Wazzup Pilipinas!
The homegrown real
estate brokerage and consulting firm highlights key market indicators that
defined the country’s real estate market in 2018 and what will shape 2019
January 23, 2019;
Manila: The TRAIN Law, the government’s “Build, Build, Build” program, adjustment
of price ceilings for socialized and low-cost housing—these are some of the
real estate market indicators that defined 2018 and what will shape the market
in the years to come, as reported by Pinnacle
Real Estate Consulting Services, Inc. in its latest research.
Here are the major highlights of Pinnacle’s latest report.
2018 Highlights
1. TRAIN Law and Real
Estate
The Tax Reform for Acceleration and Inclusion (TRAIN) Bill
or the Republic Act 10963 took effect on the first day of 2018, whose main
purpose is to implement revisions in the Philippine internal revenue tax
system, thus providing additional disposable income to working Filipinos.
Aside from this, there were also allied gains in the taxes
involving real estate transactions. Some of these are the rate-reduction and
simplification of the estate and donor’ tax systems and value-added tax base
expansion affecting socialized and low cost housing segments, residential
condominium dues, residential leasing, and the much-delayed Real Estate
Investment Trust.
It is also said that 70% of the revenues from the TRAIN Law
shall be used to fund the infrastructure projects of the government.
2. Infrastructure
Gains for Real Estate
The government continues to invest heavily on projects under
the “Build, Build, Build” program. As of 30 November 2018, the National
Economic and Development Authority (NEDA) approved 35 infrastructure flagship
projects with an estimated cost of Php1.537 trillion. This is in line with the
current administration’s policy to undertake a minimum of Php1 trillion worth
of infrastructure projects per year until 2022.
On top of the list is the Php357-billion Metro Manila Subway
Project – Phase 1 funded by a loan from the Japanese government. This
25.3-kilometer underground commuter rail system will from Quezon City to Taguig
City with an extension going to the Ninoy Aquino International Airport.
3. Adjustment on
Price Ceilings for Socialized Housing
In 2018, the Housing and Urban Development Coordinating
Council (HUDCC) issued House Resolutions Nos. 1 and 2 to increase the price ceiling
for socialized subdivision and socialized condominium housing projects,
respectively. The adjusted price ceiling for horizontal socialized housing
projects now range between Php480,000 and Php580,000.
Price ceiling for vertical socialized housing or socialized
condominium projects is between Php700,000 and Php750,000 for Metro Manila and
selected nearby areas, and between Php600,000 and Php650,000 for other areas.
There were no existing or separate housing ceiling under this category.
4. Boracay Closure
In April 2018, the government ordered the closure of Boracay
for a period of six months to rehabilitate the island. Fast forward, Boracay reopened
to the public in October 2018, but the government has now enforced stricter
rules and regulations in the operation and maintenance of the island in order for
its tourism industry to be sustainable. Major changes are the reduction of the
daily tourist capacity and accreditation of resorts, hotels, and other lodging
facilities ensuring they are environment-friendly before they operate.
The closure and rehabilitation of Boracay may have
encouraged sustainable and responsible tourism as the government is closely
monitoring the situation in El Nido and Coron in Palawan, Puerto Galera in
Oriental Mindoro, and Panglao in Bohol.
5. New Manila
International Airport in Bulacan
The 50-year concession agreement for the New Manila
International Airport finally got the approval from the National Economic and
Development Authority. San Miguel Holdings Corporation (SMHC), a subsidiary of
San Miguel Corporation, submitted the unsolicited proposal for the
construction, operation and maintenance of the airport.
The project will be constructed in a 2,500-hectare land in
Bulakan, Bulacan with an estimated project cost of Php735.6 billion. Once
completed, the airport will have a passenger capacity of 100 million a year
which is thrice the passenger capacity of the Ninoy Aquino International
Airport.
2019 Indicators
1. Updates on REITs
The Securities and Exchange
Commission (SEC) and the Bureau of Internal Revenue (BIR) have made moves to
dismantle two roadblocks that hinder the full implementation of the REIT Law.
The SEC, for its part, has agreed to lower the minimum public ownership (MPO)
to 33%, provided that the BIR clarifies that initial transfers of property to
REITs are exempt from VAT as provided by the TRAIN Law. Statement from BIR
Commissioner Caesar R. Dulay affirm that the interpretation of the TRAIN Law,
saying that the initial property transfers to REITs are VAT-exempt as long as
they qualify under Section 40(C)(2) of the 1997 tax code.
2. TRABAHO Bill
The Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO)
Bill or the second package of the TRAIN (Tax Reform for Acceleration and
Inclusion) Law was approved on third and final reading at the House of
Representatives. As its title suggests, its objective is to generate better and
high-quality employment opportunities by attracting new business and
investments through reduction of their corporate income tax (CIT). The
Philippines has the highest CIT among ASEAN countries at 30%. Singapore, which
we could say as the most business-friendly state in the region, has a CIT of
only 17%.
3. Cebu Continues
Winning Form in the Tourism Sector
The second most important metropolitan area in the
Philippines, Cebu has a prosperous tourism industry, and the opening of the
Mactan-Cebu International Airport (MCIA) Terminal 2 has been a game changer and
only bolstered the province’s position as one of the country’s top tourist
destinations, according to the Department of Tourism (DOT). MCIA data shows
that there were 1.4 million foreign tourist arrivals in Cebu from January to
September of 2018, which is 22.76% higher than the figure recorded for the same
period in 2017.
Another industry that Cebu should focus on is the MICE
(meetings, incentives, conventions, and exhibitions) industry, according to DOT
chief Bernadette Romulo-Puyat. Two major international events will be held in
Cebu this year: Routes Asia 2019 and Centre for Aviation’s (CAPA) LCCs in North
Asia Summit. Cebu is a perfect target for big-ticket and high-profile events
because of its touristy ambiance and its new airport terminal. These events are
also expected to boost Cebu’s hotel occupancy this year.
4. Bay Area Continues
Uptrend
With a condo stock of approximately 20,000 units as of 2018,
the Bay Area has already surpassed Ortigas Center as Metro Manila’s third
largest condo submarket, and is expected to overtake the Makati central
business district as the capital’s second largest condo submarket. Meanwhile, the
Paranaque side of the Bay Area will soon have its own anchor retail tenant when
the Ayala Mall Bay Area beside the City of Dreams Manila opens sometime in
2019.
Touted as one of the biggest Ayala malls, foot traffic will significantly
increase on this side of Entertainment City, and will have a significant impact
on the resale price of condos near it. In addition, office rental rates in the
Bay Area have already breached the Php1,000 per square meter per month mark, on
par with rental rates of Grade A offices in the Makati CBD.
5. Central Luzon as
New Growth Area Outside Metro Manila
The current administration’s goal of spreading business
opportunities outside Metro Manila is definitely spilling over to Central
Luzon, most notably the areas within and around the Clark Freeport Zone. This
development is boosted by several planned transport infrastructure projects
that will improve the region’s connectivity.
One of these is the ongoing expansion project of the Clark
International Airport, the first phase of which is scheduled for completion in
June 2020, and involves a new 100,000-square-meter terminal being built by
Megawide-GMR consortium and is expected to increase Clark’s capacity to 8
million passengers per year. Second in the government’s list is the Subic–Clark
Cargo Railway, which will provide freight service between the Subic Bay
Freeport Zone and the Clark Freeport and Special Economic Zone.
Several national real estate players are seen to benefit from
these ongoing developments, most notable of them include the Filinvest group,
Dennis Uy’s Global Gateway Development Corp. (GGDC) with its Clark Global City,
and SM Prime. Recently, GGDC has engaged the SM group to be the first anchor
locator in Clark Global City. Pinnacle data shows a burst of activities in
Central Luzon, most notably Mabalacat, Mexico, San Fernando, and Porac in
Pampanga, LGUs that surround Angeles City.
6. Davao as the Next
‘It’ Destination for Investment
One of the most exciting places in the Philippines at the
moment, Davao City and the larger Davao Region will be the place to be this
year. One of the region’s major draws is the planned transport infrastructure
projects aimed at mitigating congestion in Davao City itself and improving
transportation logistics for the whole Davao Region.
Foremost is the construction of the 44.6-kilometer Davao
City Bypass Road that will commence in 2019. This ambitious project will
include a tunnel section and will start from the Davao–Digos of the
Pan-Philippine Highway in Toril and will terminate intersecting the
Davao–Agusan National Highway in Panabo City.
The city’s airport will also receive a much-needed upgrade
soon, thanks to the Davao Airport Operations, Maintenance and Development
Project that will start in 2019. Once completed, the airport’s design capacity
will be increased 500% to 17.9 million passengers per year. Data shows that in
2017, the airport handled 4,234,667 passengers, way above its design capacity.
With key infrastructures set to be delivered over the next
few years, property developers have been very busy changing the landscape and
skyline of Davao City dramatically. A multitude of property giants are bringing
their unique and different brands into the real estate market of the city. One
of the most anticipated developments is Ayala Land’s Azuela Cove and
Megaworld’s Davao Park District.
7. The Rise of Condo Submarkets
Outside Traditional CBDs
With land prices in the Makati central business district and
Bonifacio Global City scarce and prohibitively costly, developers are venturing
out of the traditional business districts for their next Metro Manila projects.
The Chino Roces area over the next few years will be a thriving condo
submarket, similar to the north of Ayala area, while Ayala Land and Lucio Tan’s
Eton Properties recently entered into a partnership to develop Parklinks, a
35-hectare master-planned project along C5 Road between Pasig and Quezon City
(close to Eastwood City).
About Pinnacle Real Estate Consulting Services, Inc.
Pinnacle Real Estate Consulting
Services, Inc. is a home-grown real estate brokerage and consulting firm. It
provides a full range of services to local and foreign investors, buyers, and
real estate lenders. It is composed of a team of experienced professionals
dedicated to enhancing the value of client investments throughout the
Philippines.
The company’s primary business lines are real estate asset
management and brokerage, real estate closing and advisory services, property
appraisal, research and consulting, property and facilities management, and
non-performing loan (NPL) asset management, among others.
Ross is known as the Pambansang Blogger ng Pilipinas - An Information and Communication Technology (ICT) Professional by profession and a Social Media Evangelist by heart.
