‘Aspirants must put weight on housing policies in economic agenda’
WHILE the country’s political arena is all heated up over this year’s elections, the local real estate sector is holding its breath until the political race is all done, according to industry analysts.
The ongoing election fever is expected to freeze any major real estate activity in the first two quarters of 2016, said marketing educator Enrique Soriano, program director for real estate and chairman of the marketing cluster of the Ateneo Graduate School of Business.
“HLURB (Housing and Land Use Regulatory Board) statistics for major residential developments, especially in the vertical segment, will see a steep decline in application for housing licenses in the first two quarters due to the Presidential elections,” forecast Soriano in an interview with The Manila Times, explaining that developers are inclined to hold on to their investment plans until the elections are done.
“Property players will continue to unload existing inventories and will wait out until after the elections,” he explained further. “For major projects exceeding P1billion and up, we can expect construction to commence right after the elections. The assumption will always be premised on an election result that is peaceful and acceptable to the majority.”
Meanwhile, in a statement Thursday, Michael McCullough, co-founder and managing director of property advisor KMC Mag Group, said investors are now concerned regarding the transition to the new administration and how it would impact economic reforms already in place.
“The Philippines’ short- to medium- term growth in 2016 hangs in the balance with the impending national elections in May,” McCullough said, stressing that a change in direction might affect investors’ business confidence.
“I guess anywhere else where there is a transition from one leadership to another, everyone holds their breath,” said Jones Lang Lasalle Philippines head of research Claro Cordero Jr. in a separate interview with The Manila Times, adding that investors in general are just taking a wait-and-see stance.
“It doesn’t necessarily mean that they’re pulling out,” Cordero stressed. “Decision-making might take longer now, until we wait for a peaceful exercise of the democratic process.
“We may see some delays in the decision-making by businesses because of the incoming elections—and that doesn’t happen only in the Philippines.”
In an interview with industry magazine Property Report, Lamudi co-founder Paul Philipp Hermann noted that in any market, policy changes have direct and indirect effects on the real estate industry.
Hermann cited the recent elections in Myanmar, for example, where there was a slowdown in the industry due to the “uncertainty of upcoming changes in real estate taxes and government policies,” but where the “new democratic government is certain to be a boon to the industry.”
“This is not uncommon in the emerging markets, and it usually resolves itself once investors and property hunters become more comfortable with new policies,” Hermann said.
In the home front, Soriano lamented that none of the Philippine presidential aspirants seems to have given weight on housing policies in their economic platforms.
“As to the presidential candidates, it is most unfortunate that none of them have articulated the importance of housing policies in their economic platforms,” Soriano noted.
He pointed out: “Real estate should be considered one of the overarching pillars in any political ecosystem, as the industry has a multiplier effect directly and indirectly benefiting 52 industries from steel, cement, labor to other sub industries. Candidates must realize the compelling importance of this industry and not set it aside as a ‘side dish’ in any political exercise.”
As for McCullough, he said the country’s growth in the short- to medium-term would be supported by the accelerated implementation of the pending public-private partnership projects, spending related to the May 2016 election, and the private consumption of the country’s young and rapidly expanding population.
Aside from the elections, McCullough said another factor that may affect the country’s growth in 2016 is its consumption-heavy but investment-light type of structure.
He noted that this makes growth in the long-term less inclusive and seemingly unsustainable unless it sees more investments.
Also, the lack of basic infrastructure in the country and its delay in opening up areas of the economy to foreign competition hinders potential growth for the economy.
“As long as these are not properly addressed, PH cannot fully maximize its strong fundamentals as well as the opportunities in its partnerships with other countries, such as the ongoing ASEAN integration,” McCullough said.
He added, though, that the Philippines’ consumption-heavy structure is also a key advantage for the country as it makes the economy less vulnerable to outside shocks.
At the end of the day, McCullough said the country’s growth for 2016 would be greatly affected by the election results.
“The main risks to the country’s growth are political, and the country’s economic potential will be highly affected by the policies, decisions, and actions of the new administration,” he concluded.