AlexHK

> Unless rents drop, banks in PHL may want to find a cheaper way to attract deposits, like paying online depositors a higher interest rate. Yes, and it started already. ING Philippines & Octo (CIMB) currently offer around 4% to their online depositors, and a third one (Singapore-based Tonik) should start business in Philippines soon. I use ING for few months already and I find it very convenient. 4% is the current promotion, it should be lowered to 2.5% few months from now but it is still very competitive and more flexible than time deposits. I wonder what is the size of the deposits they were already able to attract? It is probably only a small share of the market but it will grow in the coming years. I agree with you Dr Bubb, bricks & mortar branches are not the future. The young generation prefers digital wallets and online deposits.

I did not know about this rule for person over 60 y.o. ! Did you try to order from FoodPanda? Below is an email I received from them. If you wish to order from them but have difficulties email me directly so I can order for you and have it delivered directly to your place. Their website is here : https://www.foodpanda.ph/ As clarified by the leadership of the Department of Trade and Industry, foodpanda is allowed to operate along with other food services platforms as providers of basic necessities. In light of this recent mandate, we would like to reassure you that foodpanda continues to operate as usual with free delivery on every order. We value the safety of everyone in our community, and have introduced new measures to ensure you feel secure while using our service. We're in constant communication with our restaurant partners over the latest World Health Organization notices, advising them on the health and safety practices that go beyond our already high food hygiene expectations. We also encourage you to switch to online payment. That way, we can easily keep unnecessary human interactions to a minimum. Our commitment remains with supporting all our riders, restaurant partners and valued customers as we go through this tough time together as a nation. Rest assured we will keep you updated with any further developments. Stay safe. Your foodpanda team

And GDX closed with +18.3% ! According to ETF Trends, the extreme volatility in levered ETFs and their need to re-balance may have created a disconnect among gold mining stocks' valuation vs. their fundamentals, possibly causing yesterday's outperformance.

Yes we are in Makati. Duterte declared lockdown of Metro Manila and (just now) a curfew from 8 p.m. to 5 a.m. But still we prefer to be in Makati rather than blocked in the province. We still have access to the airport (international flights only) but to go where anyway... ?

Same here Dr Bubb. I could not believe last night how low GDX was. I could only find temporary technical reasons (Friday night margin calls & panic) to explain such move so I bought during the last hour at 19.92USD With interest rates going towards zero or even negative & gold being a tangible safe haven I expect gold to go up within few weeks or months then remain at high levels. With higher gold prices and lower oil prices, which make up significant portion of a miner's costs, how could the value of Gold mining companies not appreciate sharply in the future?

Further to the current oil crisis, maybe this is time to revive the “value in Energy stocks” thread. For the past months I was following the valuation of some major Oil companies and most part of them looked already very attractive. After the new fall of oil today (nearly -30%) we can expect these oil companies to become even cheaper soon, and I start to wonder if this level of oil price is sustainable for these companies? Sooner or later oil prices will go up again and I do not mind waiting as I am a LT investor, but can these companies survive if oil prices remain at current levels for a long time or go even lower? I am thinking at companies such as Royal Dutch (RDS-A), Chevron (CVX), BP (BP Plc), Occidental Petroleum (OXY), Exxon (XOM). They are paying high and regular dividends to shareholders for decades and the next few weeks shares prices could be an historical entry point for LT investors. Do you share my view or am I missing something?

Strange type of blue color for Air Residences, and the parts colored in blue seems different compared to the photos on brochure ?

Hi Dr Bubb, Sorry for this very late reply. You are probably correct about a possible jump of rent prices. Regarding Skyland Plaza it's hard to say where the market is right now because there are no transactions. What is sure is the demand is very high (even for parking slots) but totally dependent on POGOs

Hi ECB, I own a unit in Megaworld One Central and I think your estimate of second hand prices for this building is accurate. I would say around PHP150k per sqm. The adv you mentioned at 125k per sqm does not seem realistic. One unit was offered for sale recently slightly below 140k per sqm but this unit has a problem (unit k on low floor facing a wall) so it’s not really representative of the market. One Central is now fully occupied. Majority of occupants are now Chinese & Korean. But despite the demand I agree with you, prices are not going up much. Nearby in what Dr Bubb calls "little china" (San Antonio) it's a total different story. Demand there is extremely high and prices are going up accordingly.

Interesting point Euro Chocozone. I agree with most part of what you wrote. Again, my post about Time Deposits generating 5% tax-free was not necessarily an invitation to invest in them, but a reminder for people ready to purchase properties on primary market with rental yield below 5% net. Living in Philippines for about 10 years I am always amazed by people here investing in real estates with the glossy brochure of the developer & developer’s agent fairy tale as only reference. Regarding your point 3 “property bought at market prices can offer some (- and better -) protection in case of a complete collapse of trust in the currency”, I agree with you for property owners who can hold their properties and wait a few years, because in a collapse situation you can also expect property prices to first fall sharply. Even during “good times” you have a lot of weak hands in Philippines. Local owners who need to sell urgently for personal reasons, and foreign owners leaving the country with the need to liquidate their local assets before leaving. And in a secondary market not very liquid it’s not a good thing to be in a rush. So in case of serious crisis I expect to see a lot of panic sellers, and this could be the best time for cash buyers to purchase well located properties.

PDIC only insured Time Deposits up to PHP500.000, but PS Bank (Metrobank Group) is a safe bank. BPI gives almost the same rate (4.33%) for 5 years time deposits. You can get details here : https://www.bpiexpressonline.com/p/1/69/plan-ahead-time-deposits I am not against Philippines property market in general, but I find people buying on primary market too optimistic these days. The second thing to keep in mind when buying from developers is that just to break even you’ll need to find a buyer on secondary market at a price 11% higher than what you paid on primary market (in order to cover the 6% Capital Gain Tax and the 5% agent commission). So if you add this 11% to the difference of prices between primary market and secondary market you need the property market to go up something like 30% just not to lose. In my opinion this is only acceptable for long term investment with high rental yield (7% net minimum)

At current prices offered by property developers in Philippines, the net return yield you can expect on your investment is now sometimes below 5%. Personally I consider anything below 7% as not worth the trouble, unless you have good reason to expect a profit on the value of the property itself I suggest to keep in mind that you can get a net return of 5% tax-exempt on long term time deposit without taking any risk, and with interests paid quarterly. Below is for instance an offer I received 2 weeks ago from PS Bank (Metrobank). Normally they offer 4% on 5 years Time Deposit but they sometimes propose higher rate (5% here) for a limited time. You can also check offers from other banks. My point is not to recommend 5 years time deposits but to keep it in mind as comparison when calculation your net return yield. ----------------------------------------------------------------------------------------------------------------------- The Philippine Savings Bank (PSBank) on Tuesday began offering its Long-Term Negotiable Certificates of Time Deposits (LTNCTD), with a tenor of five years and six months. In a disclosure with the Philippine Stock Exchange (PSE), the thrift banking arm of the Metrobank Group said the offer period for the LTNCTD, which carries an annual interest rate of 5 percent, will be until August 2, 2018. Set to be issued on August 9, 2018, the investment product has an issue size of PHP3 billion but the disclosure said the issuance has an “option to upsize”. Minimum placement is PHP50,000, which is also the amount for additional investments. Payment of interest will be done on a quarterly basis, the disclosure indicated. PSBank tapped ING Bank and Standard Chartered as joint lead arrangers and bookrunners while selling agents are PSBank, Metrobank, and First Metro Investment Corporation (FMIC). LTNCTDs are investment products with longer tenors relative to regular time deposits being offered by banks. They are insured by the Philippine Deposit Insurance Corporation (PDIC) and are listed with the Philippine Dealing Exchange (PDEx) with earnings that are tax-exempt if held for more than five years. (PNA)

Dr Bubb, regarding your calculation to get the net return there are also some transfer charges when you buy a flat on secondary market (around 150k for a flat of 4M) For me even 4 million would be a bit too high to get a decent return. Now, if the seller wants 5M and gets such offer at this price from purchasers within 6 months then he's correct. Otherwise he's not

Correct Dr Bubb. Assessing the value of a flat by looking at the latest official value given by developers is very misleading. Only secondary market buyers will buy your unit so only their offers matter. A seller can say that an offer is too low if this offer is significantly lower than recent similar transactions. Our problem here in Philippines is that real transactions records are not freely available. The other way for a seller to justify his price is the decent return yield the buyer can expect at this price. I am trying to follow the prices of few buildings around mine in Makati, and my guess is that secondary market prices are around 20-30% lower than official prices given by developers. I expect this gap to increase even more during the next 2 years due to downwards pressure on rents and new supplies coming. This is of course hard to admit for primary market buyers who need to sell their unit urgently. And I am not counting the 5% agent commission and 6% capital gain tax payable by sellers…

100,000 Chinese Move to Manila And Trigger Property Surge On Fri, May 4, 2018 By Bloomberg News In Manila’s main financial district and its fringes, signs of the new inhabitants are everywhere: the restaurants serving steaming Chinese hotpots and dumplings, the Mandarin broadcasts at the Mall of Asia, and the soaring property prices. An estimated 100,000 migrants, mostly Chinese, have flooded into pockets of the Philippines capital since September 2016, and the deluge is rippling through the city’s real estate market in ways that are unique among the world’s urban centers. While Chinese investors have been snapping up big swathes of high-end housing in Hong Kong, London and New York for years to move their money offshore, this new rush is motivated by something different: Manila’s booming gaming industry. More than 50 offshore gambling companies that cater to overseas Chinese punters have received permits to operate in the city since President Rodrigo Duterte’s government began awarding licenses 19 months ago. While bets are placed remotely, the operators need Chinese speakers in Manila to handle everything from marketing and customer queries to payment processing for overseas clients. The resulting migration, while only a fraction of the metropolitan area’s 12.9 million population, is propelling home prices to record levels in neighborhoods favored by Chinese workers. It’s reinvigorating Manila’s commercial property market as owners convert offices and shops into gaming centers with card tables and webcams. And it’s boosting the bottom lines of local developers including Ayala Land Inc. and SM Prime Holdings Inc. While no official numbers are publicly available showing the number of Chinese arrivals in Manila, people familiar with the matter said that offshore gaming operators in the Philippines employ about 200,000 workers, predominantly Chinese, and more than half of them have arrived in the capital region since late 2016. The Bureau of Immigration said it couldn’t immediately provide the data. The influx promises to boost the nation’s economy and is helping to strengthen ties with China – a priority for Duterte. Yet it leaves the property market vulnerable in the event of an abrupt shift in online gaming or immigration policies from either country. The perils of relying too heavily on Chinese buyers became painfully obvious last year in the Malaysian enclave of Johor Bahru, which has been grappling with a glut of vacant homes after China imposed controls on investments in overseas property and demand abruptly dried up. “Concentration risk could be a potential concern,” said Emilio Neri, an economist at the Bank of the Philippine Islands in Manila. Others see only opportunities. Qiang Huang, a realtor based in the Chinese city of Hefei, expects Manila home prices to get a boost from the steady stream of Chinese workers catering not only to offshore gaming customers, but also mainland clients who frequent brick-and-mortar casinos. A high-rolling gamer himself, Huang first visited the area in November to place bets at Bloomberry Resorts Corp.’s Solaire casino and realized that Manila could scratch more than his gambling itch. He’s planning to build a 500-square-meter showroom in the city to lure Chinese real estate investors and will soon sign contracts to market apartments at two projects. “I chose an area with a booming gambling business, as properties there have the largest potential to appreciate,” Huang said, adding that he has run into Chinese tourists who have formed “property-shopping” groups. Among the biggest beneficiaries of this appetite have been condo units near Manila’s Makati district, in close proximity to the gaming sites where mainland workers are employed. Patches of San Antonio Village, about one kilometer from Makati’s financial hub, now have restaurants, stores, money changers and payment centers catering to Chinese customers sharing space with local stores. In the Bay Area adjacent to Makati, home prices surged by a record 27 percent in the last three months of 2017, according to data from Santos Knight Frank Inc., dwarfing the 6 percent overall gain in residential prices in the metropolitan Manila area. Condo sales in the capital region rose to an all-time high of 52,600 units in 2017. Appetite from gaming operators is also supporting the commercial market as demand from traditional outsourcing companies wanes. The share of take-up of new office space by outsourcing companies decreased by a third to 46 percent in 2017, while that of offshore gaming operators tripled to 30 percent, said David Leechiu, CEO at Leechiu Property Consultants, which has partnered with CBRE Group Inc. in the Philippines. “If not for offshore gaming operators, the property market would have crashed last year,” Leechiu said. A typical online gaming operation consists of dealing studios and a call center-like facility that serves offshore customers. A studio that Bloomberg News recently toured in Makati City spanned roughly 400 square meters, with tables for games such as baccarat, Dragon Tiger and Fantan. Dealers – mostly young Filipino women wearing snug halter-neck dresses – staffed each table. Eight kilometers away, in another part of the city, is the main customer-service center. The 6,000 square meter space is divided into dozens of rooms with rows of desks that seat more than 5,000 employees. A cafeteria serves free meals around the clock, catering to the army of mostly mainland workers and some Taiwanese and Malaysian staff. Other amenities include a hotpot restaurant and a convenience store stocking Chinese snacks and other products. Fast Facts on Philippine Offshore Gaming Operators Also known as POGOs Such operations were limited to three provinces north of Manila before Sept. 2016 decision to expand them to the capital region 55 permits for POGOs have been awarded since then 14 of those are engaged in sports betting Revenue from POGOs quintupled to 3.57 billion Philippine pesos ($70 million) in 2017 from a year earlier Source: Philippine Amusement & Gaming Corp. Record Earnings Chinese demand is helping stoke record earnings at some builders. At SM Prime, the nation’s largest property developer, Chinese buyers accounted for almost 30 percent of residential reservation sales in the first quarter. The share of mainland nationals who bought homes from Ayala Land jumped to almost half of all sales to foreign buyers last year from 30 percent in 2016. Offshore gaming companies occupy 60 percent of DoubleDragon Properties Corp.’s completed office space in the Bay Area and they’re paying rents one-third higher than other tenants, said Chief Executive Officer Injap Sia. Developers aren’t betting that boom times will last forever. Ayala Land’s President Bobby Dy said the builder will limit offshore gaming leases to 10 percent of its office portfolio. DoubleDragon plans to cap total exposure to such tenants to 30 percent once all its office towers are completed. The firm requires a one-year deposit from offshore gaming operators and post-dated checks for the duration of the five-year contract. Kitt Lapeña, 34, a Makati resident for most of his life, has seen waves of foreign residents come and go before, from Japan and Korea, but never on the scale of the recent Chinese influx. While he welcomes the economic boost, he worries about the motivations of the new arrivals. “In a way, it’s good for business,” Lapeña said. “I hope they become an asset to the community and not just out to make money.”

Hi Dennis. Your project is brilliant. There is an urgent need of professional agents here in Philippines. I bought two units in Makati on secondary market but each time during my research I had bad experiences with property agents who cannot answer my questions professionally and waste time unnecessarily. I believe many people limit their purchases to primary market due to the lack of professional property agents in the secondary market. Your expertise is really needed here, and property agents trained by you will probably multiply their income. Good luck to you Dennis, and please keep us posted about your project.

From RCBC (left) to Lerato (right) on Aug 28th. Photo taken from One Central building.

I fully agree with your response Dr Bubb about the Rise & Air Residences. What could be good in Air Residences is their mall on ground floor of the building. Making malls is the core business of SM, and the residents of the Rise nearby will benefit from it ;)

Dr Bubb, there is a company in Makati called Versailles Stay which offer similar services (turn your apartment into a serviced flat) in One Central : http://www.versaillesstay.com/ They manage around 200 units of One Central building. Cf article below. Al-- Versailles Stay: A creative way of high-end living Versailles Stay, the new and revolutionary concept in property management is now in the country. Property business is one of the sunshine industries in terms of investments; Versailles Stay is here to take advantage of it. Capitarise Holdings Inc. and FPD Asia launched Versailles Stay last May 29, 2015 at their pioneering branch in One Central Residences, located on Gil Puyat Avenue near corner Ayala Avenue in Makati City. Versailles Stay is a high-quality, fully furnished residence offering rental management solutions to unit owners and developers while guests and clients have their own share of experience for superior hospitable lodgings, convenience and value-for-money. The Versailles Stay management group takes care of furnishes and maintenance of these units so that they will be always-ready and available for stay-cations and travelers. Versailles Stay at One Central There’s a new property business concept that is set to change the face of rental property in the Philippines by Capitarise Holdings Inc. – Versailles Stay. Versailles Stay is a rental management solution for fully furnished, high-quality residences offering dependable property care for unit owners and developers, value for money, convenient and hospitable lodging for guests and clients. You might ask if this is another high end hotel. No. This establishment acts as a bridge for foreign property investors and enabling them to access apartment suites from high-end condominium developers across the Metro. Versailles Stay at One Central Versailles Stay is not tied to any structure. Their innovative system can be easily set-up in any high-end residence building with One Central being their first venture. Versailles Stay has stylish, luxurious and comfortable units from Standard, Deluxe and Premiere Suites offering flexible and affordable rates allowing you to save up to 50% compared to equivalent standard hotel rooms.Each suite is equipped with an air conditioning unit, cable TV, private toilet and bath with hot and cold shower, safety deposit box, mini bar, espresso machine, kitchen with refrigerator and microwave oven. Linens, pillows and basic toiletries are also provided. In addition, all suites are wifi equipped. Daily breakfast for 2 by Manila Catering is also included and served in the comforts of your own unit. At One Central, you get to use the following facilities and services: 24-hour front desk Business Center Meeting facilities, Fitness Center Room Service, Children’s Playground Game Room Poolside Bar, Outdoor pool Dry Cleaning and Laundry, Theater Function Room Concierge, Airport Transfer Versailles Stay currently manages 200 units at One Central, fifty (50) of which are available for short term stay.

Published in the Standard on Aug 31st : China punters sway gold market Wednesday, August 31, 2011 Mainland punters have emerged as a formidable force in the international gold market and are one of the main reasons for the ongoing volatility in gold prices, say Hong Kong industry sources. The spot price of gold has lurched between US$1,640 per ounce and US$1,900 in the past month. From 7.30pm Hong Kong time yesterday the price went from US$1,785 to US$1,840 in a matter of hours in New York trade. A source in the market saw 7,000 contracts being placed via electronic trading at the start of this period. Heavy volume of bullish bets placed on the gold price by mainland punters also pushed it higher, the source said. Emperor Financial Services assistant vice president Sam Lee Chun-wai estimates the global trading volume of gold amounts to US$1 billion daily. Mainland punters by themselves cannot move the market, he said. But Lee noted that an appreciation of the yuan amid continued economic boom in China has boosted the firepower of mainland players. "Buying commodities with US dollars has proved to be an attractive investment for many mainlanders in the last few years," he said. According to a report in Yangcheng Evening News last Wednesday, just one city in Guangdong province - Guangzhou - has 2,000 underground investment companies dealing in gold and foreign currencies. Investors can leverage up to 100 times their principal with such black- market brokers, the daily said. The black market for gold in China sees up to 100 billion yuan (HK$122 billion) worth of trade every year, the report said. Legal exchanges around the world have acted swiftly to curb volatility in the price of the precious metal. The US-based CME Group raised trading margins of gold by the most in more than two and a half years last week, leading to a 4 percent drop in the spot price. CME increased margin requirements on its gold futures contract by 27 percent, the second hike in a month, following similar moves by the Shanghai Gold Exchange and Hong Kong Mercantile Exchange earlier this month. Mainland punters are taking advantage of the situation, sources say, by going both short and long on the metal. End-of-month settlement for futures contract has also helped raise volatility, said traders, who also noted that the US$1 billion daily trading volume of the gold market is relatively thin compared with the oil market, which sees a much higher volume. "Contrary to what many people think, it is not unthinkable that on certain days, mainland punters may emerge as a dominant factor on the international gold market," a source said. Mainlanders have certainly emerged as the largest players in the Hong Kong gold market in recent years, traders confirm. Local analysts estimate they now account for up to 70 percent of the daily trading volume on the Hong Kong open market. The SAR also allows out-of-market gold trading and this is very attractive to mainlanders, traders said. Last night, spot gold was up 2 percent, reaching as high as US$1,822.50 an ounce in New York afternoon trade.