How One Year of the Duterte Administration Impacted the
Real Estate Industry
Duterte. Mention that name to
Filipinos and you're sure to get either a frown or a
It's been roughly one year since the fateful May
9 presidential election, and yet we Filipinos seem to be as divided
as ever with our president. Despite the differences we may have,
however, it's important for us to look back at the previous
year and objectively assess the impact of the Duterte
administration from a point of view relevant to many Filipinos:
Housing and Real Estate.
According to a study conducted by the National
Economic Development Authority (NEDA), Filipinos aspire to have a
"comfortable life with the family, free of hardship and worry."
A good home is the foundation of any family, and as such,
demand for housing is expected to continue rising as the economy
continues to grow. Despite not being fully attributable to the
Duterte Administration, the economy grew roughly 6.8% in 2016, and
is expected to grow approximately 7% in 2017. KMC
Savills Real Estate broker Gretchen Cruz suggests that with a
strong economy, "there's more money to go around, and
people have confidence that it's the right time to start
investing in property." In fact, the
year-on-year growth rate of the Residential Real Estate Price Index
for all types of housing grew by an average quarterly rate of 5.8%
in 2016 - an indication of strong demand for housing. All
this, despite the political risks highlighted by credit watchers
Moody's and Standard and Poor's, such as the country's notorious
bloody war on drugs.
On top of residential
real estate, commercial real estate loans have also risen by a
whopping 18.4% to PHP1.02 trillion, as companies expand
aggressively and take advantage of low interest rates. For the
foreseeable future, the Bangko Sentral ng Pilipinas (BSP) is not
expected to raise interest rates despite rising inflation.
According to BSP Governor Amando Tetangco Jr., the announcement of
the rate hike in the US was in line with market expectations, and
as a result, there is no need to tweak interest rates. This may be
good news for the Real Estate market because low interest rates
mean the cost of borrowing will be low, effectively encouraging
consumers to borrow more and spend aggressively.
As prices rise and local interest rates are
projected to stay flat, perhaps now is the best time to invest in
homes and other properties. While the past year of the Duterte
Administration has been good to the Real Estate market, the future
remains to be uncertain as both local and global politics unfold -
impacting the economy and the Real Estate Market in potentially bad
or good ways. With the administration expected to spend a total of
at least PHP8.2 trillion on infrastructure, let us hope for the
Introducing Jarone Tung.
Jarone is a Business Administration student at the University of the
Philippines and a guest blogger for KMC Savills.
For Internship and Graduate opportunities with KMC
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