Now is the most opportune time to launch Real Estate Investment Trust (REIT) as the Philippine property market is on the upswing and experts anticipate Ayala Land, DoubleDragon, Megaworld Corp., Robinsons Land Corp. and Century Properties Group Inc. securing the first-mover advantage.
The five have earlier expressed interest in setting up their own REITs.
Property consultancy Colliers in a statement said the REIT law whose amended rules were signed Monday will not just develop the country’s property and capital markets but would also stoke the construction and infrastructure sectors which have significant multiplier effects to the economy.
To best take advantage of REITs, Colliers said developers should also consider divesting their properties into REITs to access a cheaper source of capital.
Collers said developers can use REIT proceeds to renovate and reposition assets such as offices, malls, and warehouses or develop integrated communities in key cities outside Manila.
It added developers should also set aside a portion of REIT proceeds to acquire reclaimed properties in Manila. They can also cquire co-living and co-working facilities that could eventually be diversified into a REIT.
Colliers said REITs can be used by developers as a benchmark for valuing assets
REIT law was passed in 2009 but the e launch of REITs was stalled by a number of regulatory roadblocks, including taxation issues and a high public ownership requirement.
REITs are now likely to be implemented this year as the government has agreed to relax the law’s restrictive rules.
The Securities and Exchange Commission (SEC) has relaxed the MPO requirement to 33 percent from the previous IRR’s requirement of 40 percent.
Funds raised from REIT are also mandated to be reinvested in the domestic market.
“The full implementation of REITs places the Philippines at par with other Asian economies that have fully developed capital and real estate markets.
