Speaker:

HON. RODOLFO G. VALENCIAPhilRES National President

PHILIPPINE ASSOCIATION OF LOCAL TREASURERS & ASSESSORS (PHALTRA), INC.

82nd Annual Convention & Seminar WorkshopFebruary 3 – 6, 2015, PICC, Roxas Boulevard, Pasay City

Theme: “Local Treasurers and Assessors: Rising Above the Challenges of Local Governments’ Fiscal Accountability, Transparency and Sustainability”

DAY 3 – February 5, 2015 (Thursday), 2:00 – 3:00 p.m., Reception Hall,

Topic : Real Estate Service and Industry Trends

 

PART ONE: THE REAL ESTATE SERVICE

1. The RESA Law - enacted on June 29, 2009 in the 14th Congress of the Philippines- RA 9646, “An Act Regulating the Practice of Real Estate Service in the Philippines, Creating for the Purpose a Professional Regulatory Board of Real Estate Service, Appropriating Funds Therefor and For Other Purposes”

Principal Author: Hon. Rodolfo G. ValenciaCo-Authors:

Hon. Raul Gonzalez, Jr. Hon. Edcel LagmanHon. Raul Del Mar Hon. Eduardo ZialcitaHon. Amado Bagatsing Hon. Narciso Santiago III Hon. Roman Romulo Hon. Mark Leandro

Mendoza Hon. Thelma Almario Hon. Victor Yu Hon. Ma. Victoria Sy-Alvarado Hon. Mariano Piamonte

Jr. Hon. Antonio Ceriles Hon. Edgardo Chatto Hon. Eurocino Codilla, Sr.

2. Declared Policy

The State recognizes the vital role of real estate service practitioners in the social, political, economic development and progress of the country by -

promoting the real estate market, stimulating economic activity, and enhancing government income from real

property-based transactions.

The State shall develop and nurture through proper and effective regulation and supervision a crop of -

technically competent, responsible and respected professional real estate service practitioners,

whose standards of practice and service shall be globally competitive, and

will promote the growth of the real estate industry.

3. The Real Estate Service Practitioners

… shall refer to and consist of the following;

a. Real Estate Consultants

b. Real Estate Appraisers

c. Real Estate Assessors

d. Real Estate Brokers

e. Real Estate Salespersons

4. Admission and Practice

a. Licensure Examination and Registration

b. Issuance of Certificate of Registration and Professional Identification Card

c. Automatic Membership in the AIPO (Accredited & Integrated Professional Organization) of the Real Estate Service Practitioners (RESPs)

d. Code of Ethics and Responsibilities for RESPs

e. Continuing Professional Development (CPD) Program

5. PHILIPPINE INSTITUTE OF REAL ESTATE PRACTITIONERS (PHILRES), INC. as the AIPO

a. Resolution No. 19 adopted on October 21, 2011 by the Professional Regulatory Board on Real Estate Service (PRBRES) officially recognized PhilRES as the duly accredited AIPO.

b. House Resolution No. 299 adopted on October 17, 2012 by the House of Representatives giving recognition to PhilRES as the AIPO.

c. Re-affirmation by then PRC Chairperson Teresita Manzala, followed by the PRC instruction that, henceforth, licensed RESPs seeking the release or renewal of their PRC ID Number (or license) must first obtain a certificate of membership in good standing (or CMIGS) from PhilRES.

5. PHILIPPINE INSTITUTE OF REAL ESTATE PRACTITIONERS (PHILRES), INC. as the AIPO

d. Section 38, RA 9646 mandates RESPs to indicate the certificate of registration, professional identification card, PTR number, and AIPO receipt number, and the date of issuance and the duration of validity on the documents he/she signs, uses or issues in connection with the practice of his/her profession.

e. Petition for Renewal of Accreditation officially submitted to the PRC Standards and Inspection Division on November 11, 2014

f. PhilRES Family (as of Feb. 4, 2015): 9,561 members and 53 local chapters

As of Feb. 4, 2015

Chapters 53Members 9,561

REAL ESTATE OUTLOOK FOR

2015

PART TWO:

A QUICK LOOK AT THECURRENT PHILIPPINE REAL ESTATE INDUSTRY

THE REAL ESTATE BOOM

SM Bay City, Manila

Araneta Center

Bonifacio Global City

Community/City Development

Greenfield District

Mckinley West Pagcor City SM Seaside, Cebu City

THE REAL ESTATE BOOMCommunity/City Development

Watch out for development at the FTI Taguig area

AYALA ARCA SOUTH (74 HECTARES)

THE REAL ESTATE BOOMCommercial Development (Office & Retail)

Century City Mall SM Aura, Global CityGreenbelt Mall

Magnolia Town CenterHigh Street South BlockAbreeza Mall, Davao City

THE REAL ESTATE BOOMCommercial Development (New Office Spaces for Lease)

RCBC Corporate Center

Hanjin, Global City

Panorama, Global City BGC Corporate Center

Twenty Four SevenMckinley

THE REAL ESTATE BOOMResidential Development (Horizontal & Vertical)

The Trump Towers

AZURE Urban Resort Residences

Anchor Skysuites Arya Residences Avida TowersCentera

South Lake Village At Eton City Avida Land at Nuvali

THE REAL ESTATE BOOMEntertainment Cities

Resorts World Manila

Makati Circuit

Solaire Manila

THE REAL ESTATE BOOMEntertainment Cities

City of Dreams Manila

THE REAL ESTATE BOOMResorts & Hotel Development

Pico de Loro Balesin Island Club

Alphaland Marina Discovery Shores Boracay

1. Queries on 2015 Property Market

a. Is it overheating?

b. Is there a glut in any of the market segments?

c. Are we ready for the Asean Economic Integration?

d. Can we compete with the more advanced real estate markets?

e. Which investment areas should we be looking at for real opportunities?

2. Good News!

a. Philippine Property Market remains strong and ebullient

b. Despite perceptible cooling of the market in the emerging economics (Brazil, Russia, India, China, followed by Indonesia, Thailand and Malaysia), the Philippines has maintained its competitive position.

c. There is clear consensus that the Philippines can easily recover lost ground and resume its former pace of growth in 2015.

3. Will the Bubble Burst?

a. BSP is on top of the situation.

b. Pre-emptive measures:

a.1. Mandated all commercial banks to provide adequate capital requirements in the light of their increasing exposure to real estate loans

b.2. Objective is to make sure banks would be capable of absorbing risks in the event of a shock.

b.3. Will start releasing its real estate price index in 2015 to better monitor prices, precisely to avoid possible bubble assets from forming

4. Land Values Are in Step with Market Forces

a. Market forces govern current land values and prices.

b. High demand for choice land in Metro Manila is driving the price of land in the growth areas beyond the 1997 level, when the Asian Financial Crisis struck. But there are no signs of nervousness.

c. Property developers with so much confidence in the local property market are prepared to bid high for the limited supply of suitable and large enough land in Metro Manila, even if this has the effect of pushing up skyrocketing prices of land in the growth areas.

4. Land Values Are in Step with Market Forces

d. Colliers International reports that two (2) parcels of land (both 1,600 sq.m.) in Fort Bonifacio owned by GSIS sold at a record of PhP 500,000 and P458,000 per sq.m.

e. Old abandoned JAKA Tower along Ayala Avenue which marred the skyline of the Makati CBD for many years is reported to have been sold to Ayala Land. Although officially undisclosed, the amount is said to be between P500,000 to P560,000 per sq.m.

5. Boom in the Retail Market

a. Developers catering to a consumption-driven economy.

b. In early 2013, some 170,000 sq.m. of new retail space entered the market. Of this, some 100,000 sq.m. is expected to have been completed before the end of 2014.

c. Some of the new malls that opened in 2014: Fisher Mall and Fairview Terraces in Quezon City, Century Mall in Makati, The District and Unimart Capitol Commons in Pasig City, SM Aura in Bonifacio Global City.

Fisher Mall, Along Quezon Ave., Quezon City

Fairview Terraces, Quezon City

Century City Mall, Makati City

New Malls in Metro Manila

SM Aura, Bonifacio Global City

5. Boom in the Retail Market

d. International brands are coming in from everywhere – North America, Europe, Asia, Australia, Middle East, and fuelling greater spending by the consumers in the country.

e. In 2014 alone, more than 250 international establishments under coffee and restaurants, luxury and business, and mid-range fashion retailers entered the Philippines. In mid-October, Swedish retailer H&M unveiled its 3,000-sq.m. flagship store at SM Megamall with four more branches set to open before year’s end.

5. Boom in the Retail Market

f. Sudden proliferation of convenience stores all over the metropolis and into the secondary cities in the provinces.

In 2012, according to a Wall Street Journal report, only 7-Eleven and Mini Stop controlled the convenience store market. In recent months, they have been joined by Family Mart, All Day, Circle K, Alfamart, and Lawson.

The current forecast is for the number of convenience stores to double from 2,000 today to about 4,000 in four years.

6. Real Estate Development is Less and Less Metro Manila-Centric

a. Metro Manila has breached its carrying capacity and it is time to push development to other areas. It now appears that it is the real estate developers that are making this happen.

b. There is growing consensus that “the Philippines is (now) becoming less Metro Manila –centric, and real estate developments have started to move outside the capital”

6. Real Estate Development is Less and Less Metro Manila-Centric

c. There is free opportunity to ensure that the new project master plans will be harmonious with the Comprehensive Land Use and Development Plans of the host cities or provinces or regions where the new projects are being put up. Hopefully, there are honest-to-goodness CLUPs and CDPs that will serve as framework for the emerging urban development projects.

d. Cebu and Iloilo in the south, and Pampanga and Bulacan in the north, seem to have been chosen by Megaworld, Ayala Land and Century Properties to be the sites of the country’s next-wave cities and critical catalysts of economic growth.

7. Tagaytay City – A Case in Point

a. Among the big players who have launched their own projects in this resort city are the SM Group, HPI, Megaworld, Ayala Land, Vista Land, Robinsons Land, and Cityland

b. Records show that total inventory of projects in Tagaytay for a period of three years amounted to P28.59 Billion. In 2013, after three years, only P10.972 Billion of inventory remained.

In other words, sales have been brisk at about P 829 Million a month, or P6.8 Billion a year.

7. Tagaytay City – A Case in Point

c. Condominium projects appear to be the leading development (80% of inventory), as dictated by the market demand.

d. Market observers say that the prospects for 2014 and 2015 could be even better.

e. But development seems to be happening without reference to a master plan. Traffic is becoming a major problem going to and around the city. Some of the structures are downgrading the natural scenic beauty of Tagaytay which was the best attraction in the first place.

Wind Residences , 15.45 has., (SMDC), 3250 units

Project Development in Tagaytay City

Tagaytay Highlands, 1,290 has., (Highland Prime, Inc.) Summit Ridge, Robinsons Land

Sky Ranch (SMDC)

Kasa Luntian , (Alveo - Ayala)

Project Development in Tagaytay City

Twin Lakes, 1,149 has., (Megaworld) Prime Residences, (Cityland)

Serin West (Avida – Ayala)

8. Tourism, Gaming and Leisure as Drivers of New Real Estate

a. Philippine tourism and hospitality industries are being developed to rival Macau and Las Vegas, with humongous and instant investments into the country.

b. PAGCOR’s Entertainment City complex in Paranaque City will see the opening of its second integrated resort this year – the City of Dreams Manila.

8. Tourism, Gaming and Leisure as Drivers of New Real Estate

c. This follows Solaire Resorts & Casino of Bloomberry Resorts Corp. which opened in 2014, and will be followed by the opening of the Okada Group’s Manila Bay Resorts in 2015. The Resorts World group has broken ground on its second property in the complex, and the plan is to complete it by the 4th quarter of 2018.

d. PAGCOR is looking at $ 7 Billion in gaming revenue by 2019.

SOURCE: http://www.pagcor.ph/the-manila-bay-resorts.php

Manila Bay Resorts Owner/Developer: Tiger Resort, Leisure

and Entertainment, Inc., (a subsidiary of Universal

Entertainment Corp., led by Japanese tycoon Mr. Okada Kazuo)

• a 44-hectare facility with ongoing construction

• to rise within the Entertainment City complex in Paranaque City come 2015.

• The 30,000 sq.m-casino alone, to open 24/7 and expect 20,000 daily guests, will have more than 500 table games and 3,000 machines to offer,

• its man-made beach resort will boast an impressively looking 100-meter diameter indoor Glass Dome.

9. New Townships & the Transformation of Cities into Business Landscapes

a. Government and private sector efforts are changing the urban landscape through expansion of the property market as a result of improved public infrastructure, political stability, control of inflation and keeping interest rates low.

But, clearly, it is the private sector that is leading the effort.

b. Best evidence is the push for the development of new townships and the continuous transformation of cities into business landscapes – where pocket developments are planned and built for self-contained communities in accordance with the live-work-study-play paradigm.

Watch out for development at the FTI Taguig area

AYALA ARCA SOUTH (74 HECTARES)

Transformation of Cities into Business Landscapes

The 74-hectare parcel of land at the FTI area was sold to Ayala Land, Inc. (ALI) for Php24.3 Billion recently or around Php33,000 per square meter,

The project will be a highly-connected master-planned business and residential district designed to be the “gateway to the south.”

10. The New Paradigm for New Communities

a. New fact of urban living: Filipinos have accepted the new community paradigm of live-work-study-play.

b. Thus, thousands upon thousands of OFWs and BPO workers are buying into communities where residences, office buildings and facilities, retail outlets, and even schools are designed side by side and in harmony with each other.

10. The New Paradigm for New Communities

c. More and more foreigners are also buying into these communities:

Expatriates in the employ of outsourcing and offshoring (O&O) companies that favor the Philippines as the location for their business.

Citizens from other countries who are actively participating in the ASEAN economic integration program and come to the Philippines to work, study, play, or simply live.

11. Business Process Opportunities are Driving the New Developments

a. O&O and BPO investors and locators are clear targets of the new townships, which are pre-selling strongly. These projects can be seen across CBDs – Bayshore in Pasay City; City Gate in Makati City, Uptown Bonifacio, McKinley West, and Arca South in Taguig City; Woodsite City and Capitol Commons in Pasig City, and Vertis North in Quezon City.

b. O&O and BPO companies will continue to bank on the country’s cost efficiency and skilled labor force. Thus, they are looking for office space in many urban centers of the country.

11. Business Process Opportunities are Driving the New Developments

c. Demand for office space is very strong among central business districts (CBDs) and other major growth centers of Metro Manila, like Makati City, Bonifacio Global City, Ortigas Center, Alabang and Pasay City. The only recent exception has been Quezon City.

12. The Response of Developers

a. Developers, such as SMDC, Vista Land, Ayala Land, Megaworld, Federal Land, and Century Properties have been quick to see the possibilities of a more vigorous industrial sector and are now keen on putting up developments in areas outside Metro Manila where these industries are locating.

b. Such upbeat economic trends are a consistent boost to the high-end to mid-market demand for luxury, high-end, affordable and mid-market townships and condominiums. It is the demand for these developments that have essentially overpowered the fears of a property bubble in the residential sector.

13. The Philippines Will Continue to be a Bright Spot In the Regional Property Market

a. The real property market in the Philippines is not only alive and well. It is vigorous, ebullient and competitive.

b. With greater improvement in our overall infrastructure development, basic urban services, more efficient and dependable mass transport systems, and more transparent and accountable governance, the Property Market will thrive and grow even more in the foreseeable future.

14. Conclusion

Without any doubt, the Philippines will continue to be one of the brightest spots in the Asian Regional Property Market. The year 2015 will contribute further to our country’s emerging role.

Thank you!

Hon. Rodolfo G. ValenciaRealtor/DeveloperLicensed Real Estate Broker, Licensed Real Estate Appraiser Licensed Real Estate Consultant

Chairman & President, The RGV Group of Companies

President, Philippine Institute of Real Estate Service Practitioners (PhilRES) Inc.

Former Governor (1992-2001)Province of Oriental Mindoro

Former Congressman, (1987-1992; 2004-2013) First District Oriental MindoroChairman, Committee on Housing & Urban Development, House of Representatives(14th-15th Congress)Past President, FIABCI, APREF (Philippine Chapter), Philipine Association of Real Estate Board, Manila Board of RealtorsFounder, Chamber of Real Estate and Builders Association