TO say that so much has changed in so short a time is largely an understatement. With an unorthodox president at the helm, the country is now on the cusp of a “new normal”, particularly on the political, social, and economic front, where many of the things we have gotten used to are now changing based on the new political temperament.
Despite the massive upheaval in the government’s methodology, some things in the economic arena remain the same, such as the continued positive outlook for the local real-estate industry.
A few months after the new administration took over the reins of the country, property development continues to be on the upswing and we can only hope that this trend continues even through challenges both here at home and abroad.
So what is there to be happy about in local real estate? Quite a few, actually.
Increased infrastructure spending outside of Metro Manila
In his very first State of the Nation Address, President Rodrigo Duterte promised an increase in government infrastructure spending in the coming year. And, just recently, the Department of Finance announced that the government will spend around P861 billion in 2017 for infrastructure projects, focusing on areas outside of Metro Manila. This initiative aims to create an inclusive Philippine economy by developing areas outside the metropolis.
This thrust to develop the countryside will also be a boon to property developers, like Megaworld and Ayala Land, who have been, for the longest time, landbanking in the provinces, especially in emerging areas like Cavite, Laguna, Bulacan, Pampanga, Cebu, Bacolod Iloilo, Cagayan de Oro, Zamboanga, and Davao. In the real-estate industry, foresight definitely pays off.
BPO industry remains bullish
Despite earlier fears that the government’s sudden pivot in its foreign policy will affect business-process outsourcing companies here in the country, the local BPO industry remains strong. This may be attributed to the fact that BPOs set up shop here mainly because office-rental rates in the Philippines remain the lowest and best value in Asia, which is somewhere in the vicinity of $29 per square feet per annum.
Also, the government’s plan to decentralize Metro Manila will help BPO companies tap into the rich work force in the provinces and take advantage of even better deals in countryside office spaces. And as we have always known, as BPO interest in the country grows, so does the demand for premium office spaces.
Socialized housing has a champion
Despite the continued growth of the economy, a sustained expansion in foreign investment, and the constant influx of remittances from Filipino workers overseas, the country continues to lack shelter for a large part of its population.
The appointment of VP Leni Robredo as the chairman of the Housing and Urban Developing Coordinating Council (HUDCC) is a welcome development and is seen as a positive push for socialized housing. During her proclamation as HUDCC chairman, the Vice President said that she will seek the help of private companies, including property developers, in addressing the 1.4-million housing backlog.
I wrote here last year that in order to address the issue of informal settlers, there should be a large-scale program that combines new socialized-housing initiatives with resettlement, relocation and livelihood projects. With the Vice President leading the housing charge, this kind of holistic program may eventually come to fruition.
Sustainable building is now a priority
When he was still Davao City Mayor, Duterte created a city ordinance that required property developers to allocate 10 percent of residential subdivision-development projects to green spaces. Then, in his Sona, the President once again emphasized the importance of environment awareness and vowed to do what he can in pushing for this initiative.
I see these as positive signs that developing green buildings will eventually become the norm here in our country. I hope that the president can push our lawmakers to pass a law that requires property developers to strictly incorporate green elements in their developments. That would greatly hasten our country’s drive toward becoming a greener, more environment friendly place.
Still doing well
Five months into the new administration, we see signs that the property-development industry is continuing to thrive, amid old and new challenges and fears of investor flight. Only time will tell if this growth momentum will hold, but from all indications, it seems to be holding up really well.
In the next few weeks, I will try to write about what real-estate experts have to say about the events and trends that defined the property-development industry for the year, as well as what they believe 2017 will be for the sector. It will be interesting to find out their take on property development in the new normal.
As we go through the birth pains that oftentimes accompany something new, we should bear in mind that things have a way of sorting themselves out. As such, we shouldn’t be totally wary of change but embrace it with positivity and optimism. Let us keep in mind what Canadian writer and global leadership expert Robin Sharma once said: “Change is hard at first, messy in the middle, and gorgeous at the end.”
