Bourse chief rules out REIT issuance this year

Published on Wednesday, 14 November 2012 20:29

Written by Miguel R. Camus / Reporter

The country’s real-estate sector remains on a growth trajectory with key themes, such as the massive housing backlog, strong office space demand, growing tourism and excess liquidity driving the industry forward, participants said during a real-estate summit on Wednesday.

Real-estate stakeholders such as top property developers, consultants and the Philippine Stock Exchange (PSE) discussed industry prospects during the Asia Pacific Real Estate Investment Summit in Makati City.

The consensus among participants was mainly positive although long-running issues like real estate investment trusts (REIT), an instrument that has stalled due to prohibitive tax and public-ownership restrictions, may still be a year away given the lack of progress on discussions with the government, PSE President Hans Sicat said.

There was also positive news for the residential sector, which has been subject to some concern by market analysts on a possible supply glut. The central bank has signaled it is closely monitoring prices and made it clear it would not tolerate any asset bubble. 

Much attention has been placed on the effects of the large number of inventory for mid-priced condominium units  entering the market but Antonino Aquino, president of property giant Ayala Land Inc. (ALI), played down those concerns.

ENJOY GOOD LIFE + INVESTMENT, CLICK HERE   

“The fundamentals of the country relative to overall demand situation is very strong,” Aquino told reporters at the sidelines of the summit.

Even then, Aquino said “there may be some short-term adjustments.” He said demand was most intense in the mid-market segment, where its Avida brand competes.

SMDC, one of the country’s most aggressive builders of mid-priced residential condominiums, said last week it is adopting a conservative approach when it comes to new product launches given its rapid growth in recent years.

“Developers should have their own way of differentiating their products. [For ALI] most of our products will be located in our mixed-use developments where we believe property values will be protected,” Aquino said.

ALI and other developers like the SM Group were also optimistic on the tourism segment given the government’s efforts to draw more foreign visitors.

The office space segment also remains one of the country’s brightest “sunrise” industries, CB Richard Ellis Philippines Inc. Chairman Rick Santos said during the summit.

Santos said the Philippine office building sector is still driven by the business process outsourcing (BPO) business, which he said is showing no signs of slowing down. He said full-year take-up in the domestic office space segment is estimated at 450,000 square meters, with take up at already 80 percent of that figure as of September.

Santos said growth should continue moving forward with some Eurozone nations facing debt problems and US corporations feeling the pressure to keep costs down—which will lead to more outsourcing activities.

 “It took 20 years to get all the stars aligned and what we are looking at is not a boom, not a short-term fix but the start of a long-term, sustained growth period,” Santos said.

Still, there have been some disappointments for the local real estate sector for issuers, such as the way REITs have stalled in the country.

Sicat remained optimistic on Wednesday despite the lack of progress on the PSE’s discussions with the Department of Finance.

“We have been trying to work with them but I don’t think you will see the REIT product anytime soon,” Sicat said at the sidelines of the summit.

He said the fiscal authorities could be more open to entertaining discussions on dropping its high tax requirements after “the country gets official investment grade” status. “So you are probably looking at a 12 month period,” Sicat said.