Twin reforms to boost PHL property sector, attract global players — Colliers

PRESIDENT Ferdinand R. Marcos, Jr. recently signed two measures that are likely to help lift the property sector. The laws will provide a major boost to Philippine real estate that still reels from the debilitating impacts of the coronavirus pandemic and the POGO exodus that left a huge void in the Metro Manila office and condominium segments.

We are now waiting for the implementing rules and regulations of these recently enacted laws but at the outset we see them playing pivotal roles in attracting investments and expediting the implementation of big-ticket infrastructure projects.

EXTENDED LAND LEASE A PLUS FOR PHILIPPINE PROPERTY
One of these measures is Republic Act (RA) No. 12252 or a law liberalizing the lease of private lands by foreign investors. The law extends the stability of long-term lease contracts for industrial estates, factories, agro-industrial ventures, tourism, agriculture, agroforestry, and ecological conservation from 50+25 years to up to 99 years.

More foreign investments in the leisure and industrial sectors should be beneficial to Philippine property players. More Philippine developers can partner with foreign hospitality brands and develop more accommodation facilities and convention centers across the country and maximize the Philippines’ improving infrastructure backbone. This is important as the government has been aggressive in rehabilitating and modernizing airports across the country. These efforts are essential especially with the Philippine government setting a lofty goal of attracting 12 million international visitors in 2028.

Philippine developers with expansive industrial footprint should also take advantage of the entry and expansion of manufacturing locators by enticing them to put up facilities within their industrial parks and occupy warehouses and cold chain facilities. With more investments in the country given the land lease term extension, Colliers sees the creation of more industrial zones outside of the established hubs — central Luzon and the Cavite-Laguna-Batangas (Calaba) corridor.

We see more foreign manufacturing players in the country given the implementation of the new measure. Colliers sees the proliferation of more sunrise industries, aside from the more established electronics sub-segments — electric vehicles, electronics, semiconductors, etc. The Philippines ranks disappointingly in the region in terms of attracting foreign direct investments (FDI). The law should make the Philippines a more competitive investment destination in the Southeast Asian region.

Other positives include the Philippines now able to attract more global players in the manufacturing and leisure segments, benefiting the hotel and industrial sectors of the Philippine property market. With more hospitality players, we also see the emergence of more tourist destinations, especially in the countryside — outside of the already popular Cebu, Bacolod, Iloilo, Davao, Bohol, and Palawan.

Colliers Philippines believes that the law’s enactment should result in the creation of massive townships offering leisure-oriented and resort-themed projects. This should entice more foreign hospitality players to invest in the Philippines and look at other economic centers outside of Metro Manila. Moreover, the extension of lease term, complemented by more attractive fiscal and non-fiscal perks, should entice more industrial players to invest in the Philippines especially in the agro-industrial segment. The latter is important as it will likely result in enhancing the competitiveness of two major economic planks — agriculture and manufacturing.

RIGHT OF WAY TO PAVE THE WAY FOR BETTER INFRASTRUCTURE
Another measure signed into law by Mr. Marcos is the Accelerated and Reformed Right-of-Way (ARROW) Act. The measure streamlines procedures to expedite the acquisition of right of way, reducing bottlenecks that delay the construction of key public projects. The law also calls for collaboration among various government agencies to address cross-sectoral challenges such as electrification, connectivity, and environmental safeguards.

The measure amends RA No. 10752 or the Right-of-Way Act, which was signed into law in 2016, a few months before President Benigno Aquino III stepped down from the presidency. The law is aligned with RA No. 12001, otherwise known as the Real Property Valuation and Assessment Reform Act, which mandates the establishment of uniformity in taxing real property.

Among ARROW’s key provisions include the setting of an appropriate price offer for government-acquired properties based on the valuation system and schedule of market values (SMV) established under RA No. 12001, or the Real Property Valuation and Assessment Reform Act of 2024.

The measure is definitely a step in the right direction. Hopefully it helps plug infrastructure gaps especially amid the flood control issue that has hampered the speedy implementation of infrastructure projects across the Philippines.

As we always highlight at Colliers Philippines, infrastructure plays a key role in stoking demand for property and in guiding property developers for their expansion. We are optimistic that the ARROW Act will give the Philippine property a much-needed boost amid stifling demand for Metro Manila condominium units and rising office vacancies.

Joey Roi Bondoc is the director and head of Research of Colliers Philippines.

joey.bondoc@colliers.com