June 23, 2018, 10:18 am
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Growth to benefit property sector

Property consultant Colliers International  is optimistic that the Philippines’ growth will remain stable over the next five years, benefitting the property market. 

Colliers said the property market will benefit primarily from the government’s accelerated infrastructure spending. 

“Aside from unlocking land values in areas outside Metro Manila, ramped up public infrastructure outlay coupled with decentralization should open more opportunities for firms engaged in construction, and operation and maintenance (O&M) of key transport infrastructure,” it said. 

“Hence, we encourage the developers’ infrastructure units to explore O&M opportunities involving transportation projects in and outside of Manila.

Economy and property on upward trajectory,” it added.

 The government Tuesday reported that the economy grew to 6.7 percent last year, putting the Philippines’ growth the third fastest in the region, after China’s 6.9 percent and Vietnam’s 6.8 percent. 

It however outpaced Malaysia’s 5.2 percent and Singapore’s 3.5 percent. 

“Although slower than the 6.9 percent recorded in 2016, an election year, the 2017 GDP indicates the country’s strong macroeconomic fundamentals with growth primarily driven by consumption, manufacturing, exports, and infrastructure. These segments have a positive impact on the country’s property sector,” Colliers said.

 Colliers said it expects consumption picking up this year due to the implementation of the first package of the Comprehensive Tax Reform program which expands the purchasing power of employees. 

Last year consumption grew 5.8 percent, slower than the prior year’s 7 percent.

“Coupled with low inflation (3.2 percent in 2017 and with the government’s 2 percent to 4 percent projection this year), higher take-home pay should have a positive effect on Filipinos’ retail spending. Consumption is also buoyed by Overseas Filipino Workers (OFW) remittances, which reached USD28.2 billion from January to November 2017, up 5.1 percent,” it said. 

Colliers said the continued remittance growth and stable interest rates “should sustain demand for housing in the Philippines, especially in urban areas outside of Metro Manila, where markets are smaller but more stable in terms of end user demand.” 

“We are optimistic that a significant part of the remittances sent in by OFWs annually will be set aside for Filipinos’ housing requirements. Higher disposable incomes also propel the Restaurants and Hotels sub-sector, which recorded an impressive 9.5 percent growth last year from 7.6 percent in 2016. The subsector continues to benefit from a burgeoning domestic travel market,” it said.
“Among the top-performing segments in 2017 was manufacturing, which grew by 8.6 percent from 7 percent in 2016. After years of sluggish growth, exports rebounded to post a 20.7 percent growth from 9.2 percent in 2016. We attribute the better-then-expected figures to improving global trade and the country’s rising competitiveness as a manufacturing hub,” it added. 

Colliers said demand for Philippine-manufactured goods is seen to accelerate given the continued implementation of the country’s trade deals with European and Southeast Asian economies. 

“Among the crucial deals signed during the ASEAN summit in Manila is the Memorandum of Understanding (MOU) between the Philippine and Chinese governments on industrial park development. This should raise industrial supply in the country particularly now that major developers are heading north of Manila,” it said.

“The implementation of the first package of the Comprehensive Tax Reform program is expected to yield close to P90 billion in additional revenues this year, 70 percent of which will be allocated to the Build, Build, Build Program of the government which covers projects that address congestion through better mass transport and new road networks. The additional funds will be used to concretize more than 14,000 kilometers of national roads and about 30,200 kilometers of local gravel roads. The government will also provide road access to nearly 8,000 isolated barangays and sitios. These projects should further unlock land values in the countryside,” Colliers added.
It noted that eight of the 10 projects that will be implemented using the additional tax revenues are in the provinces, supporting the government’s infrastructure implementation and decentralization push --- Pulilan-Baliuag Diversion Road; Camarines Sur-Albay Diversion Road; Tacloban City Bypass Road; Maasin City Coastal Bypass Road in Southern Leyte; Panay East-West Road; Cagayan de Oro Diversion Road; and Valancia City-Pangantucan Diversion Road in Bukidnon. In Metro Manila, the government has committed to complete the Bonifacio Global City-Ortigas Center Link Road and C-5/Katipunan Viaduct projects. Colliers sid it will benefit developers with office, residential and retail projects in those areas.
“Multilateral agencies and financial institutions are expecting the Philippine economy to expand between 6.5 percent to 7 percent this year. The country’s economic managers, meanwhile, are projecting a more optimistic 6.5 percent to 7.5 percent. The government hopes to realize this by complementing its infrastructure push with other economic reforms,” it said. 

“These include the planned reduction of the minimum paid up capital required for foreign retailers to open shop in the country. Aside from occupying space in the country’s brick-and-mortar malls, these companies should also contribute to office space take up across the major business hubs. Colliersalso sees the entry of 100 percent foreign-owned investment houses and the lifting of restriction on foreign contractors driving office space demand,” it added.
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