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 coming year. In this report, Pinnacle revisits last year’s highlights as we look for another banner year in 2019.
2018 Real Estate Market 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. Its main purpose is to implement revisions in the Philippine internal revenue tax system, thus providing additional disposable income to each working Filipino with a larger economic objective of boosting financial activities and sustained government funding.
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 billion. This is in line with the current administration’s policy to undertake a minimum of Php1 trillion worth of infrastructure project per year until 2022.
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. Increase in price ceilings means more developments can now be classified under this housing segment benefitting more private developers who can enjoy the tax privileges under the law.
4. Boracay Closure
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, a subsidiary of San Miguel Corporation, submitted the unsolicited proposal for the construction, operation, and maintenance of the airport.
2019 Indicators
1. Updates on REITs
Signed in 2009, Republic Act No. 9856 or the REIT Law is seen as a good alternative for those who want to invest in the property market without actually buying a piece of real estate. REITs are listed corporations that own and operate income-generating assets like offices, apartment buildings, hotels, warehouses, shopping centers, and even highways. In essence, a person who invests his or her money on an REIT owns a share in the property that the REIT operates, similar to an investment in equities.
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. A counter bill, however, currently could not get sponsorship at the Senate due to doubts on the effect of the bill on employment once it is enacted. Senators are asking the Department of Labor and Employment to provide relevant data in order to assess the impact.
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.
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. The ongoing turnover of Anchor Land’s Monarch Parksuites and Horizon Land’s Palm Beach Villas boosted the submarket’s condo stock, and we expect the area to soon overtake the Makati central business district as the capital’s second largest condo submarket, while recently launched projects include Aseana Holdings’ Pixel Residences (170 units), Megaworld Corp.’s Bayshore Residential Resorts (approximately 700 units), and Anchor Land’s Copeton Baysuites (approximately 1,000 units), all of which are in the Paranaque side of the Bay Area.
5. Central Luzon as New Growth Area outside Metro Manila
The current administration’s goal of spreading business opportunities outside the National Capital Region (NCR) is definitely spilling over to Central Luzon, most notably the areas within and around the Clark Freeport Zone, a former American military installation about 90 kilometers north of Manila. This development is boosted by several planned transport infrastructure projects that will improve the region’s connectivity.
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.
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.
Download Pinnacle’s latest Market Insight report to know more.
