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August 31, 2017

DoubleDragon to build biggest hotel in Mindanao

NEWS
Hotel and leasing firm DoubleDragon Properties Corporation, through a subsidiary, has signed joint venture agreement with Davao-based W2JP2 Corporation to build Mindanao’s largest hotel in Davao City.DoubleDragon said the new hotel will rise on a 5,300 sqm. prime commercial lot located at Eco West Drive at the side of SM City-Davao. Hotel 101-Davao will be the largest hotel in Mindanao with 519 hotel rooms, a commercial and retail strip, and facilities to cater convention. The project is scheduled to start construction on the last quarter of this year with target completion by 2020. Hotel 101 is a brand of Hotel of Asia, Inc., a subsidiary of DoubleDragon. Hotel 101-Davao is an addition to Hotel 101-Manila near Mall of Asia, and Hotel 101-Fort which is already under construction. The company aims to have a total of 5,000 hotel room portfolio by 2020. DoubleDragon has recently upgraded its 2020 goal to achieve 1.2 million square meters of leasable space with a mix of office leasing, community mall retail leasing, industrial leasing and hotels.
(Source: Manila Bulletin, 23 August 2017)
 
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RESEARCH VIEW
Davao’s travel and tourism industry has been experiencing an uptick in hotel occupancy and rates since former Mayor Duterte assumed the presidency. We believe that Davao will remain an attractive location for tourists, business travelers, and hotel and leisure investors even after the current president’s term due to spillover effects of increased infrastructure spending and renewed investor interest. Aside from DoubleDragon, Movenpick has also expressed interest to build a new hotel in Davao as it cashes in on the thriving domestic tourism.


MOA expansion to be completed by end-2017

NEWS
The SM GROUP targets to finish the expansion of the SM Mall of Asia (MOA) before the year ends, which would make it the largest shopping mall in the country. SM Prime Holdings, Inc. started the expansion of MOA for its 10th year anniversary in 2016, in a bid to add around 250,000 square meters (sq.m.) more of floor space to the current 407,000 sq.m. “They’re trying to hit late this year, if not early next year. That’s a major expansion, and also they’re upgrading a lot of facilities,” SM Investments Corp. (SMIC) Senior Vice-President for Investor Relations Corazon P. Guidote told reporters at the sidelines of the Economic Journalists Association of the Philippines forum in Manila last Friday. When it opened, SM MOA was the largest shopping mall in the country at the time. However, it was soon overtaken by SM City North EDSA and SM Megamall, which also underwent expansion. The SM MOA expansion forms part of SM Prime’s plan to add five more malls under its network in 2017. To date, the listed firm owned by the country’s richest man Henry Sy, Sr. has already opened three of the planned malls, namely SM Cagayan de Oro Downtown Premier, S Maison at Conrad Manila in Pasay, and SM Cherry in Antipolo, Rizal. SM Prime is set to open another mall in Puerto Princesa, Palawan by the second week of September, which will have a total gross leasable area of 65,073 sq.m. Asked how many more the company plans to add, Ms. Guidote noted the annual expansion target is usually five to six malls. “But I think next year mas marami (there will be more) because they’re opening smaller malls. I think we’ll be closing around 10 malls next year. But in addition, they’re also expanding existing malls,” she added.
(Source: Business World, 28 August 2017)
 
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RESEARCH VIEW

The completion of SM Mall of Asia expansion project is expected to add about 250,000 sq m of leasable space to Metro Manila’s retail stock. As of 1Q 2017, the capital’s stock reached 6.5 million sq m. We expect the delivery of about 460,000 sq m of additional retail space for the year and this should raise Metro Manila’s vacancy to 10%-11% but we see this easing to 8%-9% as retailers absorb the new space. The F&B segment continues to drive the retail sector as it accounts for about 30% to 50% of leasable space in shopping centers, one of the highest levels in the Asia Pacific region. It is primarily sustained by remittances from overseas Filipino workers (OFW). F&B spending in the country grows by 7% annually, growing at about the same pace as OFW remittances over the past eight years.


PH to allow entry of 100% foreign-owned investment houses

NEWS
Fully foreign-owned investment houses will be allowed to operate in the country as the government will remove the restriction under the soon-to-be-released latest foreign investment negative list (FINL). Socioeconomic Planning Undersecretary Rosemarie G. Edillon said the Neda Board was expected to approve in a meeting in early September the removal of investment houses and financial investors from the 11th FINL. Every two years, the government releases the FINL, the list of sectors where foreign ownership or participation is limited. The 10th FINL issued by former President Aquino in 2015, through Executive Order No. 184, had practically kept intact the 9th FINL list of activities and sectors restricted to foreign equity and participation. According to EO 184, financing companies and investment houses regulated by the Securities and Exchange Commission were allowed to have up to 60-percent foreign equity participation. The consensus to remove investment houses from the FINL was reached during a recent meeting of the country’s economic managers, who found that there was no constitutional restriction in the ownership of investment houses, Edillon said. “Except if it involves, let’s say, damages or collateral, then it will be subject to constitutional restriction,” Edillon said. The Neda official said certain foreign-owned investment houses had expressed interest to set up shop in the country. As soon as the restriction is lifted, the government hopes to see interested firms to establish presence in the country, Edillon said.
(Source: Philippine Daily Inquirer, 22 August 2017)
 
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RESEARCH VIEW

The relaxation of foreign ownership restrictions under the foreign investment negative list (FINL) is a step in the right direction as it is expected to spur foreign investments into the Philippines. The easing of foreign ownership restrictions bodes well for the economy in general and the opportunities spill over to other key sectors such as property. The enactment of RA 10641 allowed the entry of foreign banks and this, in turn, contributed to greater office space absorption in Metro Manila. We are optimistic that the government’s decision to allow 100% foreign-owned investment houses to operate in the country should also chip in to office space absorption in the country’s capital. Moving forward, the lifting of foreign ownership cap in a number of economic sectors should also trickle down to residential, retail, and industrial segments.


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