Double-digit growth in real estate seen

MANILA, Philippines - Property and real estate consultancy firm Pinnacle Real Estate Consulting Services Inc. expects the real estate sector to post a double-digit growth this year.

In 2015, the real estate sector expanded 12.7 percent, boosting the strong 5.9 percent growth in the total gross revenue index of key industries.

“After more than a decade of economic growth and several years of real estate boom, everyone is anticipating the positive political climate to sustain this growth. While growth may not be phenomenal due to higher base, stable growth is more than welcome,” Pinnacle said in a report.

Pinnacle said the real estate industry is awaiting for a possible review and implementation of the Real Estate Investment Trust Law by the incoming administration.

Incoming finance secretary Carlos Dominguez earlier said the new administration wants to review the REIT’s implementing rules and regulations that imposes more stringent conditions on firms in order to be entitled to tax perks.

The REIT Law was enacted in 2009, which primarily aims to promote the development of the country’s capital market, broadening the participation of the public in the ownership of real estate in the country.

The law intends to incentivize income-generating properties like office, retail, hotel, and even residential and hospital developments, provided the company that owns them are listed in the stock market and these companies will distribute 90 percent of their net operating as dividends to stockholders.

“Subsequent rules on public float and value added tax on the transfer dampened the appetite of would-be REIT company applicants,” Pinnacle said.

The consultancy firm hopes that an amended REIT Law would enhance the attractiveness of owning office buildings that generate stable rental income. “A REIT company would likely put office buildings in the REIT portfolio since the investing public are well aware of the steady demand for office space and its recurring income,” it said.

Pinnacle said the country’s tourism industry may also benefit from incentives for real estate development.

Like the REIT Law and Philippine Economic Zone Authority (PEZA), the Tourism Infrastructure and Enterprise Zone Authroity (TIEZA) has been empowered to give incentives to investors and developers in the tourism industry to accelerate developments.