Real estate and housing in a VUCA world

In Photo: Senate President Aquilino L. Pimentel III delivers his keynote speech.

THE discussion on where the path of retail will lead continues, with the follow up event of Urban Land Institute (ULI) Philippines called the “Debate: The Future of Retail”.

In this day and age of volatility, uncertainty, complexity and ambiguity (VUCA), especially in the housing sector,  it’s refreshing and encouraging to know that various stakeholders and bright minds from different sectors would come together to come up with solutions that would benefit the  housing sector and ultimately—the public.

The Senate President flanked by Subdivision and Housing Developers Association Inc. (SHDA) President Christopher Narciso, SHDA Chairman Willie Uy and SHDA Convention Chairman Jeffrey Ng, along with the board of governors and board of advisers of SHDA

This was what the Subdivision and Housing Developers Association (SHDA) Inc. aimed to do and able to successfully accomplish during its recently held annual National Convention with the theme “Housing Partners for Progress through Inclusive Growth”.

The housing sector is currently engulfed in a number of pressing issues. To begin with, a recent report states that as of 2016, the estimated housing back log in the Philippines is at a staggering 6.9 million units.  Industry trends also show that the average increase in the number of households is 435,000 per annum, while the average number of housing units constructed is at 233,000 per annum—clearly, there’s a need to catch up.

The planned lifting of value-added tax (VAT) suspension on low-cost housing is also a concern combined with a reduced housing budget.

The two-day conference became a platform to discuss these current and significant housing issues that impact Filipinos and the whole country and on how the housing sector can contribute to overall inclusive growth.

Highlights of the National Convention include a presentation made by Housing and Urban Development Coordinating Council (HUDCC) Assistant Secretary Avelino D. Tolentino III on Building Adequate, Liveable, Affordable and Inclusive (Balai) Filipino Communities.  The HUDCC is set to launch a nationwide housing program called “Balai Filipino”that aims to improve government efforts in addressing Filipinos’ housing needs, as well as engage participation of the private sector.

Tolentino helpfully gave an overview of the housing situation in the country, shared factors contributing to the growing housing problems and discussed the housing sector’s performance.

According to Tolentino, factors that contributed to the growing housing problems are having limited appropriation for the housing sector especially in the 2018 national budget, dealing with limited supply of government land for residential use, low affordability of targeted beneficiaries and the adverse impact of climate change, which displaces  hundreds of  residents during the onslaught of strong typhoons.

Given the challenges, Tolentino was still able to share housing accomplishments which involved anti-red tape initiatives like Land Registration Authority’s (LRA) Special Lane for CTE Processing of urgent housing projects and a faster processing of housing-loan applications in Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industria at Gobyerno (Pag-ibig). Government-to-government arrangements will also fast-track the take-out of community mortgage program (CMP) loans. Tolentino also stated that through PAG-IBIG, an affordable housing program for minimum-wage earners, which applies a 3-percent per annum interest rate—considered the lowest in the market, has been developed. The public can also expect reforms in the housing sector especially in reducing processing time for licensing and permitting for housing projects and for the development of a computerized and integrated e-Housing system to curb corruption and red tape.

House of Representatives Committee on Housing and Urban Development Chairman Rep. Alfredo B. Benitez, on the other hand, talked about bahayaninan, which delved on partnership for inclusive growth. Thankfully, without any sugarcoating, Benitez acknowledged that there is a glaring mismatch between housing supply and housing demand in the country today.

Among the notable solutions proposed to ensure inclusive growth is to build “in-city housing” which ensures connectivity of households to employment and social services. This is something I vehemently agree with since I believe that while housing is more affordable in rural areas or in the “suburbs”, it is quite far from job and income opportunities.  It is a so-called inconvenient truth.

To be able to accomplish the in-city housing plan while dodging the exorbitant prices of land in urban areas, Benitez stated that the ideal thing to do is to unlock government lands to drive down cost of in-city housing. The government, including local government units, owns  3,419 hectares of land in Metro Manila with 1,138 hectares of it occupied by informal settlers. The lawmaker said these lands can be used for socialized and low-cost housing purposes and mixed-use development. He added that a strong public-private partnership is crucial in solving these issues. After all, working together forms part of an effective inclusive growth.

SHDA is also working with the government to improve the housing sector  and address key issues.

Among the highlights of SHDA national president Christopher Narciso’s report  include the legislative efforts that the organization is  supporting such as the Tax Reform for Acceleration and Inclusion, which utilized the study entitled “Measuring the Impact on Affordability and Housing Demand of Lifting the Value-Added Tax Exemption on Low-Cost Housing”. SHDA echoed the study’s findings that the lifting of the VAT exemption on socialized housing will worsen the housing backlog.

As a result, the Senate Committee on Ways and Means issued Resolution 165, submitting the Senate Bill 1592 (a substitute bill), which retains the exemption on socialized housing, and added a new provision exempting the sales of real properties not exceeding P2 million and those that are outside of Metro Manila from VAT.

SHDA has also come out with position papers on Investments Priorities Plan 2017 which  is pushing for continued registration for income-tax holiday of housing projects within Metro Manila and for reinstating the incentives for housing projects with selling price of P3 million instead of P2 million.

The SHDA National Convention mainly discussed four main tracks which focused on “Prospects for New Housing Developments” “Strategic Plans to Enhance Lives,” “Sustainable Growth” and “Partnership for Inclusive Growth”.

SHDA’s Narciso puts premium on how making reforms require working closely with the government and other  stakeholders.

“It is absolutely necessary to find out perspectives on certain issues from various sides. That way, formulating reforms that would impact the sector positively would be inclusive, balanced and more effective—sustainable even,” Narciso began.

“The National Convention has proven time and again that it’s a helpful platform that consistently brings together organizations and individuals who might have come from different places but are united by working toward the same goal: growth. Like I’ve said before, the conference is an interesting meeting of brilliant minds who come up with possible solutions to several issues,” he remarked.