamic economy in the Philippines, the continued strengthening of the peso to the US dollar may cause a “consumer finance crisis” especially for real estate and retail.

In an economic briefing organized by China Trust (Philippines) Commercial Bank Corporation, Rolando Avante, the bank’s executive vice president and treasurer, warned that a growing concern on the declining of consumer demand, as OFWs are now keeping their money, instead of spending, due to the lesser value of their dollars.

Avante warned that in the middle-range real estate industry, wherein growth is fueled by the OFW market, a decline of demand in this particular segment is seen as dollar dominated income of Filipinos working abroad is now getting smaller, while they (OFWs) don’t get increases in the salaries.

Significantly, he said amortization of the real estate products does not change, and value of their income has declined, “it is worrisome, because OFW don’t get increases,” he warned.

Economic observers have seen a “red light” in the consumer demand for the Philippines, while the Philippine peso is seen to take stronger hold against the greenback.

He hopes that small and medium real estate developers have already taken their preparatory measures, in case consumer shock will happen.

For bigger developers on the other hand, he said these companies have already put in place preparatory shields if ever OFW market will take a slower movement.

The Philippine peso had already appreciated by 20 percent from P56 last year up to P45 levels these days. He said there is possibility that peso will continue to climb breaking P44 if the entry of dollar will not be well defended.

Aside from the growing entry of dollar remittances to the Philippines, there are also foreign bond investors, like the Japanese who are taking advantage of the strong peso, selling their yen to dollar dominated bonds, and invest it in the Philippines. This has pushed further the dollar reserves in the country.

Avante reported that in his own bank, they have three to four real estate developer clients, which have developments in middle-range housing projects, from P500,000 to P1 million, expressed observation of slower consumer demand from the OFW market.

The Philippine real estate industry, which has been affected heavily in the 1997 regional economic crisis, has experienced a rebound in the recent years, primarily because of the dollar-earning Filipino market.

He reiterated that the strong peso, although an indication of a good economic landscape in the Philippines in the macro level, could also triggered a slight fall down in the consumer demand—in the dollar-earning consumer based.

Generally, he said the Philippines is slowly building a good impression in the outside investors, because it has successfully taken out the “political risk” factor, meaning the environment much better, although it’s not yet the “ideal”.

here's the deal: many dollar earners abroad caused all this real estate excitement.
now that dollar buys less, real estate in pinas may no longer be affordable to some nanny in dubai or the pinoy seaman sailing the seven seas...

now, just because bpo's are bringing in millions of dollars to the country doesn't really mean the rank and file of bpo's could afford to buy real estate in pinas. This is because the millions of dollars brought in by these american capitalists are subdivided by zillions of bpo employees, who, on average, make more or less 300$ a month(which, in our country, is a 'lucrative' wage already).

it might be lucrative, but relative only to minimum wage, and still not within range of affording real estate.

Obviously, this is what these bpo's are in pinas in the first place!!
Cheap labor is what it is.

unless real estate developers in pinas roll back their prices since peso is now stronger and steel is cheaper(it should be!!), the real estate industry will be crunched like chicharon in vinegar

as for power outages and water rationing in our country, this will not only drive away expat real estate investors, but also drive away bpo's ..

yet again starting a crisis in our banana republic

[-TC-]

http://manilatimes.net/national/2007...70730bus1.html
RP housing booms as US slumps
By Likha C. Cuevas-Miel, Reporter
Manila Times
July 30, 2007


REAL-estate agent Letty (name withheld upon request) was driving home after a long day when her cell phone rang. The caller was interested in
buying.

Houses and lots sell like hotcakes these days in the Philippines, in stark contrast to the United States, where a failing sub prime mortgage market has sent financial markets worldwide reeling.

The Philippine property market is booming, as can be seen by surging profits in blue-chip industry players like Megaworld Corp., which last week reported a 67-percent surge in profits on the back of scorching real-estate sales.

In a span of two months, Letty, for example, sold last year an P8.5-million 5-bedroom house and a 3-bedroom townhouse worth P4 million in a subdivision in Pasig. The buyers of both houses are relatives and dollars from abroad helped finance the acquisitions.

“About 80 percent of my clients are OFWs or Filipinos abroad who decide to buy permanent houses here,” she said. “It’s like the old times but the buyers are different.”

Before the financial crisis that crippled the Philippines and the rest of Asia, Letty was closing deals at an average of P5 million a month.

She started selling properties in 1997. It was the perfect time to be a real-estate agent.

Then in July that year, the peso wobbled and fell against the US dollar, while the local stock market came crashing down.

The effect of the crisis was not felt immediately—at least in Letty’s case—as she continued to sell properties through the rest of the year.

However, demand for housing slowed to a crawl in the years that followed, sending fellow agents looking for greener pastures.

“The problem was that most of my buyers were investors, not end-users.
When financial problems came, nobody wanted to buy properties anymore,” Letty said.

She wasn’t alone. Based on gross value added, the property sector still grew by 3.8 percent in 1997.

It then slowed to 1.6 percent and 0.6 percent in 1998 and 1999, respectively, before halting in 2000. The following year, the industry contracted.

Gonzalo Bongolan, Home Guaranty Corp. (HGC) president, said there was a glut in the real-estate sector after the Asian crisis so there was really no point in building more homes.

“They were just selling off the rest of the inventory [and] that’s the reason why the industry was slow to react. It had a lag time,” said the former stock market analyst.

With People Power 2 and 3 creating an unsavory investment environment, it was not surprising that people were afraid to buy houses. At that time, state-run HGC also suffered from heavy default rates of as high as 10 percent in the late 90s, from which it had failed to recover in the ensuing years.

Another problem the industry encountered just before and right after the crisis hit was a narrow market.

According to Alejandro Mañalac, Eton Properties executive sales director, the end-user buyers then were Chinese-Filipinos, who had the money then.

So the small market for end-users invited speculators.

The situation was compounded by the presence of small developers who wanted to ride on the boom, which in turn led to a supply glut. “After the smoke [the crisis] cleared only the big ones were left. Those with more credibility,” Mañalac said.

The executive said the current cycle of high property demand is different, with the near-absence of speculators and wider market reach courtesy of new technology.

With the advent of the Internet and cellular communication, sellers are now able to extend their services to Filipinos abroad and even to foreigners who want to buy properties where they could retire.

“Those [OFWs] who left 10 [to] 18 years [ago] have come back [and] they have money right now. They’re ready to buy a house, they’re ready to retire. We have a maturing market,” Mañalac said.

First-time homeowners also abound in the market, driving the demand for condominium units that big and small developers are only too happy to fill, he said. So they are now building left and right.

Despite the dramatic increase in construction, a bubble is not yet on the horizon since supply still lags demand, Eric Cruz, executive vice-president of engineering and construction firm FF Cruz & Co., said.

“The bubble bursts only when investors are not able to dispose of their property and that scenario is remote,” he said.

He said that for the industry to experience a longer bull cycle, there must be more programs to help minimum wage earners afford houses.

Cielito Habito, Ateneo de Manila University economics professor, said the business-process outsourcing (BPO) industry is supporting the real property boom, which was absent in the pre-Asian crisis cycle.

And the boom is fundamentally supported as “all the other economic circumstances would point to relatively low interest rates, which drive real estate,” he said.

The industry will likely stay afloat for a while since property prices just started to pick-up, according to Colliers International, citing reflated land values in the Philippines.

“After six years of continuous decline, we believe that land value appreciation is justified by increased pricing power of developers in both office and residential segments,” the property consultant said.

Other factors pointing to an up trend are the “impressive” take-up in residential presales market, and the prelease take-up in the office market “considering that Manila has not historically been a strong prelease market.”

Industry insiders said the boom started last year, while others said it’s this year as the country is still seeing the onset of a bull market. However, many are cautious about pinning a date on when the party will die down.

For the meantime, Letty is just happy to assist clients who are house-hunting from one subdivision to another. And she is not alone.

“About 50 percent of those who left [after the crisis] already came back,” she said.

So happy times are here again.

[3cr]

No to boom and bust
By Mary Ann Ll. Reyes
PhilStar
http://www.philstar.com/index.php?Bu...aid=2007073179

I had an interesting talk with Federal Land president Alfred Ty, younger son of banking, real estate, and automobile tycoon George Ty, who shared with us valuable insights about the state of the real property sector in the country.

Alfred, who is just slightly older than the 35-year-old company which he now heads (Federal Homes started in July 1972 and became Federal Land in 2002), disagrees with the notion that the property sector has a 10-year cycle and since the current boom started eight years ago, then we should be at the tail end.

Don’t be fooled by Alfred’s youth though. As corporate secretary of Metrobank, vice-chairman of Toyota Motors Philippines, and president of the Metrobank Group’s property arm, Alfred definitely knows what he’s talking about. His wearing several hats gives him the distinct advantage of seeing the business from different perspectives.

We can’t help but commiserate with pessimists who believe that the good times are about to end. After all, these are people who lost their shirts in the ‘90s when the real estate bubble burst.

But Alfred thinks otherwise. After all, he wouldn’t be investing P8 billion (initial investment in at least 10 new projects) over the next 12 months, and much more in the next few years (one of his projects is estimated to cost at least P20 billion) if he doesn’t believe that the fundamentals are strong and sound.

Assuming that there indeed is a 10-year cycle, he believes that this can definitely be extended for a longer period by government putting into place the needed policy environment.

Of course, the pessimists (victims of the ‘90s real estate disaster) may have failed to take into account the fact that the banks are healthier, more liquid, and are focusing on consumer lending, that developers are becoming more resourceful in tapping new markets here and abroad, that the Philippines is becoming a call center and BPO haven, and of course the phenomenon that is OFW remittances. Many of these were not present in the ‘90s.

There are more sectors (banking for one) that are investing in the real estate sector. More than 10 percent of OFW remittances is spent for buying real property. Almost all the big names in business have joined the property bandwagon. These are people who are not going to risk their names, reputation, and capital. Without doubt, the local property sector will be here for the long run.

[3cr]

Philrealty eyes debt-equity swap with creditors
By Zinnia B. Dela Peña
PhilStar
http://www.philstar.com/index.php?Bu...aid=2007080140

Philippine Realty & Holdings Corp. (Philrealty) is looking at converting creditors’ debt into equity in the listed property firm.

Philrealty president Amador C. Bacani said the company’s debt has been reduced to P609 million from P829 million last year.

He said the property development firm is also negotiating for a P350 million loan to finance the resumption of work at its Andrea North Skyline Tower.

Bacani said the company would need P900 million to finish the Skyline Tower, expecting this project to be completed by the end of next year.

He said Philrealty is also considering selling some assets, including the 2,800-square meter lot in Fort Bonifacio, Taguig and other properties in the provinces, to complete the construction of Andrea North Skyline.

Additional funding for the project will also come from pre-selling of residential units.

He said the company will continue to undertake measures aimed at reducing its debt to a more manageable level.

Bacani said the second tower of Icon Residences at the Fort Bonifacio Global City — its joint venture with Excell Property Ventures Inc. — is already 75 percent sold. Construction of the substructure started in January this year with Tower 1 scheduled for completion by mid-2007 and Tower 2 by 2009.

“With the prevailing favorable economic environment, which appear to be sustainable provided progress in containing the government’s budget deficit continues, we are also re-evaluating the company’s other projects which were deferred because of the crises that confronted us. Once market confidence is regained with the resumption of work at the Skyline Tower, we shall aim to recover our former standing in the real estate industry with a record of delivering trendsetting landmark projects,” Bacani said.

Since 1998, Philrealty has offered land properties to banks as payment for its obligations through dacion en pago to substantially reduce its obligations.

[3cr]

Philippines seen leading property boom in Asia
By Ronnel Domingo
Inquirer
http://business.inquirer.net/money/b...ticle_id=82908


A global boom in housing prices has put the Philippines in the lead of an Asian rally as of the first quarter, according to a study made by online research firm Global Property Guide.

The study considered property prices as end-March, covering 27 countries and territories, including nine in the Asia-Pacific region.

Research findings show that first-quarter nominal prices in the Philippines rose 14.29 percent compared to year-ago level, higher than 13.75 percent in Singapore.

South Korea, where prices jumped 11.64 percent, completes a troika of markets in the Asia-Pacific region that showed year-on-year improvement as well as two-digit growths.

Still, Singapore led the region in terms of real price improvements, registering an increase of 13.19 percent year-on-year.

Philippine prices went up 10.04 percent while those in South Korea jumped by 9.36 percent.

“The house price boom is now moving toward Asia-Pacific,” the GPP study said. “Property prices in countries affected by the Asian crisis are showing strong signs of recovery, prompting fears that a property bubble is developing anew in the region.”

Global Property Guide senior economist Prince Christian Cruz said the current economic and monetary conditions suggest continued strong demand for housing in countries affected by the crisis.

“All economies affected by the Asian crisis grew by five percent in 2006,” Cruz said.

“GDP growth from 2002 to 2006 has been stronger than during the crisis period (1997 to 2001), although still slower compared to [the few years before the crisis set in],” he added.

Cruz said income per person in Indonesia, Hong Kong, South Korea and the Philippines were at an all time high. Here, the rate of increase was placed at 24 percent.

Global Property Guide said the Philippine real estate sector started its recovery in 2004, boosted by the business process outsourcing industry.

It added that with growing demand from overseas-based Filipinos, condominium projects were rising all over Manila and condominium prices and rents were going up.

Also, demand for office space for call centers and other business process outsourcing operations sparked the revival of the sector.

[3cr]

Special Feature: 2nd Quarter Real Estate Report

(Business World (Philippines) Via Thomson Dialog NewsEdge) Water levels may have gone up this rainy season, raising the alarm bells for some sectors. But for the resilient real estate industry, which is now awash with investments, the rainy spell does not bring on the blues as the sector awaits to be flooded with more projects.

Having posted significant growth in the past four years, the local property sector looks more bent than ever in beating the dry spell that ravaged the industry in the late 1990s.

In the past two weeks alone, Eton Properties, Inc. launched the 41- storey Eton Emerald Lofts, Rockwell Land Corp. started the construction for the much-anticipated Number One Rockwell, DMCI Homes partnered with Equitable PCI Bank in developing the Riverside Residences, and One Asia Development Corp. jump-started its P100-million business park in Binan, Laguna.

Despite the storm of new projects, David Leechiu, president and general manager of property consultancy firm Leechiu & Associates, insists that supply across all segments remains tight, a lack that at this rate is expected to be relieved no sooner than by June next year.

Coupled with a corresponding deficit in quality stock, these factors are mainly responsible for the escalation of rent values in prime locations, although a widespread increase in land values is yet to be seen.

"Prices have stayed generally flat across Metro Manila and we are nowhere near pre-crisis values yet except in Fort Bonifacio, which makes it the safest place to invest in at the moment," Mr. Leechiu said.

Land values at Fort Bonifacio in Taguig dropped by as much as 50% in the 1997 crisis but have seen a hundred percent increase since the Bonifacio West Development Corp. -a joint venture of Greenfield Development Corp. and Ayala Land Corp. - took over its development, making the area the country's top sales performer in recent months.

Of the central business districts, Makati still holds the prime spot, with average asking prices ranging from P250,000 to P300,000 per square meter. Ortigas, which reached a low of P90,000 per square meter from a peak of P180,000 per square meter in 1997, is now trading between P110,000 and P120,000 per square meter, Mr. Leechiu said.

Despite its 100% occupancy rate in office space, Fort Bonifacio, remains comparatively cheap at P175,000 to P215,000 per square meter, making it a favorite alternative to the Makati central business district.

"We now see a lot of migration to Fort Bonifacio in all segments. Being in close proximity to Makati, many locators choose Fort Bonifacio because it has a well-planned, well-constructed environment that is only one step away from the Makati facilities that they have gotten used to," he said.

According to the latest Colliers International Philippine Property Overview, there had been a 20% increase in office space rents in the second quarter due primarily to the dearth of quality office supply, a factor that has hindered companies from opening businesses in the country since 2005.

Monthly lease rates for premium office space in Makati are now at the P1,200-per-square meter level while Fort Bonifacio is up to P750 per square meter. Meanwhile, for other districts, monthly lease rates are still at the P400- to P600-per-square meter transaction range.

Mr. Leechiu has pegged Fort Bonifacio's annual rate increase at seven to eight percent for the next three to four years, while Makati accrual is calculated at five percent for the next two to three years before slowing down to two percent.

As available space in these two areas will continue to be limited, a significant amount of future office space supply can be found from emerging business districts such as Eastwood City, Binondo and Old Manila.

Next year will bring good news to the business process outsourcing (BPO) sector, which continues to be the main driver for office space demand, as the number of available supply coming on-stream will double towards the third and fourth quarter, offering more quality stock to choose from.

Tight supply in commercial space will be slightly relieved with the completion of the Ayala Center Building Glorietta 5 and the Dela Rosa e- Services Building in Makati, the Total Corporate Center in Fort Bonifacio, and the One E-Com Center at the SM Central Business Park in the Bay area before mid-2008.


Residential development

And as Metro Manila population continues to increase, condo living is fast becoming the habitat of choice for reasons of cost and practicability.

An estimated 23,000 units is due for completion before 2010, 60% of which will be situated in Fort Bonifacio and Makati, with the remaining 40% scattered across Quezon City, Mandaluyong, Las Pinas and other Metro Manila districts. A big chunk of supply will cater to mid to upper market, while small percentage of the total is targeted for the low-end market.

The steady inflow of overseas foreign worker (OFW) remittances, now reaching all-time highs, assures the continuance of strong demand in the residential market.

"Lately, we have seen a shift from semi-skilled workers to high-end professionals leaving the country to work abroad and despite their high- paying jobs, they are still not covered by expatriate packages where the company pays for the whole family's expenses. This in turn becomes a good motivator for OFWs to continue sending money to the Philippines," Mr. Leechiu pointed out.

Single-digit mortgage rates and easier payment schemes will result in more retail purchases from the middle class in the years to come. For professionals, Mr. Leechiu said there's a growing preference for centrally located condominium units over suburban houses in distant locations such as Las Pinas and Rizal.

Another significant source of investment demand are the local families who had parked money abroad during the Asian financial slump, but are now pre-terminating their placements and transferring them back to the Philippines.

Despite visible demand and propitious property forecasts, Mr. Leechiu warns developers against building too much stock. With debt restructuring being made available to developers both big and small, real estate corporations have been able to raise bonds at a much lower rate.

"These companies have done IPOs [initial public offerings] or secondary or even third offerings and raised a lot of cash through the stock market. They've been able to joint venture with other institutional big players. This means that there is a lot of money flowing into the system," he said.

Instead, Mr. Leechiu reminds developers to consciously watch the demand and supply situation.

Copyright 2007 Business World Publishing Corporation, Source: The Financial Times Limited

[3cr]

PSE supports credit bureaus
By Zinnia B. Dela Peña
PhilStar
http://www.philstar.com/index.php?Bu...aid=2007082046

Amid a global sell-off in stocks triggered by increasing uneasiness on the mortgage and corporate lending markets in the US, the Philippine Stock Exchange (PSE) is seeking the passage of the Credit Information System Act (CISA) to further strengthen the country’s financial system.

The CISA aims to put in place an extensive and reliable system for the collection and dissemination of fair and accurate credit information to promote and support credit-based economic activities. The proposed measure, authored by Sen. Edgardo Angara, is now pending in the Senate.

PSE president and chief executive officer Francis Lim said the proposed legislation will help the country steer away from the subprime lending problem that the US is facing.

Under the proposal, a credit information corporation will be established to consolidate credit-related data that banks, their affiliates and subsidiaries are legally mandated to submit.

Credit bureaus will be able to serve as reliable source of information to allow lenders to accurately evaluate risks and select between credit-worthy and poor-quality borrowers.

Financial markets worldwide tumbled last week as investors fret over the increasing loan defaults among subprime borrowers. With the exodus of foreign funds in the PSE, the market has wiped out all its gains for the year.

Lim, however, believes that the local stock market remains fundamentally sound.

“We in the PSE remain confident that, notwithstanding the PSE’s setback, our stock market still stands on solid macro-economic ground. Our listed companies remain profitable; interest rates, along with inflation rates, remain stable while the country’s economic growth forecasts look attainable. So we have no reason to doubt the strong fundamentals supporting our stock market,” he said.

Lim pointed out that the Philippine financial market does not face a risk similar to what is confronting the US stock market.

He said the Philippines needs the CISA just to make sure its financial system can count on an additional layer of support if global repercussions from the US sub-prime lending problem were to linger.

“Nevertheless, the proposed CISA will lessen the likelihood of such loan defaults by making the credit investigation process less tedious and less costly while at the same time, increasing the accuracy of credit information to a reliable level,” Lim said.

Subprime loans represent borrowings of persons with blemished or poor credit histories. The loans, which carry higher interest rates, often expose the lenders to higher credit risks.

“An unreliable credit information system also stifles economic growth because it reinforces the sense of distrust of banks to extend loans. But if the banks are sure that a client is credit-worthy, then they will not entertain doubts about approving a loan; and more money will flow to those who need it, creating more economic activity,” Lim said.



______________________________



Bourse wants Angara bill passed to cushion crisis
Daily Tribune
http://www.tribune.net.ph/business/20070821bus1.html

The local stock market sounded an appeal yesterday for legislative rescue amid the turbulence in global financial markets by approving a proposed law designed to lessen credit risks and loan defaults.

In a press statement, the Philippine Stock Exchange (PSE) said it is seeking urgent help from lawmakers to stabilize the local stock market.

PSE president Francis Lim said the enactment of the proposed Credit Information System Act (Cisa) will help the country steer away from the sub-prime lending problem now bothering the US.

The proposed Cisa, which is authored by Sen. Edgardo Angara, is now pending in the Senate.

Local financial markets were closed yesterday for a public holiday. Trading resumes today.

Analysts said trading today will take its cue from the US stock market amid the continuing global concerns over the credit problems in the United States.

They said the local bourse had failed to react to favorable local news as investors remain too caught up in fears over the tightening of the global credit market due to problems in the US housing market.

For the week to Aug. 17, the composite index fell 12.1 percent to 2,884.34 points, its lowest finish since Dec. 27 last year.

Average daily turnover fell to 3.26 billion shares worth P4.3 billion from 4.36-billion shares worth P5 billion in the previous week.

“The Dow Jones industrial average is close to an important support level at 12,800 level. A rebound in the US market will propel the local market back above 3,000,” forecast Jose Vistan of AB Capital Securities.

But he warned that “a break of the 12,800 support (level) can have disastrous consequences.”

Asian markets, alongside global markets elsewhere in the world, have been sold-off since late July when the sub-prime problems associated with risky home loans first became evident through losses to major New York hedge funds.

Falls on the stock markets have accelerated since then, when most benchmarks were trading at record or multi year-highs.

Dealers, however, remain uncertain how far the markets can go before bottoming out because many feel the full extent of the sub-prime problems is yet to be made public.

Major stock exchanges all over the world, including the local bourse, started suffering from massive sell-offs, triggered by nervous investors, after US lenders noted an increase in loan defaults among sub-prime borrowers. The selling frenzy has wiped out the record-breaking gains this year of the PSEi, the main barometer of local stock price movements.

“The PSE remain confident that, notwithstanding the PSEi’s setback, the stock market still stands on solid macro-economic ground,” Lim pointed out. “Our listed companies remain profitable; interest rates, along with inflation rates, remain stable; while the country’s economic growth forecasts look attainable. So we have no reason to doubt the strong fundamentals supporting our stock market,” Lim said.

“But we need Cisa just to make sure our financial system can count on an additional layer of support as buffer, if global repercussions from the US sub-prime lending problem were to linger,” Lim stressed.

Sub-prime loans represent borrowings of persons with blemished or limited credit histories. The loans, which carry higher interest rates, often expose the lenders to higher credit risks.

The US stock market started to suffer late last month from massive sell-offs due to concerns over the sub-prime mortgage market following the collapse of big US hedge funds with heavy investments in doubtful sub-prime mortgages. The collapse of the hedge funds prompted major credit rating agencies to downgrade sub-prime mortgage securities.

“Let me stress that our financial market does not face a risk similar to what is confronting our US counterpart,” Lim pointed out. “Nevertheless, the proposed Cisa will lessen the likelihood of such loan defaults by making the credit investigation process less tedious and less costly, while at the same time, increasing the accuracy of credit information to a reliable level.

“Gathering accurate information about a borrower lessens the likelihood of a dreaded business problem in the form of a loan default,” Lim explained. “So, if we liken the US sub-prime lending problem to an ailment, then the Cisa will be a welcome vaccine that the lawmakers will be administering on our credit information system,” Lim explained.

“More than ever, we need such a vaccine shot so we can lessen chances that a crisis similar to what hit US will afflict our financial system,” he explained. “Definitely, the image and fundamentals of our stock market will be affected, if our banks suffer a similar increase in loan defaults.”

Cisa will create the Credit Information Corporation (CIC), which will set the standards for credit reporting operations. The CIC’s goal is to improve the availability and cost of credit to borrowers while greatly reducing the lender’s credit risk, resulting in a more stable and consistent financial system.