DOF eyes faster growth in Duterte’s final quarter

The government’s chief economic manager vowed to “redouble” their efforts in the final months of the Duterte administration to recover lost opportunities incurred by the economy during the prolonged pandemic.

Finance Secretary Carlos G. Dominguez III said that their goal in the final quarter of the Duterte administration is to grow the economy at a much faster rate to recover the opportunities lost in the two-year pandemic.

Armed with the passage and implementation of its hard-won reforms, the Duterte administration “will continue working till the last hour of our mandate to contribute all that we can to our strong economic resurgence,” Dominguez told a virtual gathering of Rotarians.

“The reward for all the work we do now is a better future for the next generation of Filipinos,” Dominguez said in his recorded video message during the first day of the virtual Rotary International District 3870 Conference.

Dominguez said conditions for the Philippines’ post-pandemic rapid growth have never been better, owing largely to how President Duterte exercised strong political will to push game-changing reforms that that had gotten stuck in the legislative mill for decades.

“The election season will not be an issue. We have a long history of orderly and peaceful transfers of power. We will transition to the next administration a comprehensive fiscal consolidation plan to bring the country back to its high growth trajectory,” Dominguez said.

With the pandemic now subsiding and the Covid-19 vaccination program proceeding at a quick pace, Dominguez said the country is well on its way to a strong recovery from the pandemic that broke out in March 2020.

“Our risk management strategy culminated in a full-year growth of 5.6 percent in 2021, exceeding target and market expectations. This year, we expect our economy to grow by seven to nine percent,” he said.

In 2021, revenue collection was already five percent higher than in 2020, while total merchandise trade and remittances were also above the pre-pandemic levels, which all signal a return to robust economic activity, Dominguez said.

Dominguez said he expects to fully bring back revenue collection to pre-pandemic levels this year.

Moreover, the Duterte administration marked its final full year with foreign direct investments (FDIs) reaching a record-high of $10.5 billion as it continues to gain ground in reducing unemployment, Dominguez said.

The only glitch to this bullish outlook, Dominguez said, is the ongoing Russia-Ukraine crisis, which has magnified the dislocations created by the country’s two-year battle with the pandemic.

He said the Philippines, like all other nations, will most likely experience elevated inflation levels because of the impact of the crisis on oil and commodity prices.

“The Duterte administration is closely observing the developments and it is doing its utmost to mitigate the impact of oil and food price increases on our people,” Dominguez said.

“Our priority is to support the vulnerable sectors of our society from the ill effects of inflationary pressures brought about by the conflict,” he added.

The support will be in the form of cash grants for the bottom 50 percent of the population, fuel subsidies for the public transportation sector, and fuel discounts for small farmers and fisherfolk, Dominguez said.

Source: Manila Bulletin

Pandemic drives up costs of PHL socialized housing projects

The pandemic has driven up the production costs of socialized housing while the sector continues to face gaps in affordability and quality, the Subdivision and Housing Developers Association, Inc. (SHDA) said.

“The pandemic highlighted the urgency to address persistent vulnerabilities in the housing sector, such as housing affordability and quality gaps, particularly among low-income households,” SHDA President May Rodriguez said.

“But to address these vulnerabilities, the government should first introduce measures to remedy the increasing housing production costs — land, labor, construction materials, and cost of doing business, that the economic crisis has accelerated.”

The wholesale prices of construction materials in Metro Manila hit a nearly three-year high in November before slowing down slightly a month after, when mobility restrictions were relaxed, government data showed.

The Construction Materials Wholesale Price Index for the National Capital Region eased to 5.2% year on year in December 2021, compared to 5.4% in November.

Socialized housing will need to be a budget priority for the next government after the current funding emphasis on transportation and public works projects, Institute for Leadership, Empowerment, and Democracy Executive Director Zy-za Nadine Suzara recently said.

She had noted that the average share of housing in the national budget between 2016 and 2022 was about 0.3%, compared to infrastructure projects that account for nearly a quarter.

According to real estate services firm JLL Philippines, the overall residential market saw a slowdown in business activity during the pandemic.

“This was more felt in the socialized to low-end segments where a large number of units were returned to the market, with buyers pulling out from deals as they shift priorities and step away from big ticket purchases,” JLL Philippines Research Manager Karisse Garcia said in an e-mail.

But fewer units were being returned towards the end of last year, indicating a gradual recovery, she added.

As it gears towards recovery, SHDA is working with the government in identifying land that can be used for public housing, Ms. Rodriguez said.

“As the Philippines charts the path towards economic recovery, there is renewed momentum for increased investment in socialized housing,” she said.

“But to sustain this, the government should encourage the participation of the local government units, the private developers, and the communities themselves in conceptualization, identification of sites, and implementation of socialized housing programs.”

JLL’s Ms. Garcia said public-private partnerships could speed up the recovery of the sector.

“This is what was seen in several affordable housing projects launched during the pandemic such as Basecommunity, Tondominium and Binondominium in Manila City, as well as Uswag low-rise residential building in Iloilo, which came into fruition with the partnership of the different LGUs with private developers,” she said.

“Focus on socialized housing will need to be brought up to the national level with key government bodies getting their hands on the initiative.”

Source: BusinessWorld

What will drive real estate forward in 2022

Continuing to tread the recovery path, the Philippine real estate (RE) sector has shown not just resilience amid pandemic-led disruptions but also stable and positive performance, as well as adaptability. Yet, with more transformations being realized and solidified in the current landscape, individual players must remain agile in meeting what markets and consumers demand.

Looking at the overall landscape, JLL Philippines Head of Research and Consultancy Janlo de los Reyes expects the RE market to move with cautious optimism in 2022, following the performance in leasing activities last year. He stresses that “significant supply expansion is expected to exert pressure in 2022 on office, retail, hospitality, and residential sectors.”

Further into foreseen trends, meanwhile, policies are seen to provide legs for RE’s future growth. These include the Philippine Economic Zone Authority (PEZA) moratorium, which is regarded as a key factor in lease activity, particularly IT-BPM occupiers, which remains a key driver of the office market; and the Retail Trade Localization Act, which is projected to impact real estate activity as the act will hopefully attract more capital for prospective retailers.

JLL also forecasts the Regional Comprehensive Economic Partnership and the amendments to the Public Services Act to provide structural changes in the market, as these are expected to attract foreign investments.

Demand for data centers is also on the rise. Carl Dizon, JLL Philippines’ Senior Analyst for Capital Markets, says that the local data center industry is gearing up for the arrival of hyperscalers. “Hyperscalers and foreign data center operators may be expecting data localization policies as this is a growing trend across Southeast Asia,” says Mr. Dizon.

Moreover, the firm also sees a rising prominence of technology in the built-up environment due to continuous shifts in demand. “Sustainability, and safety and wellness are also accelerating technology adoption across occupiers,” Mr. de los Reyes noted. JLL cites contactless systems, access cards, automated sensors, and air-con filters as examples of adopted property technology (PropTech).

Moreover, Environmental, Social, and Governance (ESG) investments are essential to success in RE.

Nix Garchitorena, JLL Philippines’ Energy & Sustainability Services manager, emphasized the importance of a continued push for actionable steps in achieving sustainability goals. Out of the top 50+ clients globally, she explained, 96% have set ambitious, publicly-stated sustainability goals; and 88% of them have set those goals but will expire by 2025. Only 19% have a clear, real estate-specific sustainability action plan, and JLL’s goal in 2022 is to narrow the gap between publicly-stated sustainability goals and specific action plans.

Demand for green certifications is also on the rise, with both new and old offices making efforts to meet this demand. There’s also a push from the regulation side, Ms. Garchitorena added, with the Securities and Exchange Commission requiring all publicly listed companies to produce an annual sustainability report.

Given these apparent demands to update buildings, asset enhancement is seen as a solution for occupiers to consider.

“Over 50% of buildings in major cities are over 20 years old and most have not been upgraded to meet post-COVID requirements. As vacancy rates increase and rental rates decline, a ‘do nothing’ approach will not preserve or enhance value,” JLL Philippines’ Head of Project Development and Services Calum Swinnerton explained, adding that health and wellness, human experience, sustainability, and technology are areas whose enhancement focuses changed since COVID-19 began.

In conclusion, JLL Philippines’ Country Head Joey Radovan says that this year will definitely be more positive than last year. “The only thing that may slow down transaction decisions is the elections since clients are interested in how policies and regulations shaping real estate may affect their operations,” said Mr. Radovan.

Source: Businessworld