Home Ed. 2019 June Philippine Real Estate is Now Ready and Ripe for REIT

Philippine Real Estate is Now Ready and Ripe for REIT

Ten years ago, I attended the last Reit Conference held in the Philippines. In 2009, a law for Real Estate Investment Trust (REIT) or R.A 9856 has just been passed for the local real estate industry and the foreign players, who were hoping that it will be implemented then very soon.

However, even before the Implementing Rules and Regulations or the IRR could be issued the law has been torpedoed by the tax officials. A way of killing goose that lays the golden egg.

For several year, I have been attending the REIT Summit and Awarding in Singapore since Asean Times is a media partner of these events. I can only envy the growth in Singapore, Malaysia, Thailand and Hongkong since the players have a way of raising capital ala stock exchange using the REIT for promoting investments.

Then, early this year, the government has announced it is ready to get REIT going on and passed the IRR’s just last week particularly on investments of Insurance companies in REIT. This is the reason the 3rd APAC REIT Investment Summit was held in Manila last week led by APREA or the Asia Pacific Real Estate Association.

During the said Summit at the Solaire Tent, the following paper was submitted, viz:

• FYI, a REIT is a publicly listed stock corporation that owns income-generating real estate assets such as malls, offices, and hotels.

• REIT has actually been around for a while- since 1960 in the US, canada, France, Italy, Germany, UK, Japan. In the Philippines, since Republic Act 9856 was passed in 2009, the real estate market has been anticipating the realization of REIT. And now, with the government amending the rules on REIT’s, developers are increasingly looking at listing their income-generating assets as REIT companies.

• The REIT industry across the world has continued growing since the passing of REIT law in the Philippines. In june 2014, the industry was estimated to be valued at about $140 billion in Asia and $1.4 trillion cumulatively in all parts of the world.

• To date, the Philippine REIT industry has not made great strides. Several blue-chip real estate companies have shown their interest and even established REIT management companies, but those have been put on hold due to a couple of of obstacles.

• However, the Securities and Exchange Commission (SEC) of the Philippines is now taking significant measures to jumpstart the REIT industry once again and attract potential investors and REIT issuers by relaxing stringent regulatory conditions and placing a proposal to the Department of Finance (DoF) to reduce the minimum public ownership (MPO) requirement for REIT from 67% to 33%. SEC has alsorequested DoF to review and reduce corporate taxes on capital markets including stock transaction tax and initial public offering (IPO) tax.

So let the REIT ball get rolling.

By LUIS T. ARRIOLA