Cebu is booming

This “Queen City” in the Visayas continues to boom particularly tourism, property and retail.

Major real estate developers in Cebu are expanding several retail developments to cater to the growing demand for consumer goods.

These are primarily stand-alone supermarkets or neighborhood centers anchored by a supermarket, according to CBRE Philippines.

 Existing shopping malls are on expansion mode to increase mall patronage. Colonnade Shopping Mall, which has 6,000 square meters of gross leasable area, was reopened after undergoing major improvements amounting to P20 million.

 Retail developments launched during the second half of last year included J Centre situated along A. S. Fortuna. The three-storey mall has 70,000 square meters of gross leasable area and is anchored by a hypermarket.

 Last November, two SM Savemore Markets opened in Mandaue. Set to open in 2012 are SM Consolacion, which will have 40,000 square meters of gross leasable area, and Shopwise in Mambaling.

 Ongoing redevelopment of Ayala Center Cebu will bring in additional 36,300 square meters of gross leasable area upon completion in 2013.

 The retail sector thrives with the proliferation of mixed use office-retail buildings and residential condominium developments. Retail sales growth will be buoyed by the demand coming from residents and employees.

 CBRE noted that the stable domestic economy of Cebu has sustained consumer confidence.

 The growing retail spending is backed up by the unabated inflow of overseas remittances and rising income due to the growing outsourcing industry.

 The steadily increasing number of tourists visiting Cebu significantly contributed to retail sales growth.

 The existing broad consumer base prompted international brands to remain active in the leasing market.

 In the second half of 2011, Forever21 launched a branch in SM City Cebu. It is the first outlet of the US fashion brand outside Metro Manila. Krispy Kreme opened stores at the Ayala Center Cebu and Asiatown IT Park in October.

 Likewise, the leasing market is further strengthened by occupier demand coming from local retailers.

 CBRE said the 10.6-hectare retail development will be developed into a waterfront lifestyle strip that will offer a range of seaside leisure activities is intended to complement the residential-office-commercial space project of Filinvest.

 Filinvest Land, the retail component will offer a variety of retail, food, entertainment, and seaside leisure activities. The land development has started in October last year and its first phase will be completed by the third quarter of 2013.

 CBRE noted that Metro Cebu is maturing into the major retail hub of Southern Philippines and is capturing the opportunities that come from the economic drivers.

 With a population of 1.5 million and a total land area of 408 square kilometres, Metro Cebu can be likened to Singapore given its 694 square kilometer land area and 3.2 million resident nationals.

 With the right push and consistent support from both public and private sectors, Metro Cebu can become the newest retail destination in Asia, said CBRE.

Improving Philippine labor market to boost economy

The improving performance of the Philipine labor market in 2011 is expected to bolster the optimism for a better economy this year.

 Socio-economic Planning Sec. Cayetano Paderanga, Jr. stressed that the country generated more employment in 2011 compared to the previous year.

 

Employment level rose by 3.2 percent or 1.156 million, largely on the strength of the continued growth in services and the recovery in agriculture, although there was a slowdown in the industry sector,” said Paderanga.

 

The quality of employment remained positive last year, with strong growth in wage and salary employment (4.6%), modest growth in full-time employment (1.5%), and slight easing of the unemployment rate from 7.3% in 2010 to 7.0% in 2011, despite the increase in the labor force participation rate to  64.6%.

 

Paderanga said that the figures were taken from the results of the quarterly Labor Force Survey (LFS), which complies with international standards and guidelines prescribed by the United Nation’s International Labour Office.

 

When asked why the Philippines has a better unemployment figure compared to the United States, which has an unemployment rate of 8.3 percent in January 2012, Paderanga explained that this is because the character of our economy is different from those of developed nations.

 

“Our problem, however, is that many of the employed are working in the informal sector, where the income levels are really quite low. We would like to produce more work in the formal sector,” said Paderanga.

 

He noted that while the Philippines may have fewer unemployed persons, the country would compare unfavorably to developed economies in terms of underemployment, which increased from 18.8 percent in 2010 to 19.3 percent in 2011.

 

The unemployed is internationally defined as persons 15 years old and over without work, seeking work and available for work.

 

On the other hand, the underemployed are those of the same age bracket that are already employed but want to have additional hours of work in their present job or an additional job, or to have a new job with longer working hours.

 

“Many of those already employed are finding themselves in jobs that they probably are not satisfied with. They fully employed but wages are low,” said Paderanga in explaining that a high underemployment rate is an indicator that per capita income is low.

 

He added that the survey’s sample of 51,000 households makes the labor force survey the most comprehensive data set on labor force that can be used for microanalysis on employment.

Philippine stock market hit all-time high

Share prices are likely to consolidate in the near term with some profit taking following last week’s wave of buying that hit the composite index to another record high.

 “After finally breaking the psychological 5,000 resistance level, we may see the market taking a breather with some traders likely to take profits from the current run to record highs,” says AB Capital Securities.

 “The market does look expensive at 17.8X PE, which translates to an earnings yield of 5.6%.  Geopolitical concerns in the Middle East could be used as an excuse by profit takers to be more aggressive,” says AB Capital.

 Despite such concerns, AB Capital believes that the pullback would be minimal as so much liquidity are still on the sidelines, waiting for opportunities to come in.  

 “We recommend accumulating on dips with emphasis on banking issues like Metropolitan Bank and Trust Co. (MBT) and Security Bank Corporation (SECB).  On the more defensive issues, we see opportunities of laggards like First Philippine Holdings (FPH) and Energy Development Corporation (EDC),” says AB Capital.

 BPI Securities noted that the bourse once again landed to its new all-time high closing at above 5,000 level after Monetary Board policy slashed its interest rate by 25 basis points.

 Value turnover slightly declined by P1 billion to P7.1 billion with net foreign buying of P525 million.

 The most active traded stocks were AGI, PLDT, MPI, DIZ, AP, DMC, Ayala Corp. and Metrobank. Advances outnumbered declines 96 to 66 while 38 were unchanged.

 Week on week, the PSEi advanced 123 points (+2.46%) buoyed by better corporate earnings and the entry of more foreign funds.

 The continued upswing of the local market was buoyed by another cut in interest rates locally and hopes of a ratings upgrade.

 Local shares surged with the PSEi moving above the critical 5,000 level for the first time ever. 

 AB Capital noted that investors’ sentiments were also boosted by the release of strong 2011 corporate earnings and anticipation of sustained growth this year. 

 “Another positive driver for the market last week was Moody’s Investors Service comment that the country is now eligible for another credit rating upgrade.”

 “The country’s top finance officials recently provided rating agencies with an update on the country’s economic developments and concluded that the country is underrated.”

 “Among the major area of strengths identified were the government’s improving debt and revenue ratios, which was mainly attained through the Aquino administration’s continuing efforts to enhance tax administration.”

 “Going forward, the rating agencies are upbeat on the government’s aggressive push for reforms in sin taxes as it is seen to pull up the economy by as much as 1.3%,” says AB Capital.