The recent election of Rodrigo Duterte as the Philippines’ president will bring positive changes, especially in view of his countryside development plans, infrastructure and agriculture focus, increased government spending and anti-crime priority, according to a recent analyst report published by Macquarie Research.
These goals are expected to have a positive impact on different sectors of the market over the longer term, including property, which was named the most preferred portfolio in the report.
“Countryside development should help the property sector, in addition to specific issues such as REITs reinstatement (helping recycle capital as another funding alternative), beneficiary of infrastructure enhancements, as well as on tax reform,” said Macquarie analyst Gilbert Lopez, the report’s author.
As a result, the country’s top property developers are expected to benefit under Duterte’s term. Macquarie’s top picks include Ayala Land, Robinsons Land and Megaworld Corporation, which won the 2016 Best Developer award at the fourth annual Philippines Property Awards.
The report stated that Ayala Land stands to gain the most from the government’s countryside development plans as it has a land bank of over 9,000 ha, the largest in the country.
Megaworld also has a nationwide land bank and property portfolio, while Robinsons Land is the most geared for REITs as it has the largest mix of investment properties, added the report.
Here are 5 things that President Rodrigo Duterte can do for Real Estate:
1—The Philippines could be home to the next Singapore or Hong Kong
In an interview with the Philippine Star last January, Duterte said he was planning to lease some of the country’s islands (there are around 7,500) to establish the next Singapore or Hong Kong.
“If we can lease our land for military bases, why not lease an island… to create our own version of Hong Kong, Taiwan or Singapore? The jobs will come here. Going abroad must be a choice, not a necessity,” he said, adding that the buildings and infrastructure owned by multinational corporations should revert to the Philippines after 50 years.
“From the 51st year to the 99th year, they will pay rental for those buildings and infrastructure from the Philippines, thereby creating the country’s income,” he told reporters.
2—Ending crime and corruption could help increase transparency
Duterte’s popularity is mainly attributed to his promise to eliminate crime and corruption within the first six months of his presidency, as the Wall Street Journal reminded readers.
While that ambitious promise remains to be fulfilled, his call to eradicate crime and corruption could improve real estate transparency, which has been categorised as “semitransparent” by Jones Lang LaSalle Philippines.
Lindsay J Orr, country head of JLL Philippines, told the Business Mirror that the “perceived corruption in the Philippines has affected the country’s transparency rating.”
3—Secondary and provincial markets could be boosted
Duterte is likely to decentralise Manila and promote impoverished provincial locations, where he aims to bring prosperity, citing a “crime-less” Davao as his template.
“Davao City is my Exhibit A,” he was quoted as saying last January by online news agency Rappler.com.
“Before a city or province can really prosper, you have to establish order. So that the investors would be coming in, comfortable in their thoughts that there would be no corruption, that they are safe, and that their businesses will prosper.”
4—Equal opportunity among real estate buyers… can it be achieved?
Duterte received a lot of criticism from various sectors for his offensive or insensitive statements during the campaign period, with some comparing him to US presidential aspirant and real estate mogul Donald Trump. That same trait has also endeared him to his supporters.
The controversial politician was also reported to having a “soft spot for indigenous peoples” by issuing an anti-discrimination ordinance in Davao City upon learning that Muslims received discrimination from real estate agents.
5—Green space ordinance might be implemented nationwide
Sun Star Davao reported back in March that Duterte recently reinforced a city ordinance that requires property developers to allocate 10 percent of green space in residential subdivision development projects.
If he can push Congress to require developers nationwide to follow strict regulations on sustainability and urban planning, then the Philippines would be a greener place.
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