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The Liveability of Manila - stuck at over #100 (rank in the world)

Each of 140 major cities of the world were assessed in 30 separate categories by EIU, a London-based service
Manila came in again at #104 in the 2016 survey

+ Poor infrastructure, inadequate healthcare and education systems

Ranked #5 in Southeast Asia, behind Sinagapore, KL, Brunei's capital, and Bangkok
The roads and the infrastructure (including public transport) are a big part of the shortfall

Good points:
+ Restaurants, availability of consumer goods and services

The Survey makers believe the PH govt needs to invest more in the lower rated areas.
Melbourne, Austr. was ranked as the most liveable city, followed by Vienna, Vancouver, and Toronto.


A new trend has been a weakening of global stability scores - ie more terrorist incidents - which have been reported in many countries including: Turkey, Australia, Bangladesh, Pakistan, France, Belgium, and the US.

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Beyond war on drugs, Philippines' Duterte seen setting up economic boom


Reuters - 23 August 2016


MANILA: Less than two months in office, Philippines President Rodrigo Duterte is getting high marks from the business community for policies that could engineer an economic surge and companies say they are making new investments as a result. While Duterte may be getting headlines for a bloody war against drug dealers and users, less attention has been paid to one of Asia’s few economic success stories. The groundwork was laid by Duterte’s predecessor, President Benigno Aquino, who took growth above 6 percent over his six-year term , but executives are also cheering the new administration’s focus on building new infrastructure and say it could spell the start of a long-term boom.


Some even see Duterte’s violent and highly controversial anti-drugs campaign as potentially positive. “We are in a very good spot,” said Antonio Moncupa Jr., president and CEO of East-West Banking Corp, one of the top 10 lenders in the country. “The pronouncement of government prioritising infrastructure spending, accelerating it and cutting red tape, solving peace and order, I think all point to very good prospects ahead.” Last week, the government announced that the Philippines’ economy grew at 7 percent in the second quarter from a year earlier, its highest level in three years. It makes the Philippines the fastest growing among all countries that have reported so far for the second quarter.


When Duterte won the May presidential election, there were questions marks over how he would handle the economy...


The mainstays of the economy - remittances and the outsourcing sector - are flourishing and boosting domestic consumption.


Jollibee Foods Corp, the biggest fastfood chain in the country, plans to open 200 more domestic stores this year. So does Robinsons Retail, taking its total to over 1,500. BDO Unibank Inc, the country’s biggest lender, plans to open 50-100 new branches this year. “We are supportive and encouraged by the new administration’s socio-economic agenda, which has a holistic approach for the benefit of all, including JFC,” said Jollibee investor relations officer Cossette Palomar. However, the Philippines has a worrying precedent of a strongman leader. In the 1960s, when the country had one of the highest per capita incomes in Asia, Ferdinand Marcos took over as president. Two decades of dictatorship, corruption and plunder by Marcos left the Philippines in a shambles.


“Business will be good under this administration,” BDO Unibank executive vice-president Luis Reyes said of Duterte. “Concerns centre more on the extra-judicial killings.” Supporters of Duterte say even as the long-term mayor of the southern city of Davao, where he earned his reputation for busting crime, he created the conditions for business to flourish. Government data show that the Davao region’s economy grew by 6.6 percent on average in 2010-14 compared with 6.3 percent for the whole country. According to one estimate, there were more than 20,000 people in outsourcing jobs in the city in 2013, and this sector was growing at more than 20 percent a year. Duterte’s reputation of carrying out his promises has given businesses plenty to look forward to - for instance his vow to make spending on infrastructure a priority.


“I believe infrastructure is going to grow very fast and it will have a double or triple effect,” said Henry Schumacher of the European Chamber of Commerce in the Philippines. “Money will be available. An iron fist is going to be behind it.”



In May, Duterte told the country’s main telecom providers to speed up the internet, or he would junk laws that prohibit foreign competition. Duterte’s economic plan also includes lowering corporate and income taxes and a commitment to invest in education, to reap the demographic dividend of the country’s young population. About two-thirds of the Philippines’ 100 million people are of working age, between 15 and 64, rising from about 56 percent of the population in 1990. In 2030, about 70 percent of the 125 million people will be of working age, the government has projected. “This is another advantage given other neighbours in the region, most of Northeast Asia and some in Southeast Asia, have populations that are ageing and are therefore facing labour supply constraints,” said Euben Paracuelles, an economist at Nomura. Still, Joanne Burgonio, a 27-year-old software analyst in Manila, said it was too early to say what a Duterte presidency would bring. “My concern is transportation,” she said, adding that she waited two hours for a bus home the previous evening. “His focus now is (on) drug pushers, hopefully the focus will be on infrastructure. I am optimistic because whatever he promised before he was elected, he is doing.” -- Reuters

Read More : http://www.nst.com.my/news/2016/08/167600/beyond-war-drugs-philippines-duterte-seen-setting-economic-boom

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Good News, Bad News

Good: Estimates rose for PH Growth : Up 0.4% to 6.4% for this year, and 6.7% for next year.
That's very good indeed, but was not the only news out...

PH Slips in Global Competitiveness

The Philippines fell 10 notches to rank #57, out of 138 economies reviewed.

In the latest year, the Philippines saw a decline in 7 of the 12 pillars used in the survey; namely: institutions, infrastructure, goods maket efficiency (v19 to #99), labor market efficiency, technological readiness (v14 to #83), business sophistication (v10 to #52) and innovation (v14 to #62) .
"The country appears to be going backwards vis a vis its peers in some of the more complex areas of competition.

PH continues to have the second lowest rating on ease of starting a business.

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The Phil- PESO is getting weaker... Should investors worry?


PHP ... All-Data



Not yet, seems to be the quick answer, since the country now has a big cushion of FX reserves.


Here are some reactions to the Duterte's faltering reputation, and the weaker currency


+ At less than PHP 50 per USD, the Peso is still inside a long term trading range


+ "PH has buffer for economic headwinds" - BSP, central bank of the Philippines. (in the Manila Ttimes)

"the economic engine is still in good shape" - ie exports, trade flows, and incoming remittances remain healthy

The expected Growth rate was recently boosted to 6.4 percent.


+ "PH must send the right signal to investors" - The World Bank (in the Manila Times)

"Lingering uncertainty regarding the new administration's reform agenda will lead to caution among investors"

If policy changes in the areas of taxation, expenditure tracking, and land-tenure are positive there's a "risk' of still higher growth in 2017.


+ Vulgarity is eroding Pinoy values, says PH council of Bishops


+ Former Senator Juan Ponce Enrile says: Give Rody more time

"We must not be too impatient. We need time... Let him do his job,,, He may succeed."

There are some signs he is wiping out the drug menace. (3,000 people have been killed since he took office June 30th.)

There are more addicts in the USA than PH. The illegal drugs industry is P60 bn in the US,vs. P 10bn in the Philippines

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An unsustainable trend?

PH Trade deficit widens 93% in Aug
Global demand weak but PH imports strong
Balance of trade in goods for PH in August was $2.023 billion, up from $1.048 billion

This was based on Imports of $6.927 billion, and exports of just $4.908 billion, and exports actually fell 4.4 percent, year on year
The good news is that the trade gap narrowed somewhat from $2.038 billion

The export areas where there were big falls included:
+ Machinery and transport equipment (- 52.5%)
+ Metal components (- 25.9%)
+ Chemicals (- 16.2%)

A trade gap is "normal" to some extent for the Philippines because of the positive inflow of funds from OFW's.
But a rise of the size shown does not look healthy to this observer.

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Makati's plan for a P 1 Billion : BUS Rapid Transit System



Dela Rosa walkway extension was opened yesterday - is now the longest in PH

Summary of a story which appeared in today's Manila Bulletin
Key Points:

+ A business group, Makati Commercial Estate Assoc. (MACEA), whose member own comm'l buildings in Makati has submitted a plan to the govt for a P 1 Bn BRT system. The plan involves private financing under a Build-Operate-Transfer (BOT) arrangement
+ The first step is to get approval at the local and national levels


+ There is a plan for six underground stations, starting at the corner of EDSA and Ayala Avenues
+ From there, it would go down Ayala Avenue, and turn left at Gil Puyat Ave. (Buendia), and continue on to end at the Buendia station, also called Taft Ave. on LRT-1, Light Rail line.
+ It would utilize existing buses, and the space presently given over to the center islands along Ayala Ave.
+ It will connect with the larger BRT system for Greater Manila has already been approved, and is now arranging financing
+ MACEA's plans also include spending on pedestrian facilities in Makati. P 497M has already been spent, and the works include the 305 meter extension of the DelaRosa walkway, which opened on Monday (yesterday)

A key source of this information was: Manuel Blas 2, VP within the strategic landbank mgmt group of Ayalaland

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Philippines Growth remains strong - but the toughest years of the decade are just ahead


PH growth

1990 : 3.0% / 2000 : 4.4% / 2010 : 7.6%
1991 :-0.6% / 2001 : 2.9% / 2011 : 3.7%
1992 : 0.3% / 2002 : 3.6% / 2012 : 6.8%
1993 : 2.1% / 2003 : 5.0% / 2013 : 7.1%
1994 : 4.4% / 2004 : 6.7% / 2014 : 6.1%
1995 : 4.7% / 2005 : 4.8% / 2015 : 5.9%
1996 : 5.8% / 2006 : 5.2% / 2016 : 6.8%
1997 : 5.2% / 2007 : 6.6% /
1998 :-0.6% / 2008 : 4.2% /
1999 : 3.1% / 2009 : 1.1% /
-yrs7 : 19.7 / ------- : 32.6 / ------ : 44.0
Av7yr: 2.8%/ ------- : 4.7% / ------ : 6.3% : Growth has accelerated
-last3: 0.77 / ------- : 11.9 / ------ : ????
Av3yr: 2.6% / ------ : 4.0% / ------ : ??? : But the last 3-years of the decade could be slower

15-q1 : ?.?% / 16-q1: 6.8%
15-q2 : ?.?% / 16-q2: 7.0%
15-q3 : 6.5% / 16-q3: 7.0%
15-q4 : 6.6% / 16-q4: 6.6%

At 6.8% full-year growth, PH Tops China's 6.7%, and Vietnam's 6.2%

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Jan Inflation at 2.7%; highest in 2 years - Business Insight

Was slightly higher than Dec average of 2.6%

Rises in: clothing, utilities, health, and education, alcohol & bev. showing a 5.6% rise

This falls within the 2.3 to 3.2 percent forecast range...

BSP "closely monitoring developments", including tax reforms

The govt pans to hike excise taxes on cars to limit car sales (traffic congestion)

Monthly Headline inflation:

Mo. : 2016: 2017: 2018: 2019:
J'18 : 1.3%: 2.7%: 3.4%: 4.4% :
Feb : 0.9%: 3.3%: 3.8%:
Mar : 1.1%: 3.4%: 4.3%:
Apr. : 1.1%: 3.4%: 4.5%:
May : 1.6%: 3.1%: 4.6%:
Jun. : 1.9%: 2.7%: 5.2%:
July : 1.9%: 2.8%: 5.7%:
Aug : 1.8%: 3.1%: 6.4%:
Sep : 2.3%: 3.4%: 6.7%:
Oct : 2.3%: 3.5%: 6.7%:
Nov : 2.5%: 3.5%: 6.0%:
Dec : 2.6%: 3.6%: 5.1%:
Ave.: 2.3%: 3.2%: 5.2%:
Index <-- OLD—> <- NEW ->
=== 2016 : 2017 : 2018 : 2019 :
q1: 0.28%: 1.11% : 0.96%:
q2: 0.52%: 0.49%: 1.19%:
q3: 0.68%: 0.68%: 1.57%:
q4: 0.82%: 0.88%: 1.48%:

Yr: 2.30%: 3.16%: 5.20%

q1: 1.01%: 3.13%: 3.83%:
q2: 1.53%: 3.10%: 4.77%:
q3: 2.03%: 3.10%: 6.27%:
q4: 2.47%: 3.16%: 5.93%:%:

SOURCE : https://psa.gov.ph/statistics/survey/price/summary-inflation-report-consumer-price-index-2006100-july-2017

Mo. -CPI- : -CPI- +chg% :
==: -2017 : -2018 +yoy% :
J : 109.6 > 114.1 +4.0% :
F : 110.1 > 115.0 +4.4% :
M : 110.7 > 115.5 +4.3% :
A : 111.1 > 116.1 +4.5% :
M : 111.0 > 116.1 +4.6% :
J : 111.0 :
Jl: 111.1 :
A : 111.4 :
S : 112.1 :
O : 112.3 :
N : 112.8 :
D : 113.1 :
>> https://tradingeconomics.com/philippines/consumer-price-index-cpi

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Residential Rents to soften further - Colliers

+ Rents fell by 1-1.5 Percent in Q4; Makati to P837psm from P847 psm (Q3)
+ Rents like to decline on: Rising supply, popularity of fringe areas
+ Expeceted drop: another 5-7% over the next 12 months
+ BGC fell from P848 to P833, year-on-year
+ Colliers is forecasting a 54.3 percent rise in supply in Metro-Manila, from 90,784 units at end 2016,
to 140,061 by 2020

+ Fringe areas appeal, because they are 10-15% cheaper to rent (and maybe at least that much cheaper to buy)
Examples: Vertis in Quezon City, Circuit in Makati
+ Fringe area completions (4,800 units) outpaced those in the main CBD's (3,900 units)


They give some figures for Capital Values, which look high to me:
: Makati : P180,300, + 2.3%
: BGC -- : P163,200, + 2.2%
: Rockwell : + 1.1%
"Prices are still going up because interest rates are low"
"We see Makati CBD prices increasing by about 14 percent in the next 12 months, while Ft. Bonifacio and Rockwell wll grow by about 8 to 10 percent," Colliers said.
( article in The Manila Times, pg. B5, Feb.13, 2017)
They must be talking about prices in the 'primary' market - is new properties.
I see lots of evidence that prices in the secondary market are weak.
And fall rents are hardly an argument for rising prices, when the daily newspapers are full of stories of inflation rising, and short term rates under upwards pressure

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Big Jump in Supply and Vacancies is undermining Residential Rents - 2017 is a crunch year!

(As per the Q4-2016 Collier's report, "the Knowledge")

Overall vacancy continues to rise - see the table below
As of the end of 2016, overall vacancy in Metro Manila stood at 10%. This shows a 2.2 percentage point
increase from the vacancy recorded in the first half of 2016. (But it is even higher in key CBD areas.)
Colliers sees overall vacancy hovering between 12% and 16% in the next twelve months with the delivery of
an additional 22,800 units this year.

Makati CBD Comparative Residential Vacancy Rates
GRADE / Q3-16 : Q4-2016 : Q4-17F :
Luxury - : 12.96% : 13.98% : 16.04% :

Others --: 11.25% : 13.23% : 16.66% :
AllGrades 11.48% : 13.33% : 16.59% :
FtBonifacio : 14% in 12 mos. (7,500 units)
Ortigas Ctr : 7-9% in 12 mos
Comparative Luxury 3BR Rental Rates (PHP / sq m / month)
AREA--- : Q3- 2016 /mid : Q4- 2016 /mid : Q4- 2017 /mid : Est.Chg / Report
Ft. Bonif. : 650-1040/ 845 : 640-1026/ 833 : 600-0960/ 780 : - 6.37% / - 6.37%
Makata -- : 570-1120/ 845 : 560-1100/ 830 : 530-1040/ 785 : - 5.42% / - 5.67%
Rockwell : 790-1080/ 935 : 780-1070/ 925 : 740- 1010/ 875 : - 5.41% / - 5.19%
> http://www.colliers.com/-/media/files/marketing%20reports/4q2016_colliers_quarterly_residential.pdf

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The DISCONTINUITY in Capital Values : Moving from Apples to expensive Fruit salad ?




BUYERS of new properties look set for disappointing yields (when their properties are completed)


There is a major discontinuity in the data that Colliers is now reporting for Capital Values, and it may be masking a drop in secondhand like-for-like prices for a single property owned in the real world.


The problem is that Colliers want to accommodate the much higher prices being achieved on new luxury launches, so reported prices have been "stretched" to the upside to include these new luxury properties. So in some way, we are moving from comparing the old "apples" with new "luxury fruit salad", making it meaningless to try to use the Colliers data as an indication of how the price of a particular property is performing over time. Even as these Colliers values are being pushed higher, I am hearing several anecdotal reports that secondhand resale prices have been dropped - and that the resale market for completed properties is very soft now. Perhaps it is down in line with falling rents - now some 6% below the highs of 2nd-half 2015. And someone who is in a hurry to sell may have to accept an even larger discount.


> http://www.colliers.com/-/media/files/marketing%20reports/4q2016_colliers_quarterly_residential.pdf


Qtr/ Year : Mak-Mid. QonQtr : Yr.onYr. / Low - Makati - H / Low -Bonfacio- H / Low -Rockwell- H /

4Q /2015 : 151,300 : +0.20% : + 4.71 % : 106,400- 196,200 : 114,700 - 185,400 : 121,700 - 202,100 :
1Q /2016 : 152,000 : +0.46% : + 3.16 % : 107,000- 197,000 : 115,000 - 185,000 : 121,700 - 202,100 :
2Q /2016 : 147,575 : - 2.91% : - 0.96 % : 103,770- 191,380 : 111,760 - 180.760 : 120,390 - 200,040 :
3Q /2016 : 146,485 : - 0.74% : - 2.99 % : 103,010- 189,960 : 109.790 - 177,580 : 119,090 - 197,870 :
3Q /2016 : 145.4ka*: - Not/A : - N/Avail. : 103.0 - 187.8a / 145.4k :
4Q /2016 : 150.6Ka* - Not/A : - N/Avail. : 109.0 - 192.2a / 150.6k :

3Q /2016 : 176,150 : - Not/A : - N/Avail. : 084,000- 268,300x70% : 097,200- 222,200 : 170,800 - 206,300 :
4Q /2016 : 191,800 : - 0,00% : - N/Avail. : 109,000- 274,600x70% : 110,500 - 226,400 : 188,400 - 207,700 :
Qtr/Year : Mak-Mid. QonQtr : Yr.onYr. / Low- Makati - H/ adjust / Low-Bonfacio- H / Low-Rockwell- H /


Using the "old data", up through Q3-2016: ... pd



The data for Q4-2016 is adjusted, as explained in this post ... pd



I have adjusted the new data, so that it is more comparable with what was reported before.

My adjustment is to multiply the new high-end price (P274,600) by 70% and then average it with the low-end price. The result for Q-2016 was P 150,600 which is only 2.8% above the P 146,485 reported for Q3-2016. I will have to monitor this adjustment for a few quarters before I will have any real confidence in this adjustment. But I do not think it would be meaningful to push my chart values up from P146.5K to P191.8K (that is +30.6%), since I do not think that anyone has seen appreciation like that in an actual Condo that they own.


I find this comment to be very telling:

"Take-up in Metro Manila’s residential secondary market remains soft amid the influx of new supply across submarkets."


Perhaps the secondary market (in both sales and rents) is being mostly neglected by big agents and by the developers - who are heavily focused on promoting the more profitable sales market for new properties.

Colliers also suggested:

"Given the falling occupancy rates, Colliers recommends that developers establish their own leasing arms to assist owners in leasing out their units to a targeted clientele and attain the promised yields. This initiative should complement the developers' well-established pre-selling teams."

(You have to smile at that phrase: "well-established pre-selling teams" - many developers are great at pre-selling, but maybe not quite so good at helping their clients get "promised yields." Can you see where the disappointments are going to be? The developers may be hoping yields will rise somehow, to justify the high prices. Another possibility is news may hit, and buyers will wake up and see where the weak link in the chain is - the unreliability of estimates of future rents levels. Then the willingness to pay high prices could suddenly evaporate, unless a developer has demonstrated a strong leasing capability, and the ability to get good tenants at "expected" rent levels. I have heard that Colliers is now assisting some developers, like Ayala, to strengthen their leasing capability)


Here's more evidence of buyer's abandonment of a traditional focus on cash yields. Do they even realise that rents are falling?. I reckon some Colliers clients who do consider yields in their investment criteria have begun to complain. And Colliers would like to see the developers address this so investors will not be too disappointed :

"Given the falling occupancy rates in CBDs, it would practical for developers with projects under construction within and outside the established business districts to organize their own leasing arms in order to assist their buyers to lease out their units and attain the promised yields"

In other words, buyers are going to be sorely disappointed with the returns they make after completion, unless the developers do a better job at marketing to end tenants the virtues of these expensive new properties. Right now, the landlords are mostly "on their own" or working with a handful of agents who specialize on prime tenants (like expats seeking well loacted 2BR and 3BR flats). One wonders if there are enough good tenants to go around to maintain a balanced market?. Colliers is now separating the market into PRIME areas within the main CBD, and Fringe areas with "10-15% lower rents", where Filipinos may rent smaller places as "halfway houses" to have easily access to their places of work, and avoid the massive traffic congestion.

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WHEN WILL THE LOW for Residential be in place?


UPDATING the Supply data -Up to 50% jumps (and more) are coming

After Rents falling in 2016, 2017 now looks like another crunch year


RESIDENTIAL SUPPLY : Properties keep getting delayed

OLD estimates, at end-2014 : Showed completions clustered in 2015-16, especially for Makati (also see post #101)
Location: End2014> 2015F: + Pct. / 2016F : + Pct . / 2017F : + Pct. / 2018F
Makati -- : : 18,110 / 4,608: +25.4% / 2,017: +11.1% / 1,485: +8.20% / 1,072
B.G.C. -- : : 19,427 / 5,433: +28.0% / 4,895: +28.0% / 2,979: +15.3% / 1,010
Ortigas-- : : 13,633 / 2,756: +20.2% / 1,227: +9.00% / 0,573: +4.20% / 0,422
Rck+Ewd:: 11,706 / 0,000: +00.0% / 0,908: +7.76% / 0,346: +2.96% / 0,914
Total-of-5 :: 62,876 /12,797 +20.4% / 9,127: +14.5% / 5,383: +8.56% / 3,628


But that projected 20-25% surge for 2015 did not happen.

Instead, we completions got delayed to this, as of (Nov. 2015, Q3-2015?)


Estimate, late 2015:
Location : End2014/ 2015F: + Pct. / 2016F : + Pct . / 2017F: + Pct. / 2018F / 2019F
Makati - : : 18,337 / 1,000: +05.5% / 4,148: +22.6% / 2,962: +16.2% / 1,072 / 0,598
B.G.C. -- :: 19,427 / 2,779: +14.3% / 6,931: +35.7% / 4,125: +21.2% / 2,831 / 2,482
Ortigas-- :: 13,820 / 2,430: +17.6% / 1,355: +9.80% / 0,899: +6.51% / 0,422 / 0,570
Rck+Ewd :: 11,707 / 0,000 : + 0.0% / 0,988: +8.43% / 0,346: +2.96% / 1,124 / 1,124

Total-of-5:: 63,291 / 6,209 : +9.8% /13,422: +19.3% / 8,332: + 10.0% / 5,449 / 3,919
Tl.condos: 63,291>69,500 :--------> 82,922 :--------> 91,254 :---------> 96,703 /100622


And some completions due 2016 got delayed again, so as of (Early 2017, for Q4-2016).

Here's the latest estimate of completed Supply, and what is coming:


Estimate, -------------------- : Est., made in early 2017 ---->
Previous: End'14 : late'15 : Latest
Est. for---: 2016E : 2016E : 2016E // 2017F: + Pct. / 2018F / 2019F / End'19 : chg>'19
Makati - : : 24,735: 23,485: 21,633 // 4,784: +22.1% : 1,072 : 0,598 / 28,087 : + 29.8%
B.G.C. - :: 29,755: 29,137: 24,275 // 8,566: +35.3% : 3,858 : 3,022 / 39,721 : + 63.6%
Ortigas-- :: 17,616: 17,605: 16,250 // 1,489: +9.16% : 0,782 : 0,570 / 19,091 : + 17.5%
Rck+Ewd :: 12,614: 12,695: 11,707 // 1,334: +11.4% : 0,492 : 0,901 / 14,434 : + 23.3%
Total-of-5 : 84,720: 82,922: 76,208 / 16,173 +21.2% : 6,207 : 5,091/ 103,679: + 36.0%
= Delayed : --------: 01,765: 06,714 //
+++++ Expected Supply (-early 2017) //
Expected Completions (at late 2015) / 8,332 +10.0% : 5,449 : 3,919
Expected Completions (at end 2014) / 9,127 +10.8% : 5,383 : 3,628
Total-of-8 : -------------------> 90,784 / 22,890 +25.2%:15550: 7,707/ 136,938: + 50.8%
> source: http://www.colliers.com/-/media/files/marketing%20reports/4q2016_colliers_quarterly_residential.pdf

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Philippines : Growth, shrinking debt, and some modest rate rises coming but not immediately

Property in Manila is over-built, but the counry's fundamentals still look sound.
From today's press:
+ PH Foreign debt SHRINKS to $74.8 Billion in 2016 (Manila Bulletin)
Down by 3.5% or $2.7 billion thanks to debt repayments, and $846mn of net buying of $846millon PH debt by foreigners. A weak yen also helped, since 12% of the debt is denominated in yen. The absolute number ($74.8 bn) was the lowest since 2010. The external debt ratio dropped to just 20.4 percent at year-end 2016, down from 21.9 percent, a year earlier. Such is the financial power of those millions of OFW's, Overseas Foreign Workers.

+ Analysts see two BSP rate hikes this year (Business World)
No rate rise is expected in March, and there seems to be "no urgent need for adjustment" though the trend in inflation is rising. If rates do not go up this month, it will be the 20th month in a row with no change
+ The mothballed National Steel in Iligan Cty has been acquired by SteelAsia a rebar manufacturer, who has the intention of turning it into a state of the art stell manufacturing complex. This should be an important step in creating a local PH steel industry, which will be very useful as the country upgrades its infrastructure

The latest reports on Growth were : 6.8% Real growth in 2016 - one of the highest , and 1.8% inflation. But the latest month, February, inflation was up to 3.3%, which is on the high end of the target range.

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Philippine Pesos Troubles Just Beginning
The peso is down 8% and investors are dumping stocks amid doubts about Dutertes economic agenda.

By William Pesek

You can spin voters and the media, but currency traders are a harder lot to fool. Thats dawning on Filipinos as markets render a damning verdict on Rodrigo Dutertes 266 days in the presidential palace.
The peso - down nearly 8% in that time - is buckling under the weight of a chaotic and distracted administration with little time for economic reforms. Lots of body bags - more than 8,000 and counting - but no big wins on attacking poverty, increasing job growth or improving infrastructure. Now, those bodies, casualties of Dutertes war on drugs, are fueling impeachment talk in Manila.
A longshot, perhaps, but this sudden surge of palace intrigue could further impede whatever economic agenda Duterte might have up his sleeve - and hit the peso even harder. Already, his vendetta against drug pushers and users has derailed much of the momentum that followed populist Duterte into the palace on June 30th.

Prior to that day, investors had been clamoring for peso assets thanks to predecessor Benigno Aquinos structural upgrade drive. Aquinos efforts from 2010 to 2016 to increase transparency, strengthen government accountability and repair the national balance sheet won the Philippines its first ever investment grade ratings. Much was left undone, of course. Turning around a long-neglected economy and a notoriously corrupt political system isnt a six-year job. Voters hoped strongman Duterte would turn Aquinonomics up to 11.
Duterte Harry, as hes known, made his tough-on-crime bones as mayor of Davao City. Voters were also enamored with his economic successes in that southern city, including less inequality than many other Philippine metropolises, his willingness to take on vested interests and attention to improving roads, bridges, ports and power grids. Just as Indians turned to Narendra Modi to take his Gujarat model national, Filipinos figured Duterte would drain the swamp in Manila and increase prosperity.

Instead, the peso started this month at 10-year lows, a clear sign investors doubt the Davao City model argument. Duterte is being haunted by allegations of involvement with corruption and unlawful killings during his mayor days. While he denies it, the impeachment complaint filed by opposition politician Gary Alejano highlights the magnitude of the resistance Duterte faces - opposition that will make it increasingly difficult to implement economic upgrades. Vice President Leni Robredo, meanwhile, is calling out what she sees as Dutertes human rights abuses.
Robredos public opposition, unprecedented in Philippine history, will spark questions including among international partners as to the stability of the Philippines government, says Christian Lewis of Eurasia Group. Overseas investors, too, who as of early March had sold more than a net $120 million of Philippine stocks this year.
The outflows could easily accelerate as Duterte Harrys government descends into Game of Thrones farce. Hes tried to oust Robredo, excluding her from policy deliberations and cabinet meetings. Speculation is rife that he wants to replace her with Ferdinand Marcos Jr., son of the former dictator who morphed one of Asias richest economies into the Sick Man of Asia. Duterte faces accusations of Marcos-like behavior: amassing $40 million and arresting Senator Leila de Lima, a vocal critic, on charges many deem questionable.
DUTERTE IS IN THERES-NOTHING-TO-SEE-HERE MODE: trade talks with Chinese Vice Premier Wang Yang, visiting Thailand to discuss South China Sea issues, swinging by Myanmar to strengthen partnerships, scoffing at talk of the International Criminal Court putting him on trial over his anti-drug crusade, telling business groups more prosperous days are on the way.
Currency traders arent buying it, and wisely so. Dutertes machine-gun fire squads are distracting him from lowering personal income, corporate and inheritance tax rates, boosting levies on fuel, vehicles, cigarettes and alcohol, reducing tax evasion, attacking official graft, crafting a clear mining policy to tap vast stores of national resources and doing something about productivity-killing traffic in Manila. Each of these changes is vital to attracting foreign capital to pay for better infrastructure, education and healthcare. Each is needed to move the Philippines up on global competitiveness rankings. Its currently 57th on the World Economic Forums index, trailing Slovenia and Turkey.

Theres still time for a presidency course correction. But Duterte must act fast, and convincingly. In September, just 83 days into his term, Standard & Poors threatened Manilas credit rating, warning about policy unpredictability and a drug war that could undermine respect for the rule of law and human rights. As if investors werent spooked enough, Duterte lashed out at S&P in an expletive-laden rant. I would say to the ratings [agencies] in business and the economy, so be it. Leave us. Then we will start on our own. I can go to China, I can go to Russia. I had a talk with them, they are waiting for me. So what the hell?
Currency traders are wondering as much, too. Only theyre not asking questions. Theyre selling.


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"Prior to (Duterte's election), investors had been clamoring for peso assets thanks to predecessor Benigno Aquinos structural upgrade drive. Aquinos efforts from 2010 to 2016 to increase transparency, strengthen government accountability and repair the national balance sheet won the Philippines its first ever investment grade ratings.

...The peso started this month at 10-year lows, a clear sign investors doubt the Davao City model argument. Duterte is being haunted by allegations of involvement with corruption and unlawful killings during his mayor days."

- William Pesek writing in Barrons.


Here "on the ground" in the country, I am hearing stories about how Duterte is LESS CORRUPT than Aquino was.

and that some minor headaches, like police stopping cars randomly and coercing money have all but stopped.

Meantime, Chinese financing of a build-out of some new rail lines, seems to be progressing.


I went to a art show opening the other day at the Ayala Museum, and the ribbon was cut by the governor of the Central bank (Tetango?), and then the next morning I read that the country had a bid surplus in January thanks to recprd tax collections, and they would be issuing P30 Bn Treasury notes in small denominations, in order to give retail investors a safe place to park their money (earning maybe 3-3.5% pa over three years.) It is about time that this country thought about improving financial opportunities for average people.


Also, despite my very real concerns about excess of supply, and falling rents, one property investor friend told me that Ayala would be raising prices by 10-15% this year on one of their projects.


The currency drop does not look as dramatic as Pesek claims, though it has failed to show the 2017 strength of some other non-USD currencies


PHP versus currencies of: Thailand, Japan, Mexico ... update



(The PH Peso could soon cross the 76d MA, and get a "buy" signal.

Rising inflation, at over 3%, has triggered some concerns that the BSB might raise rates.

The same day he was cutting the ribbon Tetango announce he would hold rates, and that

the central bank was cutting their inflation forecasts from 3.5% to 3.4% for the year,)


I don't believe much of what I read in the paper these days, and have thought that Willie Pesek is a closet globalist, aligned with the NWO

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Last year, or the year before, when the USD was very strong, PHP was the strongest emerging market currency,

having dropped the least against the dollar, and this year, while the dollar has weakened, PHP has likewise weakened.

And I read that over 50pct of all remittances come from USA, so any USD weakening is immediately followed by PHP weakening

as USD and PHP are almost (intimately) linked. Every US navy vessel has at least one PH soldier so they are linked.




Much chagrin on the "Asian Alliance Against China" facebook page visitors due to the huge interest charges that need

to be paid back to China in RMB, I believe this is a very smart move by DU30 as China's currency is going

to depreciate very slowly over time against PHP, and probably more so than USD/PHP.

So I tend to believe that the 6pct RMB loan is a better deal than the 3pct Worldbank USD loan.

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My own opinion is that it is USD weakness which is causing PHP weakness, because as you

can see -- long term investors are still increasing their PH bets. PH is a (net) import country

so higher raw materials prices cause the currency to weaken more than those of its

more commodities exporting neighbors.


Personally I see both Trump and DU30 as one time presidents -- an unfortunate choice -- but

the democrats USA and the liberal party PH will emerge as the winners in the next elections of both respective countries.


Trump is a complete disaster. What made America great - above anything else - is immigration and he's closing that door.

Trump would better follow Ronald Reagan's advice "Tear down that wall".

The Wall usually foretells the end of an empire.

Cooler heads will prevail in the next election as the drug war cannot be won by slaughtering thousands of people.

Disappointment will set in as more DU30 promises will be broken and war fatigue will set in.


Both presidents see people as the problem. But people are the SOLUTION. The problem is only in their head,

-- the wall builder -- and the killer.

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"Trump is a complete disaster. What made America great - above anything else - is immigration and he's closing that door."


Thank goodness he is closing the door to Illegals

Immigration can be a good thing, but not ILLEGAL IMMIGRATION by people with so little to offer. They are coming to take advantage of free healthcare, and free education - while breaking the Laws of the country and disrespecting our traditions and our people.


I suggest to get a copy of Anne Coulter's book, Adios America, to see why Trump's moves are needed

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MANILA Office Market
“Strong demand amid large volume of new supply maintains upward rent trend.”
Claro dG. Cordero, Jr., Head of Research, Philippines
Net absorption rises on the back of strong demand
Net absorption in Makati CBD and Bonifacio Global City (BGC) posted a significant increase in 4Q16, reaching 119,900 sqm from the 43,000 sqm recorded in 3Q16, as take-up in new developments was high. The offshoring & outsourcing (O&O) sector remained the primary driver of demand for office space.
Notable leasing transactions in 4Q16 involved an O&O company and advertising firms leasing more than 8,000 sqm in BGC. Furthermore, a tech firm and a consulting firm leased space totalling more than 5,000 sqm in Makati CBD. Supply rebounds with new completions
Completions during the quarter included Vista Hub, W City Center and Uptown Bonifacio Tower 3, all in BGC, adding 117,300 sqm to total stock. Key developments set to complete in 1Q17 are Metrobank Center, The Curve, Inoza Tower, Ore Central, World Plaza, One Bonifacio High Street Office and High Street South Corporate Plaza Tower 1, all in BGC.
Vacancy further declined to reach 2.0% in 4Q16 despite the large volume of stock completed during the quarter, as occupancy in existing developments improved while newly completed buildings achieved high occupancy levels.
Capital value growth marginally outpaces rental growth
Rents increased 1.4% q-o-q to PHP 979 per sqm per month in 4Q16 amid a tight vacancy environment. Growth in capital values slightly exceeded that of rents, posting an increase of 1.5% q-o-q to PHP 128,000 per sqm in 4Q16.
The strong local economy continues to attract occupiers and investment into the country. The upward adjustment of the country’s economic growth forecasts by the Asian Development Bank further highlights the potential attractiveness of the country to investors.
Outlook: Large incoming supply may temper rent growth
The next two quarters are expected to see the completion of 286,000 sqm of office space from nine developments, which may result in the slowing of rent growth.
Nonetheless, the office rental market is expected to remain landlord- favourable due to sustained demand primarily sourced from the expansion of the O&O sector. Pre-commitment rat...


> Q4-2016 : Pg.27: http://www.ap.jll.com/asia-pacific/en-gb/Research/asia-pacific-property-digest-4q-2016.pdf?288c3591-6b6c-491d-9419-7ae37096b7ec

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They are coming to take advantage of free healthcare, and free education


Yes this is precisely the ILLUSION that many would be immigrants to the USA have, because BOTH the health care and education system in USA is the most expensive in the world.

And it is so because it is a "racket" according to Charles Huge Smith. And it is a racket because it is no longer FREE.

In any case the border adjust(ment) tax might clobber the dollar according to Peter Shiff,

At least Rody is going to build more bridges over the Pasig river, (let s hope there will be one Pasig/Mandaluyong BGC brigde), and this is at least better than the worthless

walls and increased military spending which "false" prophet Trump has promised. California is now going to punish companies that help build this wall.



History is rife with empires that tried to build walls - the China Wall / the Roman empire / The Iron Curtain -- they all fell because they collapsed from WITHIN,

so history is on my side. (Rody also indicated he was willing to accept Syrian refugees so PH continues its open border policies ---

PH is the new America).


As the USD weakens, so will the PHP, but it will not weaken as much as USD. For EUR and non USD based investors, this might be the last time to grab

PHP assets this cheaply. The weakening PHP will also likely stoke more inflation, and it might mitigate the PHP price declines in MNL real estate


For overseas based investors, this is a "fortunate" event because PHP assets will likely become cheaper now for the next 2-3 years due to PHP currency weakness

as a result of these "false prophets".It will probably reverse when the next USA president - almost certainly a democrat - will be chosen in 2020, because

quite ironically the democrats have more fiscal restraint than the republicans. Then the USD and PHP rally will resume, and as PH will become one of the wealtiest

nations, it will be reflected in a much stronger PHP, which will likely rise against ALL currencies.

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"the border adjust(ment) tax might clobber the dollar according to Peter Shiff"


The dollar is beginning to weaken - DXY is now below 100.


DXY / trade-weighted US Dollar ... 2-yrs



But that Dollar weakness has not yet translated into PHP strength.


PHP / Philippines Peso ... 2-yrs



I think that a stronger PHP will come if/when DXY falls below 99 and 98.

The BSP (Central Bank) has held off on rate rises so far, because they do not expect inflation to rise much more


PHP in relation to Euros has weakened a little this year, since it is clinging to a weak-ish USD


Schiff's recent track record on calling markets cannot compete with many other prognosticators

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Yes Axel Merk is more my favorite. But even he does not see long term value in the Euro. The EURO might rise temporarily due to stock market weakness.

And the euro is (the favorite) carry trade funding currency now --- so if there are liquidations, there's going to be a tremendous demand for EUROs/

Peter Shiff is a perpetual dollar hater -- you are correct. Perhaps because he (might have?) had German ancestors.

I think EURPHP can over the course of this year and next year rally back to the old 59-60 area, and then it will be over.

My long term targets are 40 then 30 then 20. This would imply that a massive EURO devaluation is coming.


Anyway the currency is the barometer as well, -- and the PHP currency will sooner or later reflect that, as it will start to rise against all Major currencies.

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"Peter Shiff is a perpetual dollar hater -- you are correct. Perhaps because he (might have?) had German ancestors."


He's more of a US government, and IRS hater, since his father was long in prison for tax-related infractions.

Though some with anti-tax views, see the father as a hero


"I think EURPHP can over the course of this year and next year rally back to the old 59-60 area, and then it will be over.

My long term targets are 40 then 30 then 20."


I agree the EUR may have future weakness, and on reviewing that charts: it seems that the EUR in PHP is looking toppy now

- the rally looks tired, and is struggling to get above the resistance


EURphp ... All Data : 5yr-W : 10-d // EurUSD : 10-d :


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