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April 3, 2018

Manufacturing investments up 244% to $1.15 billion in 2017–Lopez

NEWS
The Philippines posted a twofold surge in manufacturing investments last year to $1.15 billion, Trade Secretary Ramon M. Lopez reported  on Wednesday. Investments in the manufacturing industry rose by 244 percent, from only $334.25 million in 2016. Lopez said it accounted for at least 35 percent of the total 2017 equity capital placements at $3.3 billion against 13 percent of the total 2016 equity capital placements at $2.59 billion. Lopez noted manufacturing continues to deliver well for the economy, as the government is banking on it to become the pillar of economic growth in the country. He added the sector was receiving intensified backing since 2012 from the Department of Trade and Industry, which, for its part, is linking the government with private entities to bolster manufacturing. “It is a highly viable investment area and a source of meaningful and well-paying jobs for the people,” Lopez said of the industry. “Investor confidence [in manufacturing] is real.” The trade chief also said investors continue to trust the country in terms of its growth prospects, highlighted by the steady progress of its economy in recent years. “The Philippines continues to be a magnet for investments, and this is due to the country’s improving business environment, sound macroeconomic-policy reforms, aggressive infrastructure buildup, much-improved peace and order and political stability, favorable demographics, growing middle class and consumer base and, of course, our people, who have always been the country’s prime asset in attracting foreign investments,” he said.
(Source: Business Mirror, 14 March 2018)

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RESEARCH VIEW
Among the top-performing segments in 2017 was manufacturing, which grew by 8.6% from 7% in 2016. After years of sluggish growth, exports rebounded to post a 20.7% growth from 9.2% in 2016.We attribute the better-then-expected figures to improving global trade and the country’s rising competitiveness as a manufacturing hub. We see the demand for Philippine-manufactured goods accelerating over the near to medium term given the continued implementation of the country’s trade deals with European and Southeast Asian economies. Among the crucial deals signed during the ASEAN summit in Manila is the Memorandum of Understanding (MOU) between the Philippine and Chinese governments on industrial park development. This should raise industrial supply in the country particularly now that major developers are heading north of Manila. Recently, DoubleDragon acquired a 6.2-hectare lot in Luisita Industrial Park in Tarlac. The site will offer about 32,000 sq m (344,000 sq ft) of industrial space. The first phase of Ayala Land’s (ALI) 64-hectare Alviera Industrial Park in Porac, Pampanga is 95% sold. Tenants include firms into food, logistics, and warehousing. This indicates strong demand for industrial space and facilities outside of the Cavite-Laguna-Batangas corridor. Outside of Luzon, conglomerate San Miguel Corporation (SMC) is developing an industrial estate in Cebu. Meanwhile, ALI will develop an industrial estate as part of a mixed-use complex that will rise on its 526-hectare estate in Laguindingan, Misamis Oriental.


Megaworld to turn over P30 billion worth of residential units to owners

NEWS
Property developer Megaworld Corp. said it is turning over this year a huge bulk of its residential projects, valued around P30 billion, in Fort Bonifacio, Taguig City. The company said on Monday that around 2,300 residential units from five condominium developments in its townships in the former military camp in Taguig worth P30 billion will be turned over to owners within the year. These include the Florence Tower 1, Viceroy East Tower and The Venice-Giovanni Tower, all at McKinley Hill; Saint Moritz Private Estate in McKinley West; and One Uptown Residence and Uptown Ritz, which are both in Uptown Bonifacio. “This is, so far, our biggest inventory for turnover in Fort Bonifacio within a year. These projects are primarily located in our three bustling townships where demand for residential projects continues to go up, primarily fueled by the migration of several corporate offices within the Fort district,” said Noli D. Hernandez, the company’s senior vice president for sales and marketing. Viceroy East Tower, Florence and Venice Luxury Residences boast of its strategic location surrounding the Megaworld’s Venice Grand Canal in McKinley Hill. These three residential developments are also within walking distance from educational institutions, such as Enderun, Chinese International School and Korean International School, as well as from several office towers where companies like United Health Group, Wells Fargo, Samsung, Abbott and Concentrix hold their operations. One Uptown Residence and Uptown Ritz, on the other hand, are linked to Uptown Mall and Uptown Parade in Uptown Bonifacio.
(Source: Business Mirror, 19 March 2018)
 
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RESEARCH VIEW
Colliers International Philippines data show that 2017 Metro Manila condominium take-up reached 52,600 units, surpassing the previous year’s  42,000 units and recording the highest annual take-up since 2012. The secondary market similarly showed resilience as vacancy was virtually flat QoQ at 12.6% despite the completions. Given the record take-up, it was not surprising to see prices rise to record levels as well. Meanwhile, rents have been declining or flat at best, due to the combined effect of a double-digit vacancy and the influx of new supply. We conclude that condominium demand should remain strong due to Metro Manila still having more attractive rental yields than most Asian cities and sustained demand from Filipinos, foreign investors, and offshore gambling firms operating in Manila.

 

Ayala Land, Royal Asia to develop big Cavite lot

NEWS
Shanghai - Chinese e-commerce giant Alibaba said Monday it would appoint one of its founders as head of Lazada and inject another $2 billion into Southeast Asia's leading online shopping firm, boosting its regional expansion. Alibaba, which already owns 83 percent of Lazada with two investments totalling $2 billion as of June last year, has been trying to acquire both online and offline assets to further bolster its business. Lazada operates in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam and has 560 million consumers in the region. One of Alibaba's founders, Lucy Peng, will take over as chief executive officer of Lazada. Peng is currently the chairwoman of the Southeast Asia firm. "With a young population, high mobile penetration and just 3 percent of the region's retail sales currently conducted online, we feel very confident to double down on Southeast Asia," Peng said. Lazada founder Max Bittner said Alibaba's "new commitment of capital and resources is good for Lazada and good for the Southeast Asia e-commerce market".
Peng is also the chairwoman and chief executive of Alibaba's affiliate Ant Financial, which is planning a separate public offering.
(Source: ABS-CBN News 19 March 2018)
 
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RESEARCH VIEW
Unlike the United States and other Western economies where brick-and mortar businesses close shops due to the fierce competition brought about by online retail businesses,  Colliers believes that malls remain an important part of the Filipino lifestyle and continue to attract consumer traffic. This is the reason why developers and retailers do not migrate totally to e-commerce but in fact use online shopping and social media platforms to complement their physical stores. Millennials, for instance, now shop on the photo-sharing application Instagram. We believe that this is a thriving opportunity that mall operators should tap. Alibaba’s investment indicates the potential of e-commerce in Southeast Asia.


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