Property sector growth unprecedented — report

The growth of the local real estate sector over the past few years was likely the fastest pace the country has ever experienced.

“This has raised concerns for both optimists and skeptics as to where this growth is eventually headed,” real estate consultant Pinnacle Real Estate Consulting Services Inc. said in its latest report.

It noted that for the optimists, the economic situation has never been better and that it stands to further improve. “With sound economic fundamentals and fiscal policies in place, this period presents an opportune time for both end-users and investors to acquire real property, hence, the need to build more. As a result, most of the major developers have increased their budget for capital expenditures for 2012,” according to the report.

It noted, however, that for skeptics, the over optimism could lead into a potential oversupply and result into a serious economic backlash.

The lower income households, which is identified as the underserved segment and the primary target of these developers, may find difficulty in keeping up with the amortization. Even with competitive paying job opportunities abound, such as in the BPO sector, the number of qualified individuals are not sufficient to fill up the vacancy as reflected by a hiring rate of less than 10 percent as reported in some government sponsored job fairs.

Regardless of how these two parties view the situation the sustainability of the real estate sector necessitates corresponding developments in infrastructure for both utilities (i.e. energy, water and telecommunications) and transportation.

The main districts will constantly evolve as activity in these areas will continue to increase. These areas will experience a reshaping of its landscape with new and better structures and facilities. The excess activity will trickle down to the areas along its fringes causing these areas to emerge as new districts, it said.

The report added not to be overlooked is the development of the country’s tourist destinations which is one of the priority programs of the government.

Promoting the country as one of the top tourist destinations in the world will generate much needed revenues not to mention the possibility of attracting investments from both foreign and local entities. Development of the facilities and accessibility to these areas are of prime importance for this to succeed.

All of this will necessitate additional requirements for utilities for it to operate properly. To complete the synergy of growth and expansion, these areas need to be linked through an efficient road network, transport and telecommunications system, the report added.

As a testament to sustain this growth, major conglomerates have diversified their portfolio by including investments in these sectors, the report added.

To cite an example, two of the biggest conglomerates in the country, Metro Pacific Investments and San Miguel, have acquired substantial shareholdings in one of the country’s largest power distribution companies, Meralco.

The report noted that in the recent Asian Development Bank (ADB) summit, it was cited that the Philippines should invest more in development of infrastructure as this will improve services, promote more investments in the other sectors and eventually the overall growth of the country.

Together with the reforms being instituted to eliminate graft and corruption, this will make the country more attractive to potential investors be they foreign or local, it said.
Providing ease and security in doing business will be a strong motivation for investors to put their resources in the country.

The report added the Philippines has been cited as one of the emerging markets by some foreign market analysts. It is only appropriate that country lives up to this expectation.
“The government’s flagship program, the Public-Private Partnership (PPP) will do well in achieving these developments. In theory, giving both the government and the private sector a stake in these developments will put in place a form of check and balance system. This will ensure that both parties will keep up their end of the bargain and that these programs will be executed properly with no corners being cut,” the report said.

The first project to be awarded under the PPP program is the Slex-Daang Hari toll road which was awarded to Ayala Corp. Other projects lined up under the PPP pro-gram are the Nlex-Slex connector road, LRT 1 Extension from Baclaran to Bacoor, Cavite and the NAIA Expressway Project.

“For all this to succeed, there must be the political will and perseverance to see things through. It will not be easy but the benefits later on will be well worth the time, effort and resources invested,” it said. –Daily Tribune