Philippine Real Estate News - January 19, 2020

Hello everyone,

Here’s some select articles about Philippine Real Estate and our Economy from various newspaper correspondents that matters for your reference.  Take note that these articles when assessed actually guides us locally what direction the economy is going, what kind of issues our government is going through and generally, and how this affects our real estate market.  News directly affects investors / businessmen on their assessment of what business decision to make, this could be from the stock market ( which is a good barometer ) to daily activities ( expansion / downsizing of business, logistics. employment, construction supply chain, and other economic variables ).

from business world correspondent, L. W. T. Noble :

‘Hot money’ leaves PHL in 2019

MORE FOREIGN funds left than entered the country last year as global uncertainties took a toll on investor sentiment in the Philippines and other emerging economies.

Foreign portfolio investments (FPIs) — also dubbed as “hot money” due to ease by which these funds enter and leave the economy — saw a net outflow of $1.9 billion last year, according to data from the Bangko Sentral ng Pilipinas (BSP).

This is a turnaround from the $1.204-billion net inflow recorded in 2018 and also missing the BSP’s projection of $8 billion in inflows for the year.

Gross outflows for the year hit $18.502 billion, surpassing the $14.829 billion booked a year ago.

“Majority (or 97.1%) of these outflows represented capital repatriation while the remaining 2.9 percent pertained to remittance of earnings. The United States (US) received 75.1% of total outflows,” the central bank said.

The BSP said a big chunk of net outflows seen last year were from securities in Philippine Stock Exchange-listed shares ($1.7 billion). The rest were from peso government securities ($228 million) and other portfolio instruments ($22 million).

Meanwhile, gross inflows in 2019 totaled $16.602 billion, inching up 3.5% from the $16.033 billion in 2018.

The central bank said 77.7% of FPIs were securities listed in the PSE mainly involved in investments in “holding firms, property companies, banks, food, beverage, and tobacco firms, and retail companies.”

The balance was invested in peso government securities (22.3%) and other portfolio instruments (less than one percent).

“The United Kingdom, the US, Singapore, Malaysia, and Hong Kong were the top five investor countries during the year, with combined share to total of 74.3%,” the central bank said.

For December alone, FPIs also yielded a net outflow $320.96 million, a reversal of the $278.11-million net inflow seen the same month in 2018 but less than the $354.32 million net outflow seen in November 2019.

The month saw gross outflows of $1.435 billion, higher than the $1.302 billion seen in December 2018.

This beat the gross inflows worth $1.114 billion seen during the same month, which also dropped the $1.58 billion seen in the same month in 2018.

The BSP cited some offshore developments last year which affected hot money flows, including the continued trade tensions between Washington and Beijing, the escalating unrest in Hong Kong, the attack on Saudi Aramco’s oil facilities, and the US House of Representatives’ vote to impeach President Donald J. Trump.

Back home, the year also saw the passage of the rice tariffication law, the midterm elections, easing domestic inflation, the BSP’s move to slash banks’ reserve requirement ratios, and the “strong views” of President Rodrigo R. Duterte about the alleged onerous provisions of the concession agreements of Maynilad Water Services, Inc. and Manila Water Co., Inc., among others.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion called 2019 a “tumultuous year” not only for the country but for emerging economies in general.

“Small-open economies, like the Philippines, were highly vulnerable to dramatic market swings and volatility in advanced or developed markets,” Mr. Asuncion said in an e-mail.

“Although the attractiveness of the Philippines as a preferred investment destination is relatively high among emerging economies, market uncertainty and negative perception about global economic growth prospects does influence the inflows and outflows of investments in emerging countries,” he added.

Amid the 18-month long trade war between the world’s two biggest economies, Mr. Asuncion said there is a tendency for investors to prefer “safe-haven investments in advanced economies.”

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the hot money outflows seen in 2019 may be indicative of investor concerns.

“The decline in net portfolio flows in 2019 after an already lean performance in 2018 seems to suggest that investor concerns about the Philippines have gone way beyond the inflation spike episode in late 2018,” Mr. Neri said in a text message.

For his part, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said some local issues may have offset market optimism from the recent progress in the US-China trade talks.

“[The net outflow was] largely brought about by regulatory uncertainties especially on the country’s biggest water utilities…offsetting the optimism brought about by positive developments on the phase one trade deal between the US and China that led to some improvement in global market risk appetite…,” Mr. Ricafort said in an e-mail.

For 2020, hot money flows may continue to be affected by the progress of the trade talks between US and China, the tensions between the US and Iran, as well as some local developments, according to analysts.

“How the phase one [deal of US and China] pans out and is actually implemented is very crucial to the resulting sentiment toward more investment inflows into emerging markets, specifically the Philippines,” UnionBank’s Mr. Asuncion said.

“Offsetting geopolitical factors include any tensions between the US and Iran…that would lead to some volatility in global crude oil prices, but US-Iran tensions already eased recently with positive signals,” RCBC’s Mr. Ricafort added.

Mr. Ricafort said that among the local factors which could boost hot money inflows are the on-time approval of the country’s 2020 national budget paired with the extension of the validity of part of the 2019 budget, as well as the government’s catch-up spending on infrastructure.

“One offsetting local risk factor is the uncertainties on the timing and extent of the damage brought about by the Taal volcanic eruption,” he added.

The BSP expects a net hot money inflow of $8.2 billion this year, based on projections given last month. 

from Business World correspondent, Arjay L. Balinbin : 

DPWH announces completion of projects in Isabela, Leyte, Zamboanga

THE Department of Public Works and Highways (DPWH) said Friday that it completed a P122-million flood control structure in Isabela, a P34-million river wall in Leyte, and a P6-million farm-to-market road in Zamboanga del Norte.

The P122-million Magat River Flood Control Project will benefit the residents of Barangay San Roque, San Mateo, Isabela, the DPWH said in a statement.

The flood control structure, which will minimize the overflow of water during heavy rains, was started in June 2019 and completed in December.

Of the P34.7 million flood control project along the Bangon River in Barangay Arado, Palo, Leyte, DPWH Region 8 Regional Director Nerie D. Bueno said: “The 323.90-meter river wall was constructed by DPWH Leyte First District Engineering Office (DEO) to prevent the overflowing of Bangon River especially during typhoon season.”

“With the newly-completed 6.75 meter-high embankment, residents will no longer have to worry (about) any threatening events when heavy rains occur as this structure was constructed in accordance to the department’s standard specifications for flood mitigating structures,” Ms. Bueno added.

The DPWH noted that the flood control project was funded under the 2019 General Appropriations Act (GAA) of the Leyte First District Office.

The DPWH also completed a P6-million farm-to-market road project in Barangay Canupong, Gutalac, Zamboanga del Norte.

The project, according to DPWH Zamboanga del Norte 2nd District Engineer Romeo A. Sadalaga, “involves the construction of a 380-meter road with 5-meter wide carriageway and 20-centimeter thick concrete pavement.”

DPWH Secretary Mark A. Villar said: “This road hastens the mobilization and transportation of farm produce to market centers in the city, thus improving socio-economic activities in the area.”

“We hope to provide more farm-to-market roads in Zamboanga del Norte which has devoted most of their lands for planting agricultural products such as banana, corn, coconut, sugarcane, and palay,” he added.

from World Bank :

January 2020 Global Economic Prospects: Slow growth, policy challenges


  • The world economy is poised for a modest rebound this year, but outlook is fragile.
  • Emerging, developing economy growth to accelerate in 2020 as some emerging economies recover from periods of stress.
  • Rise in debt, slowdown in productivity pose challenges for policymakers.

Following its weakest performance since the global financial crisis, the world economy is poised for a modest rebound this year– if everything goes just right.

Hanging over this lethargic recovery are two other trends that raise questions about the course of economic growth: the unprecedented runup in debt worldwide, and the prolonged deceleration of productivity growth, which needs to pick up to bolster standards of living and poverty eradication.

Global growth is set to rise by 2.5% this year, a small uptick from 2.4% in 2019, as trade and investment gradually recover, the World Bank’s semi-annual Global Economic Prospects forecasts. Advanced economies are expected to slow as a group to 1.4% from 1.6%, mainly reflecting lingering weakness in manufacturing. 

Emerging market and developing economies will see growth accelerate to 4.1% from 3.5% last year. However, the pickup is anticipated to come largely from a small number of large emerging economies shaking off economic doldrums or stabilizing after recession or turbulence.  For many other economies, growth is on track to decelerate as exports and investment remain weak.

A worrying aspect of the sluggish growth trend is that even if the recovery in emerging and developing economy growth takes place as expected, per capita growth will remain below long-term averages and will advance at a pace too slow to meet poverty eradication goals. Income growth would in fact be slowest in Sub-Saharan Africa – the region where 56 percent of the world’s poor live. 


Per capita income growth lags behind long-term averages. © World Bank Group

And even this modest rally could be disrupted by any number of threats. Trade disputes could re-escalate. A sharper-than-expected growth slowdown in major economies such as China, the United States, or the Euro Area would similarly reverberate widely. A resurgence of financial stress in large emerging markets, as was experienced in Argentina and Turkey in 2018, an escalation of geopolitical tensions, or a series of extreme weather events could all have adverse effects on economic activity around the world.

Debt Wave

One feature overshadowing the outlook is the largest, fastest, and most broad-based wave of debt accumulation among emerging and developing economies in the last 50 years. Total debt among these economies climbed to about 170% of GDP in 2018 from 115% of GDP in 2010. Debt has also surged among low-income countries after a sharp drop over 2000-2010.

The current wave of debt differs from previous ones in that there has been an increase in the share of non-resident holdings of EMDE government debt, foreign currency-denominated private EMDE debt, and, for low-income countries, borrowing from financial markets and non-Paris Club bilateral creditors, raising concerns about debt transparency and debt collateralization. 

Public borrowing can be beneficial and spur economic development, if used to finance growth- enhancing investments, such as in infrastructure, health care, and education. Debt accumulation can also be appropriate in economic downturns as a way to stabilize economic activity.

However, the three previous waves of debt accumulation have ended badly – sovereign defaults in the early 1980s; financial crises in the late 1990s; the need for major debt relief in the 2000s; and the global financial crisis in 2008-2009. And while currently low interest rates mitigate some of the risks, high debt carries significant risks. It can leave countries to vulnerable to external shocks; it can limit the ability of governments to counter downturns with fiscal stimulus; and it can dampen longer-term growth by crowding out productivity-enhancing private investment.

This means that governments need to take steps to minimize risks associated with debt buildups. Sound debt management and debt transparency can keep a lid on borrowing costs, enhance debt sustainability, and reduce fiscal risks. Strong regulatory and supervisory regimes, good corporate governance, and common international standards can help contain risks, ensure that debt is used productively, and identify vulnerabilities early.

Productivity Slowdown

Yet another aspect of the disappointing pace of global growth is the broad-based slowdown in productivity growth over the last ten years.  Growth in productivity – output per worker – is essential to raising living standards and achieving development goals.

An extensive look at productivity trends in this edition of Global Economic Prospects focuses on how the productivity slowdown has affected emerging and developing economies. Average output per worker in emerging and developing economies is less than one-fifth that of a worker in an advanced economy, and in low-income economies that figure drops to 2%. 

Among emerging and developing economies, which have a history of productivity growth surges and setbacks, the slowdown from 6.6% in 2007 to a trough of 3.2% in 2015 has been the steepest, longest, and broadest on record. The slowdown is due to weaker investment and efficiency gains, dwindling gains from the reallocation of resources to more productive sectors, and slowing improvements in the key drivers of productivity, such as education and institutional quality. 

How to rekindle productivity growth? The outlook for productivity remains challenging. Therefore, efforts are needed to stimulate private and public investment; upgrade workforce skills to boost firm productivity; help resources find the most productive sectors; reinvigorate technology adoption and innovation; and promote a growth-friendly macroeconomic and institutional environment.

Two other issues merit consideration in this edition of the outlook: adverse consequences of price controls and inflation prospects in LICs.

While price controls are sometimes considered a useful tool to smooth price fluctuations for good and services such as energy and food, they can also dampen investment and growth, worsen poverty outcomes, and lead to heavier fiscal burdens. Replacing them with expanded and targeted social safety nets alongside the encouragement of competition and an effective regulatory environment, can be beneficial both to poverty eradication and to growth.

And while inflation has declined sharply among low-income countries over the last 25 years, keeping it low and stable cannot be taken for granted. Low inflation is associated with more stable output and employment, higher investment, and falling poverty rates. However, rising debt levels and fiscal pressures could put some economies at risk of disruptions that could send prices sharply higher. Strengthening central bank independence, making the monetary authority’s objectives clear, and cementing central bank credibility are essential to keep prices anchored.

While the global economic outlook for 2020 envisions a fragile upward path that could be upended, there is high degree of uncertainty around the forecast given unpredictability around trade and other policies. If policy-makers manage to mitigate tensions and clarify unsettled issues in a number of areas – they could prove the forecast wrong by sending growth higher than anticipated.  

from Manila Bulletin correspondent, Lee C Chipongian :

POGOs no risk to real estate sector – Diokno

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the heavily-monitored real estate sector is not at risk against Philippine online gaming operators (POGOs) based on the BSP’s many stress tests.

“I don’t think that POGO poses such a big risk (to the property sector) but of course there’s a risk (but it will) not upset the growth of the economy,” Diokno told reporters Friday.

Diokno said property developers and real estate builders are cautious particularly since they have the BSP breathing down their collective necks.

“But real estate (companies) – the big ones – are most conservative,” he said, and these companies will ensure there are safety nets when dealing or conducting business with POGOs.

“In the case of POGOs they ask for one year advance payments so there will be no abrupt change (or reaction that will have an impact),” said Diokno.

BSP Managing Director Lyn I. Javier of the Policy and Specialized Supervision Sub-Sector, said the BSP is employing stability indicators to ensure the real estate sector is properly monitored.

The Residential Real Estate Price Index (RREPI), for example, is one of the stability indicators. There is also an expanded reporting on real estate and project finance exposures.

“What’s important is that lending (to) real estate companies are anchored on sound credit underwriting,” said Javier. The BSP’s stress testing and other prudential limits help in assessing and monitoring the property sector, especially property price trends.

So far, according to Javier, “we are satisfied with the results of these stress test results.”

There was a report from Fitch Ratings last week that warned that what it called a “sustained surge in Philippine property prices” in the last three quarters are putting the banking sector at risk and it noted “speculative activity that could affect market stability if unchecked.”

“To the extent that the increase in prices has been driven by a boom in the POGO sector, it may also expose banks and the property industry to greater policy risk,” according to Fitch.

Fitch reiterated that the national residential real-estate prices have risen by 10 percent year-on-year in the third quarter 2019, and as reported by the BSP, with condominium prices increasing by as much as 34 percent in the National Capital Region.

“The surge partly reflects a 75 basis points decline in Philippine policy interest rates since April 2019, but also strong demand from the POGO sector, which anecdotal reports suggest has accounted for around 30 percent of Metro Manila office demand over 2018 (third quarter),” noted Fitch which believes that this activity is likely to have had spillover effects on nearby residential property prices.”

from Daily Tribune correspondent, Maria Romero :


With an above-average economic growth, healthy external position, and sustainable public finances, the Philippines is being tipped for an upgrade in its long-term sovereign credit rating but policy reforms needed to be ramped up to achieve the aspired for A rating.

In April last year, S&P Global Ratings raised a notch higher its debt rating for the country from “BBB” to “BBB+.”

This made the country at par with Mexico, Peru, Thailand, and Trinidad and Tobago. It is also higher than the “BBB” ratings of Italy, Portugal, Hungary, Panama and Uruguay.

S&P said the positive improvement mirrors the forecast that the Philippine economy would achieve above-average real gross domestic product growth over the medium term, supporting the sovereign’s credit profile.

Likewise, debt watcher Moody’s Investors Service said the timely approval of the 2020 budget will help the country regain its economic growth momentum that was lost after the delay in last year’s budget approval.

In a statement, Moody’s said the P4.1 trillion national budget, which is 12 percent higher compared to the P3.7 trillion the previous year, is “credit positive.”

Address policy gaps

Economists believe that several structural reforms implemented by the government continue to pose a threat to the economy, making it unlikely that the country will get first-world debt rating in the coming years.

This was according to First Metro Investment Corp. (FMIC) independent director Victor Abola, who said that major overhaul in the government system is needed to secure higher credit rating.

Credit rating measures the country’s ability to fulfill its financial commitments based on its previous dealings.

“I don’t think we should expect an A rating anytime soon. For us to think (that this may happen) in the near future, I think our energy is better spent on improving our policies,” Abola told reporters in a spot interview in Makati City.

“(We need) to focus a lot more on removing obstacles among our local government units because we allowed them to go beyond their power in their turf. It takes so much time to get permits from them,” Abola explained.

Abola, who is also an economics professor at the University of Asia and the Pacific, said the inefficient government service should be immediately addressed as this prompts negative sentiments among investors.

“Reforms are really needed… At this point, I don’t see any credit rating (agency) giving us the A,” Abola said.

Abola said improved credit rating would allow the government to demand lower rates when it borrows from lenders.

Therefore, it could also transform to lower interest rates for consumers and businesses borrowing from banks using the government-issued paper as benchmarks for their loans.

Diokno remains optimistic

Although this was the case for Abola, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, who is a topnotch economist, believes otherwise.

Diokno was recently quoted as saying he is “very optimistic” the Philippines will achieve an “A” credit rating in the next two years amid economic hindrances.

“Our target is to get it in two years. The key there is more structural reforms. It is doable. We’ll get there. But the more important thing is that we do these structural reforms,” Diokno said.

“As long as the national government is able to implement the ‘Build, Build, Build’ program, the road to A status can be accomplished in 2 years’ time. I am very optimistic… It is doable, maybe in 2021 or 2022. That’s just in time because next year we will graduate to an upper-middle-class income country,” he added

As such, Diokno said the central bank will advocate for the much-needed reforms in several areas within its scope.

This includes the amendments to the Anti-Money Laundering Act of 2001 and the Human Security Act of 2007, amendments to the Agri-Agra laws and reforms in financial consumer protection and deposit secrecy.


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Professional Affiliation :
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Member, City of Taguig Real Estate Board 2016 - 2019
Real Estate Broker’s Association of the Philippines 2000 - 2015
President, San Juan 2008, 2009
Philippine Association of Real Estate Boards
San Juan Mandaluyong Chapter 1998, 1999
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Robert G. Sarmiento Properties
Professional Affiliation :
Philippine Association of Real Estate Boards
Member, City of Taguig Real Estate Board 2016 - 2019
Real Estate Broker’s Association of the Philippines 2000 - 2015
President, San Juan 2008, 2009
Philippine Association of Real Estate Boards
San Juan Mandaluyong Chapter 1998, 1999
PRC # 6569
PRC Lecturer’s License # 0294
+ 632 5536051 ( trunkline )
+ 632 4781316 ( telefax )
+ 632 8561365 ( line 3 )
+ 632 8041701 ( line 4 )
+ 6325148481 ( mobile landline )
+ 63 917 5364829 ( globe )


Give us a call at

+ 632 5536051 ( trunkline )
+ 632 4781316 ( telefax )
+ 632 8561365 ( line 3 )
+ 632 8041701 ( line 4 )
+ 6325148481 ( mobile landline )
+ 63 917 5364829 ( globe )


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