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Property:
Out of the Woods ? Perhaps one positive thing going for the country at the moment are some indications hinting of the possibility that the bust cycle in the property sector is finally coming to pass. The break is not coming from the banks; the disposal of non-performing assets in the housing sector still remains sluggish despite the many incentives dangled by government. Well, you can't entirely blame the lenders for their reluctance. It is certainly difficult to let go of billions in assets especially when these have to be sold at substantially reduced prices. Several areas of opportunities may hold the key to marshalling the property sector out of the woods, and it's just a matter of developing the resources available. For one, demand for commercial spaces is rising on the back of expectations of sustained economic recovery not only in the Philippines but also in other parts of the region. Influx of call centers The fact that Filipinos are among the most fluent English speakers in the region and adept when it comes to information technology have indirectly helped the property market. Office building unit rentals, for instance, are seeing some action because of the influx of more call center firms from overseas. And not only are lease or rental prices rising, so are the quality of commercial spaces that are being made available. Based on industry statistics, the Philippines' call center industry has around 25,000 contact center seats, which would likely double this year as big businesses realize the practicality of outsourcing most of their job requirement. Workstations are projected to reach 200,000 in the next five years. Dubbed as the country's sunshine industry and just second to dominant player India, there's still much room for growth as far as call centers - and consequently commercial space demand - are concerned. Choice retailing hub Trade liberalization and strong domestic spending have also supported the recovery of the property sector as more foreign firms start to put up their retail hubs. Such is the case of Walter Mart, Price Smart, Watsons and others. Consultancy firm Jones Lang LaSalle recently noted that rental for prime retail spaces in Metro Manila inched up 1.4 percent year-on-year in the first quarter to March, while vacancy rates fell by one percent. Retirement haven The Philippines is also being packaged as a leisure and retirement destination not only for Filipinos here and overseas but also for foreigners who may have found the Filipino's hostility simply addicting. The concept of the Special Resident Retirees Visa, which allows holders to permanently reside in the Philippines, along with a package of other incentives should further boost foreign interest in retirement communities and serviced vacation homes in the country. While the constitutional limitation of land ownership, specifically for foreigners, stays, foreign retirees may instead be encouraged to invest in shares of proprietary clubs owning the retirement communities. Leisure farms The concept of leisure farming has also excited most middle to high-income families who have grown tired of the hassles of city life. Tagaytay is the number one destination given its cool climate all year round and its proximity to the metropolis. Latest we heard is that property developer Belle Corp has its hands full servicing hundred of clients interested in its various residential and leisure farm projects in that side of town. Disposition of non-performing assets Recently, the National Home Mortgage Finance Corp. (NHMFC) sold P13.4-billion of non-performing asset representing close to 60,000 delinquent housing loan accounts of the Social Security System and the Pag-IBIG Fund. This is maybe an indication that the SPV Law that was long debated may perform miracles for the property and financial sectors. The sale to Deutsche Bank AG's affiliate is the first time a local financial firm - and a government entity at that - was able to sell such a huge amount of non-performing assets to a foreign investor. The fire sale may have led to huge losses since the assets carried an estimated value of P20 billion, but the overall effect cannot be underestimated. Funds stuck up as bad debts and idle assets are best re-lent rather than kept in the vault, in the first place. With so much
money now available for relending by the SSS and Pag-IBIG for the
housing loans of interested members, perhaps a harder push to get
new property projects moving is now feasible. The effect that banks will play in reviving the Philippine property market cannot be underscored. But until this finally happens, we cannot in all certainty say that the sector is, after years of quandary, finally out of the woods. Taxes, corruption and BIR on TV "Isyung Kalakalan at iba pa" on IBC News (4:30 pm and 10:30 pm, Monday to Friday) presents today a discussion of issues related to taxes, corruption and the Bureau of Internal Revenue. The 10-point program of GMA requires substantial funding that the government at present does not possess. Additional revenues must be realized either out of better collection of current taxes due or the imposition of new or higher taxes. What areas of the existing tax administration system require overhauling to improve collection efficiency? What new taxes can be imposed without necessarily affecting the overburdened consuming public? Watch it. "Breaking Barriers" with Mr. Bayani Fernando, Chairman, MMDA "Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature on Wednesday, 14th July 2004, MMDA Chairman Bayani Fernando. What initially might appear as complex problems in Metro Manila may actually be resolved by implementing simple basic solutions. However, the challenge is to have the will, determination and political acumen to push through with the implementation and show results. Also needed is the courage to accept mistakes and to change tact without losing sight of the objective. Surely, not all of the solutions offered by MMDA produced good results. Those that were not effective were immediately withdrawn and revised or put on hold. What is refreshing, though, is that MMDA is not short of ideas and initiatives and has, so far, demonstrated the political will to push through changes in the face of conflicting interests of local politicians and residents. Watch it. Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.
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