REIT to unlock prospects for local hotel developers
Ehda M. Dagooc (The Freeman) - June 19, 2019 - 12:00am

CEBU, Philippines — The implementation of the Real Estate Investment Trust (REIT) law in the Philippines is seen to open opportunities for local hotel developers to acquire international brands or build homegrown brands.

Property research and consultancy firm Colliers International Philippines forecasted that REIT proceeds can be used by developers to expand their operations, and compete head-on with established global brands.

REIT is a stock corporation established in accordance with the corporation code of the Philippines and the rules and regulations promulgated by the Securities and Exchange Commission (SEC) organized under the laws of a foreign country principally for the purpose of owning income-generating real estate assets and real estate securities.

Over the next three years, Colliers sees hotel REITs being an attractive option for developers given the sustained demand from the traditional sources such as Koreans, Chinese, Japanese, and Americans. Over the past three years, foreign arrivals have been growing by an average of 10 percent per year with the Tourism Department projecting arrivals to grow by about 15 percent in 2019 to 8.2 million tourists.

Chinese tourists, in particular, have been rising by 27 percent per annum from 2016 to 2018.

Colliers believes that the growing number of foreign tourists should be supported by rising demand for Meetings, Incentives, Conventions and Exhibition (MICE) facilities due to local and international events as well as a continued push for more domestic travel, driven by the popularity of the staycation concept.

“Over the past three years we have seen national players such as Ayala Land, Megaworld, Rockwell, and Filinvest being more aggressive in launching their own hotel brands such as Seda, Savoy, Aruga, and Quest,” Collier said in its market update report released yesterday.

Likewise, in Cebu local developers have been active in bringing in international brands.

These are, among others the Cebu Landmasters with the first Radisson Red in the country, AppleOne Properties’ Resorts Worldwide, Sheraton and Starwood Hotels in Mactan, and Grand Land’s Dusit Hotel.

“We project an occupancy of 70 percent in 2019 as we expect a subdued completion of new hotel rooms during the period. This is higher than the 69 percent posted in 2018,” it added.

Colliers International believes that improving the country’s travel and tourism competitiveness plays a crucial role in sustaining hotel occupancy rates and enticing local and foreign businesses to increase their leisure-related investments in the country.

Among the major issues that the Philippine government needs to immediately address are safety and security, air transport infrastructure, and the business registration process. The latter is particularly important if the government wants to attract more leisure related investments.

REAL ESTATE INVESTMENT TRUST
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