Speech of Senator Ferdinand R. Marcos, Jr.

Transcription

1 Speech of Senator Ferdinand R. Marcos, Jr. CREBA 5 th Monthly Business Meeting at the Grand Ballroom, Hotel Intercontinental, Ayala Avenue, Makati City on 30 May 2013 Mr. Charlie Gorayeb, President of the Chamber of Real Estate and Builders Association, Inc., (CREBA) officers and members of CREBA, guests, ladies and gentlemen. Again, let me thank Mr.Gorayeb and your other officers for the kind invitation to be your Guest Speaker in today s meeting. Mine is the pleasure and honor to be with you today. You must have missed me after more than six (6) months since your last convention in Palawan, that you ve decided to ask me to join you again today to update you on the industry and the new opportunities in the real estate 1

2 area currently being enjoyed in the various regions of the country including Metro Manila. I am confident that as real estate practitioners you are well informed on the current developments in the real estate sector, especially its housing component. But with your indulgence, allow me to refresh you on what I believe are the salient features of the current economic environment of the real estate sector and their impact on housing developments. Let me start my friends with the analysis of the different factors that have influenced the growth in the demand for real estate. Consider firstly the growth in the Remittances of Overseas Filipino Workers (OFWs). 2

3 For the past five (5) years, more especially in the lastthree (3) years, the Philippines has been surviving economicallyand principally on the increasing dollar remittances of our OFWs. With a 7% growth rate in 2011, OFW remittances increased to a level of $20.11billion in 2011 representing 6.8% of our Gross National Product compared with $14.4Billion in Preliminary figures reveal that as of the last quarter of 2012, OFW remittances have reached the $21.1Billion level.additionally, of the total number of OFWs as of 2011, around 9.2% came from the Ilocos Region compared to 12.5% from National Capital Region; 14.3% from Central Luzon; and 16.5% from Calabarzon. These statistics will surely change dramatically if we also recognize the existence ofunregisteredofws!! The huge amount of OFW remittances to their families and relatives here in the country has propelled the 3

4 Philippines into a consumption-driven economy. In 2009 for example, OFW household expenditures registered approximately 43.30% on food which in turn directly impacted the retail sector. The real estate expansion to the regions brought about by major mall developers and Metro Manila retailers and the proliferation of fast food chains is a direct response to this spending phenomenon. Of the total expenditure pattern of OFW Households, some 2.1% or $364 million in 2009 was reportedly spent on Housing. I am sure that you have witnessed these developments in the different regions of the country. Consider next the growth in Business Process Outsourcing (BPO). From a level of $3.2 billion in revenues in 2006, BPO revenues had increased to $8.9 billion in 4

5 2010,representing an average annual growth of 24%. Direct employment more than doubled from 240,000 in 2006 to 525,000 in The Business Processing Association of the Philippines (BPAP) has recently announced a Road Map projection of BPO revenues amounting to $25Billion by 2016 or a growth rate of some 19%. By 2016, an estimated 1.3 million will be employed directly by the industry with an estimated direct payrollvalued at $12.9 billion or Php564 billion. About Php232 billion or 41% shall be spent on food while Php73.7 billion or 13% shall be allotted by BPO employees for housing expenditures. Let us go to the third consideration: the growth in Tourism. In 2010, the number of tourist arrivals reached 3.5 million increasing to 3.74 million in 2011 and by 2016, 5

6 the Department of Tourism (DOT) projects 6.3 million visitors. Likewise dollar receipts reported in 2010 of$2.4 billion increased to $2.67billion in 2011 and by 2016 it is estimated to reach $4.5 billion. The DOT has further identified an average of annual growth of 4.5% in tourism arrivals as one major impetus for various real estate investments in the country. Among these investment developments are hotels, medical and cultural tourism projects, theme parks, retirement villages and meetings,incentive travels, conventions and exhibitions. The combined overall impact on demand for real estate by these three significant factors in the socioeconomic environment of the country has been manifested in the following real estate developments: 6

7 1. Preferences of OFW households have been clearly focused on housing, second only to food.ofws have now therefore become the major market of housing developers nationwide. Low cost housing units (P1.25M P3M) and mid-end units (P3M P6M) are the primary targets of OFWs.In the urban areas, the young generation OFWs with higher disposable income consumes most of the residential condominiums. The continuing growth in BPO influences both the rental housing units for its young employees and the surge in office space rentals. The resultant increase inrental housing units catering to BPO employees unfortunately also led to property price increases of 59.3% in , although slowing down in 2011 at 5.5%. 7

8 The real estate for office space is currently characterized with limited turnover, rising leasing rates, and strong pre-leasing demand. 2. The targeted increase of at least 10 million tourists and 35.5 million domestic travelers by 2016 shall require many many more hotel and resort rooms which is expected to be insufficient. This lack of hotel and resort rooms significantly points to the directions by which public and private sectors should focus on. Additionally, most tourists who are young professionals have been observed to have shown their preference for low-budget hotels. The current global demand for theme parks, family entertainment resorts and M.I.C.E. (Meetings, Incentive travels, Conventions, Exhibitions) has likewise reached the Philippines. We have to admit that thecountry 8

9 right now has limited facilities for this kind of tourists destination. Slowly but surely, the tourist industry has felt this demand and has begun to reactpositively to this development. Retirement villages and more land areas exposing our cultural, beach and wellness have likewise been identified as tourist spots which should be able to compete with what other Southeast Asian countries have to offer as vacation alternatives. The supply side of this development in the real estate market has shown positive responses despite financial limitations, government policy restrictions and availability of land. 1. In the Housing sector,initial projections indicate that around 48,000 residential units will be completed by 2012 and 2013 with an 9

10 additional 56,000 units due for completion towards the end of 2015.The highest deficiency however has been observed to be in the economic size housing of almost 2 Million units compared to socialized housing with 624,200 shortages and 484,325 deficiency units for lowcost housing.from the total shortage of housing units for all households was estimated at 2.7million units. In the case of condominium units, the CALABARZON region leads the country as new and upcoming constructions are being experienced in Metro Cebu, Metro Davao and Metro Iloilo. In Metro Manila, an estimated supply of 8,253 units of upcoming new residential condominium was expected to be completed in 2012,with an additional 5,028 units by end of Two thirds of these additions are supplied 10

11 by four districts, namely Quezon City with 24%, Makati by 18%, Mandaluyong with 15% and Manila supplying 12%. The regional comparison of residential supply among the five (5) regions of the country reveals the concentration of housing activities in National Capital Region (NCR). In 2006, NCR got 46%, Central Luzon had 25%, Metro Cebu obtained 16%, Metro Davao reported 11% and Southern Luzon 2%. By 2011, NCR increased its share to 61% mainly because of condominium projects. On the other hand, Central Luzon, Metro Cebu and Metro Davao suffered decreases to 19%, 11% and 7% respectively; while Southern Luzon maintained its share at 2%. 2. In 2010, about 525,000 direct employment and Million indirect employment were 11

12 generated by BPO. A sizable portion of these employment figures is filled up by migration of labor from nearby provinces notably in NCR and CALABARZON. Ostensibly, such urban migration triggers residential condominium supply in the urban centers particularly Metro Manila. As of June 15, last year, about 143,123 upcoming residential condominium units in Metro Manila have been registered. More than two thirds of the upcoming supply is located in Quezon City, Makati, Mandaluyong and Manila. Similar trends in upcoming residential condominium supply have been observed in Metro Cebu, Metro Davao and Metro Iloilo. By 2016, the roadmap estimates a direct employment figure of 1.3 Million and 3.2 Million indirect employment. The large increase in the employment figures shall manifest in more residential units in the urban areas. 12

13 Major increases in supply of offices for BPO use have been observed during the past 5 years coincident with the rapid increase in BPO locators in Metro Manila spreading to other urbanized regions. Demand pressures have consistently defined location and quantity of non-residential units. 3. In the tourist industry, developers have since adopted a mixed-use developmentas a key strategy to maximize the returns on large plots of land rarely found in the urban centers. This strategy is becoming to be the standard in the hospitality and entertainment sectors as evidenced by on-going big projects,among others: 13

14 a) SM BAY CITY ARENA is the newest structure at the Mall of Asia (MOA) complex, where large events like concerts, circus, ice shows, and other sports and entertainment events can now be held. b) ASEANA Business Park is a Flagship National Government Project being implemented by the Philippine Reclamation Authority (PRA) with R-1 Consortium using the B-O-T approach to reclaim and develop approximately 204 hectares of land along Manila Bay. The project will feature a complete array of real estate products ranging from high-end residential units, office clusters, a marina and yacht club, 14

15 retail strip, and a retirement community. c) GRAND HYATT HOTEL AT THE FORTis a 66-storey project offederal Land now beingconstructed at the heart of Fort Bonifacio. Its first 25 floors will house the Grand Hyatt Hotel (500 to 600 rooms). d) THE SHANGRI-LA AT THE FORT will have 60 stories, 544 guest rooms, 146 long-stay residences 6,800 square meters of meeting and banqueting facilities. Given the above described developments in the real estate industry as affected by three major socioeconomic variables --- the growth in OFW remittances, BPO and Tourism we can 15

16 safelyconclude that these existing and observable growth with its constraints and incentives should now guide the developers in our country.. And these can be listed as follows: The issue of availability of land for real estate. A lot of concern has evolved around this issue. First is the land conversion problem. The conversion from agriculture to commercial purpose of a given land consists of a process that involves several national government agencies and local government units. Evidently, the process starts with the adoption by the LGU of a Comprehensive Land Use Plan, which sad to say, is lacking in a number of LGUs. And in some of them, professional help from the HUDCC may be needed. This is to be followed by the surveys to be conducted by the Department of Agriculture (DA). Unfortunately, the DA has only ONE Team that handles ALL the conversion requests. Hence the conversion process 16

17 may last for months if not years, indeed a limitation that has to be resolved! The second concern is land administration. The proliferation of several titles covering the same piece of land is part of this problem. We need a national effort to resolve once and for all the lack and neglect of having comprehensive cadastral maps/surveys to exactly define specific private property requests. But I understand that the House of Representatives is currently considering several versions of bills addressing this concern and I have had the responsibility of considering the same efforts in the Senate as chair of the Committee on Housing, Urban Planning and Resettlement. 17

18 Obviously, I cannot help you in resolving most of these concerns since they are executive in nature meaning that they are responsibilities of the department secretaries in the Executive branch of government. On the issue of informal settlers, their resettlement, socialized housing and other housing finance concerns, the NHA and the LGUs, by law are primarily the implementers of the resettlement projects pertaining to informal. However, private real estate practitioners should become likewise involved since, by and large, the resettlement issue affects also other private properties which can provide alternative sites and uses. The problem of professional squatters has proliferated because of the lack of efficient and effective LGU- 18

19 PNP-Private owner strategy in implementing the resettlement plans. This involvement is more definite in the case of socialized housing. I understand that the Socialized Housing Corporation has been gaining ground in the implementation of this new scheme. Yet please be reminded that more can be achieved if the private sector is involved from the planning stage up to its execution. A critical gap has also been observed in the state of overall financing strategy for housing including those for economic and mid-end housing. Additional capital should be provided the Housing Guaranty Corporation to solidify its primary function of providing guaranties to private banks and thereby encourage participation in housing production. 19

20 Likewise, measures should be put in place to encourage real estate associations led by CREBA to liquify their housing loan receivables through the National Home Mortgage and Finance Corporation (NHMFC) Housing Loan Receivables Purchase Program. Hopefully, this effort shall be able to activate the long moribund secondary mortgage market for housing. In the Senate, without sounding to be too repetitious the Committee on Urban Planning, Housing and Resettlement under my Chairmanship has sponsored the creation of a new Department of Housing and Urban Development (DHUD) which was passed by the Senate plenary on its Third Reading. On the other hand, my counterparts in the Lower House have not been able to pass this in their chamber. I honestly believe that the creation of DHUD will allow us to 20

21 attend to most of these housing finance and production concerns. It is, I believe, now appropriate for the CREBA and its members to carefully study the various incentives for tourism activities and avail of them. For example: a) The Tourism Act of 2009 (RA 9593) which created The Tourism Infrastructure and Enterprise Zone Authority (TIEZA), to generate new investment in the tourism sector by granting fiscal and other incentives among others: --offering the same non-fiscal incentives in terms of providing special visas,assuring investment repatriation, andprotecting investments from government expropriation; 21

22 --6-year income tax holiday, compared to 4 years for BOI and PEZA, and -- assist locators with local issues concerning their host communities b) PEZA Resolution No (July 2012) with regionalization in aid of the urbanization of the provinces as the main thrust of the resolution CREBA members should now actively participate in the upcoming Private and Public Participation (PPP) projects.apparently there is still not a prescribed manual, code or rules governing the LOCALIZED version of the PPP. Still the developers should now consider working with the LGUs in the preparation and adoption of the PPP scheme in their own localities, if only to avail of the various 22

23 incentives under the PPP and possibly provide a template for the national government to serve as a sample of localized PPP. My friends, I have to stop at this juncture for I am afraid that if I am to continue, I will not be able to contain my enthusiasm in giving you my personal pointers and directions with respect to the Housing and Urban Development Sector. Suffice it to say that the above analysis and statements come direct from my heart and my years of experience as a local government executive and as Chair of the Committee on Urban Planning, Housing and Resettlement for the past three (3) years. Moreover, they signify my sincere concern to help you achieve what I dream to be the development catalyst in our country. 23

24 Thank you very much once again and I hope that this will be a continuing and dynamic dialogue between your organization and my office. Maramingsalamat at Mabuhay kayonglahat! 24