Asset management firm Pinnacle Real Estate Consulting Services Inc. expects a surge of at least double-digit growth in the real estate sector due to positive political climate brought about by the incoming Duterte administration.
In a Pinnacle report titled, “Stability and Growth - Market Insight Q2 2016,” the positive result of the previous national elections is cited to likely sustain the country’s robust economic growth and real estate market.
The report highlighted the other factors that may sustain economic growth.
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Business Process Outsourcing (BPO) industry leaders that may soon be overtaking dollar remittances from overseas Filipinos in terms of revenues, given the continued strong demand for office space.
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Political interventions such as incoming Finance Secretary Carlos Dominguez’s commitment to revisit the Real Estate Investment Trust (REIT) Law and its implementing rules and regulations.
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The enactment of Republic Act No. 10844 creating the Department of Information and Communications Technology (DICT) that will initiate the BPO and telecommunications industry growth.
Macroeconomic Indicators
The report also assessed the following macroeconomic indicators that projected the growth of the real estate market in 2016 and in the years to come.
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The Philippine gross domestic product’s (GDP) 6.9 percent growth for the first quarter of 2016. The growth was attributed to the election-related spending which is a big leap from the GDP annual growth of 5.8 percent in 2015.
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The BSP’s latest figures showing the steady growth of the net foreign direct investment (FDI) in the past five years, reaching close to $6 billion (P278 billion) in 2014 and 2015.
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The stable bank interest rate and foreign exchange which averages to 4.82 percent in May compared to 4.0 percent by the end of 2015.
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The consistency in Overseas Filipino remittances’ growth which reached a total of $25.77 billion (P1.19 trillion) in 2015, an increase of 4.6 percent from $24.63 billion (P1.14 trillion) in 2014.
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Remittances for the first three months of 2016 projected to $6.56 billion (P304 billion), a slightly lower 1.3 percent compared to 1.4 percent in 2015.
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Despite the low inflation related to weak economic activity, BSP has seen a generally stable labor market where the latest unemployment rate was tallied at 6.1 percent in April compared to 6.6 percent by the end of 2015.
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The Department of Tourism’s (DOT) recorded 5.36 million total visitors in 2015. By the end of March, tourist arrivals have already reached 1,602,253 which generated a total revenue of about P67.74 billion.
In 2015, the real estate sector grew 12.7 percent, boosting the strong 5.9 percent growth in the PSA’s Total Gross Revenue Index for the last quarter of 2015.
These indicators are very positive to consumers as well as to real estate developers which provide a strong economic footing for the country.
“After more than a decade of economic growth and several years of real estate boom, everyone is anticipating the positive political climate to sustain this growth,” Pinnacle said in the "Stability and Growth - Market Insight Q2 2016" report.
“While growth may not be phenomenal due to higher base, stable growth is more than welcome,” the property and real estate consultancy firm added.
What do you think about Pinnacle Real Estate Consulting Services Inc’s expectations for a surge of at least double-digit growth in the real estate sector? Let us know in the comments section below.
Source: International Business Times June 20, 2016
http://www.ibtimes.ph/pinnacle-expects-double-digit-real-estate-growth-developers-continue-meet-2683
