REITs reinforce optimism in PH real estate industry


Despite the impact of COVID-19 and downturn in international stock markets, the Philippine real estate industry continues to have reasons to be optimistic, according to leading real estate service company, Santos Knight Frank.

Rick Santos, Chairman & CEO of Santos Knight Frank, cited various drivers, including the roll out of REITs, continuous expansion of BPO companies, and strong consumer demand. Since 1985, household consumption has accounted for 70-75 percent of Philippine GDP.

The property service company noted that 2020 is the year for REITs. More property companies have expressed interest in REITs after regulators unveiled the revised rules in January. It cited property giant Ayala Land recently filed its application for its own REIT subsidiary, AREIT, while DoubleDragon Properties Corp. is looking at raising ₱11 billion annually over a six-year period via REITs.

Asia-Pacific REIT markets Australia, Japan, and Singapore have all performed well in 2019, producing higher dividend yields than listed property companies, according to Santos Knight Frank. In addition to the impressive performance of dividend yields in the three markets, REITs in Hong Kong and Japan have delivered higher total returns versus listed property companies during the year.

REITs in Australia, Japan, and Singapore delivered higher dividend yields in 2019 versus listed property companies. Meanwhile, REITs in Hong Kong and Japan provided higher total returns versus listed property companies.

Santos Knight Frank believes that REITs will unlock a number of opportunities in the property market, such as greater access to real estate investment and revitalization of capital markets.

“REITs bring about a significant opportunity to democratize the Philippine property market, allowing the small investor to participate in high-value real estate assets alongside major corporate institutions. REITs have the power to sustain long-term growth for the Philippine economy through investments,” said Santos.

“We anticipate that REITs will drive an increase in acquisition, consolidation, and property development activities across the Philippines in the coming years. New capital raised by the developers through REITs will enable expansion of the real estate sector not only in Metro Manila but also in the provinces, and with it generate jobs across many sectors,” says Kash Salvador, Associate Director for Investment & Capital Markets, Santos Knight Frank.