RP now on last year of property-boom cycle

THE Philippines is on the 11th and last year of a property boom but the cycle could still be extended by the Aquino administration if it rids the real-estate sector of red tape and other sources of corruption.

This, according to noted urban planner Felino A. Palafox, who noted that the administration was coming in with “so much optimism.”

“Without corruption we can still have this 11th year significant for the sector,” Palafox told BusinessMirror on Thursday, the 21st anniversary of his firm Palafox Associates.

Palafox said the Aquino administration could take advantage of the closing window of opportunity by reviewing the number of signatures required for development and building permits.

He said it takes 32 signatures for a development permit and 12 for a building permit.

“These not only serve as devil’s playground for corruption but also as obstacles to the boom.”

Palafox said that by cutting down on red tape in securing permits for property-development projects, the government could earn 20 percent more while the private-sector costs could be slashed by 10 percent

He also said allowing foreigners to own at least 10 percent of their property in the country could help extend the last leg of the  property boom here.

The real-estate sector in developed countries considers a boom-and-bust cycle of seven to 11 years, Palafox said. In the Philippines, the cycle began in the latter years of the Estrada administration and took most of the 10-years under former President Arroyo.

The market shook with the September 11 terror attacks in the United States and the recession of the US economy in 2008, Palafox said, “but because of the remittances by millions of Filipinos in other countries, our property sector took off.” The boom was also driven by a budding business process outsourcing industry, he said.

With a huge budget deficit and a promise not to raise taxes, the Aquino administration maybe hard-pressed to finance many of its projects which could cost a total of P20 billion a year, according to some lobbyists.

Using the latest figures that Palafox Associates submitted to the Securities and Exchange Commission, the boom may have already tapered off as the partnership’s architect fees last year dropped nearly 30 percent (24.83%) to P97.05 million from P129.099 million the previous year.

The firm also had its total cash in 2009 slashed by nearly 33 percent (32.59%) to P28.99 million from a cash balance of P43.02 million the previous year.

Registered in 1991 as a general professional partnership, Palafox Associates is in architectural design, urban planning, master planning, environmental planning, interior design and consultancy. It’s not subject to income tax. –Dennis D. Estopace / Reporter, Businessmirror