HOW can the Duterte administration continue the growth momentum of the real estate sector? For global property portal Lamudi, the peace and order thrust of President Rodrigo R. Duterte goes beyond helping people move around freely.
“More than just allow(ing) people to move around freely with no fear of imminent threat to their well-being, an uncorrupt and decriminalized socio-political landscape means a less risky investment to foreign companies who are considering bringing their business to the Philippines,” Lamudi said in a press statement.
The business process outsourcing (BPO) sector, one of the country’s largest employers and revenue sources, will benefit from the new administration’s promise of reducing crime, it said.
In addition, the property portal also emphasized the importance of making socialized housing a top priority of the new administration. Lamudi believes that while there are home loans from government sectors, owning a home among Filipinos remains a challenge, and the current minimum wage is only enough to meet basic needs like food and children’s education.
“Home ownership is probably the biggest dream of all hardworking Filipinos, yet the current property market lacks the supply to make this a reality,” Lamudi said.
According to the Philippine Institute of Real Estate Service (PHILRES), the housing backlog in the country stands at 5.5 million and the rate is growing at 250,000 per year.
The Home Development Mutual Fund (HDMF) or Pagibig, starting July 1 this year, offers 5.5 percent interest for housing loans under a one-year fixed-pricing period.
Improving infrastructure, through better implementation of traffic laws, improving thoroughfares and building more roads, is also vital to support the property sector’s growth.
“(Better infrastructure) will open up more options for buyers and encourage them to consider purchasing properties outside known and more congested key areas,” said Lamudi.
Shortly after the May 9 elections, Duterte’s economic adviser announced a 10-point economic agenda that included a promise to invest an equivalent of five percent of the gross domestic product (GDP) on infrastructure.
The property sector also anticipates the new administration’s review of the Real Estate Investment Trust (REIT) law that is expected to usher more property investments into the country.
Pinnacle Real Estate Consulting Services, in its second quarter market insight report, said the industry welcomes Department of Finance Secretary Carlos Dominguez III’s announcement of the review of the REIT law’s implementing rules and regulations.
The law intends to incentivize income-generating properties like office, retail, hotel, and even residential and hospital developments, provided that the company that owns them is listed in the stock market and these companies will distribute 90 percent of their net operating income as dividends to stockholders.
However, Pinnacle said the subsequent rules on public float and value-added tax on the transfer dampens the appetite of would-be REIT company applicants.
The thrust on telecommunications and better utilities in the underserved areas should also be looked into, said Lamudi, these being vital to encourage developers to construct more homes in provinces.
Lastly, Lamudi believes the new administration needs to support the construction of green buildings through incentives. By incentivizing the creation of more sustainable residential, commercial, and retail structures, Lamudi said both developers and buyers will be able to do their part in lessening their carbon footprint, economize, and save money in the long run.