REAL estate is one industry that reflects and supports the strong growth of the Philippine economy. It also creates a positive chain effect by boosting other industries, like the retail business, business process outsourcing (BPO) and tourism, through the property sector’s commercial or retail, residential, office and hotel or leisure segments.
Real-estate prices are increasing, but there are no significant risks of price bubbles because of the strong demand. For residential units, in particular, demand is mainly from end-users, like overseas Filipino workers (OFWs) and business-process outsourcing workers.
In an effort to track pricing trends in the domestic real-estate sector, the Bangko Sentral ng Pilipinas (BSP) this year created the Residential Real Estate Price Indices (RREPI), which would be released every quarter. The BSP said the RREPI, based on bank-approved housing loans, could be a useful tool in assessing the real-estate and credit-market conditions in the country.
Based on the RREPI, real-property prices in the National Capital Region (NCR) increased by 9.7 percent in the first quarter of 2016, compared to the same period last year. Real-estate prices in areas outside the NCR (AONCR) increased by 9.4 percent during the same period.
Other highlights: Condominium units posted the highest year-on-year growth in prices at 12.9 percent, followed by townhouses at 8.5 percent. About seven out of 10 residential real-estate loans granted were for the purchase of new housing units. Condominium units were the most common house purchases in NCR, while in AONCR, single detached houses were the most popular.
NCR accounted for 50.4 percent of the residential real-estate loans granted in the first quarter of 2016, followed by Calabarzon (Cavite, Laguna, Batangas, Rizal, Quezon) (28.4 percent), Central Luzon (7.6 percent), Western Visayas (3.8 percent) and Central Visayas (3.3 percent).
The real-estate sector’s growth has been so strong that some
companies are already experiencing labor shortage, particularly for skilled construction workers, as well as engineers. Property consultant Colliers International said in a separate study that this would continue to affect the delivery of real-estate units for all segments.
The Colliers study noted that six projects were scheduled for delivery in the second quarter of 2016, but only one was completed because of the “acute lack of skilled labor in construction.”
Nevertheless, the property sector is expected to sustain strong growth for the rest of the year because of low inflation (1.3 percent in the first half of 2016, well-below the government’s target of 2 to 4 percent), low interest rates and modest growth in OFW remittances.
These factors, according to Colliers, translate to greater purchasing power and higher consumer confidence, which will, in turn, benefit the various segments of the property sector.
What makes the growth of the real-estate industry significant is that its contribution to the economy is not only in terms of higher output or GDP.
The labor shortage being experienced by some developers show that the real-estate industry is a big employment generator. Jobs are being created not only during the construction phase, but also in the operation of businesses in the newly built malls, other commercial facilities, office buildings and hotels.
The real-estate industry also helps in developing new growth areas outside Metro Manila, thus encouraging and stimulating new businesses in the provinces, in the process raising household incomes in those areas.
The government’s focus on accelerating infrastructure development, particularly in many areas outside Metro Manila, like Mindanao, should also sustain the growth of the real- estate industry.
In the not-so-distant future, I hope to see the same modern landscape in the far-flung provinces of Luzon, the Visayas and Mindanao, as in Metro Manila.
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