• Property markets need to be more open – JLL

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    AN improved transparency system in the country’s real estate industry is expected to attract more foreign investments into the Philippines, according to a real estate services firm.

    In a market note, Jones Lang Lasalle Philippines head of research, consulting and valuation advisory Claro Cordero said the creation of the Residential Real Estate Price Index (RREPI), which is compiled by the Bangko Sental ng Pilipinas (BSP), is a step forward in improving the market transparency levels of the Philippine property markets.

    “Ranking among the semi-transparent markets, the availability of the RREPI is a major leap forward in efforts to provide high-quality accessible data to local and, especially, foreign property investors,” Cordero said.

    The RREPI aims to measure the trends in housing prices based on quarterly reports for residential real estate loans of universal/commercial banks and thrift banks in the Philippines.

    In June, the BSP released the maiden results of the index, which posted a 9.2 percent year-on-year increase in the first quarter of the year.

    “The survey results suggested that the growth of loans accompanying the growth of real estate activity in the sector is still at manageable levels with adequate risk controls imposed by the BSP,” Cordero noted.

    Despite the presence of the RREPI, Cordero said there is still a need for more high-quality, accessible data from Philippines for the country to be able to increase its transparency levels on a global scale.

    Based on JLL’s Global Real Estate Transparency Index for 2016, the Philippines ranked 46 among 108 countries, falling under the semi-transparent market category.

    Cordero emphasized the need to cover other property sectors, as the RREPI only tracks the residential property market.

    “Moving forward, there is a need to cover the other property sectors, as well as establish more specialized property indices to measure returns against a benchmark,” Cordero said.

    Higher transparency levels would also help in drafting policies to be implemented in the property markets.

    “As more data is collected, the availability of the new property index in the Philippines, albeit limited in scope, will be a better policy tool when looking for the early signs of asset bubbles and knowing when to introduce measures to arrest any unsustainable rise of property values,” Cordero said.

    Furthermore, Cordero said better transparency levels will attract more investments into the country’s property markets.

    “As the economy continues to grow and growth opportunities in the property investment sectors are made available, the step towards greater market transparency coupled with regulations that are more prudent, is a bold move to attract more investments in the sector,” Cordero concluded.

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