CHANGING WORLD
Dr. Bernardo M. Villegas
Demand for real estate will slow down in general as a result of the COVID-19 pandemic. Buying or constructing a new home will not be on top of the spending priority of most households as consumers will focus on such necessities as food, health and fitness, education and digital devices and services made necessary by changes in lifestyle and working practices resulting from the pandemic. Hardest hit will be the premium market consisting of units priced at P10 million a unit or above. Because millions of low-income households have been rendered poor as they have lost their jobs, the affordable segment (P1.7 million to (P5 million) will also take a hit. What could continue to grow is the mid-market segment (P5 million to P10 million a unit) in which there is an estimated back log of some 2 million to 3 million units market demand from the families of 10 million overseas Filipino workers and the 1.2 million BPO-IT employees, among other high-middle income households. Without adequate support from the government, socialized housing units may practically disappear during the pandemic.
As part of the response to the plea of Pope Francis to reform the free market economy so that it can lead to a more inclusive economic system, it is necessary that the real estate industry should also undergo a transformation so that it can pay more than lip service to helping shelter the homeless. Although the government must take the lead in addressing the housing problem of the marginalized populations in urban or semi-urban areas, the private sector can do much to support such agencies as Pag-ibig and the Department of Human Settlements and Urban Development (DHSUD). I am glad to learn from the head of DHSUD, Eduardo del Rosario, that the agency is planning to craft a policy framework and program implementation of what is called the Balai Rental Housing Program (BRHP), a socialized housing approach to address homelessness and free informal settler families (ISFs) from danger zones and dense settlements. The BRHP is envisioned to help the marginalized households in urban areas to live in more humane and decent environments while promoting in-city relocation.
We have to realistically assume that the Philippine government does not have the resources or the competence to implement a housing program that can replicate the outstanding success of Singapore in providing decent housing to low-income households under the leadership of the founder of modern Singapore, Lee Kuan Yew. Establishing the Central Provident Fund was a masterstroke of former Prime Minister Lee Kuan Yew. It raised to very high levels the savings rate in Singapore, enabling the state to house all its citizens with a minimum of comfort and decency. The Singaporean government solved the housing problem singlehandedly. In the Philippines, the state will need all the help it can get from the private sector to bridge the housing gap which is estimated at 6.57 million by 2022. Of the total housing need, some 27 percent is represented by the ISFs or squatters in common language.
The DHSUD under the leadership of Mr. Del Rosario is giving the opportunity to the real estate developers to modify their free market thinking and limit their profit objective to what is a reasonable rate of return so that they can contribute part of their revenues to solving the housing problem of the poorest of the poor in urban areas. A technical working committee (TWC) has been created composed of representatives from national government agencies, local government units (LGUs), state universities and colleges (SUCs), and non-governmental organisations (NGOs). A realistic assumption being made is that informal settlers are at a level of income at which they cannot afford to actually purchase housing units. What they need are units to rent. After all, many of them are already actually paying as much as R2,000 monthly to squatter syndicates. What the TWC is tasked to do is formulate an effective and sustainable rental program.
Under the BRHP, LGUs, SUCs, NGOs, and other people’s organizations will be the key proponents. It will be their responsibility to identify and/or provide suitable land for the project; formulate policies and rules and regulations, including the identification of beneficiaries; secure necessary permits for development projects and take responsibility for the estate management, a very critical function to prevent the deterioration of the housing community after the units for rent have been delivered to the beneficiaries. On the other hand, the DHSUD, along with key shelter agencies (KSAs) will be responsible for site assessment, development planning, preparation of the terms of reference for the hiring of developers, and the raising of subsidy funds for the project.
Since there is no need to reinvent the wheel, the developers should be the established real estate companies such as Megaworld, the Villar group, Ayala Land , Rockwell, Federal Land, PHINMA Properties, DoubleDragon, and Landmaster and many others who can contribute their services as part of their CSR program. In fact, PHINMA Properties already pioneered in a socialized housing program in partnership with the Quezon City local government in constructing the Bistikville housing units in the middle of Quezon City and the Strikeville units in partnership with an LGU in Cavite. The real estate companies that participate in this program need not worry about the long-term sustainability of the project since it will be the principal proponents such as the LGUs or SUCs who will be responsible for the maintenance of the facilities, collection of monthly dues from the beneficiaries, and for the provision of security, health, and other social services. What the real estate developers will contribute is their expertise and competence in constructing well built housing units that will pass the test of time.
The Balai Rental Housing Program is a very timely scheme that will give the capitalists behind our major real estate companies the opportunity to build a more humane form of capitalism that does not subscribe to the extreme form of free market economics that naively assumes that as long as business people are allowed to maximize their profits, there will be an automatic trickle down of economic welfare to the poor. Trickle-down economics has been proved ineffective in attaining inclusive growth, especially in the housing sector. Evidence to this is the existence of millions of households in major urban areas who are living in the most dehumanizing of conditions. It is about time that real estate investors prove that they too are willing to finally abolish what Pope Francis calls “the economy that kills.”
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