24th Oathtaking Ceremonies
of New Real Estate Brokers

24th Oathtaking Ceremonies of New Real Estate Brokers
Realty Service Council of the Philippines
Hall B, Philippine Trade Training Center corner Sen. Gil Puyat Ave. & Roxas Blvd., Pasay City
9 August 2007, 1:00 PM

Guest of Honor and Speaker
Senator Edgardo J. Angara

I am honored to be here at the 24th Oathtaking Ceremonies of new real estate brokers of the Realty Service Council of the Philippines.

Our real estate industry is far from being perfect. Over the years, we have encountered ups and downs in the industry-a drop in the 80s due to political turmoil, we recovered in 1991 and reached an all time growth rate of 10.7 % in 1996 and then the sad fate brought by the Asian Crisis that caused 10.7% contraction in the industry in 2001.

This year, the industry is booming. Early June, the country has reached a 40-year high in the real estate industry brought by massive remittances from OFWs and growth in the business process outsourcing (BPO).

In the fourth quarter of 2006, real property sector had a 22.7% growth making it the highest growing sub-sector within the services. At present, real estate and property development is the growth leader in the service sector surpassing communications.

Growth in the real estate industry translates to economic growth. The real estate industry alone accounts for 4.5% of the country's economic output. One of its chief allied industries, construction, which includes the provision and manufacture of construction materials, makes up another 4.5%.

This sector is one of the most important sectors of the country's economy and a good indicator of economic strength. The strength or weakness of economic activity in real estate has the capacity to stimulate or dampen economic growth in all areas.

In the US, real estate has been the dominant sector in the economy since the recession ended and it has been the most robust economic engine of the land.

What brought the real estate boom in our country? OFW remittances, BPO and tourism.

OFW remittances rose 21.92% to $5.9 billion in the first half of this year. At least 30% of all their remittances end up in spending for the real estate sector either in buying new property or improving houses.

With the mushrooming of BPOs in the country, comes a boom in office spaces sales and occupancy. Call centers alone employ 100,000 Filipinos scattered around Manila and major centers all over the Philippines.

Growth in tourism likewise contributes to the booming real estate industry. CB Richard Ellis, the world's largest real estate advisory firm, predicts that with the government targeting 5 million tourists by 2010, foreign investments will go to building deluxe hotels and resort facilities.

Despite the booming industry, there are loose ends that we need to tie. I would like to mention five.

First and foremost is the problem on stability of land titling. Land title is at the heart of the real estate industry business. From the time of our great grandfathers, Filipinos have shed blood and tears over land disputes.

However, our present structure is burdened with fraud and bureaucratic inefficiencies that have caused serious loss of confidence among homeowners and entrepreneurs alike.

With this, I would like to talk about the Land Administration Reform Act (LARA), which I filed in the Senate.

Right now, there are about six agencies handling land administration that causes overlapping jurisdictions. We lack a safe and sound system in land titling and delineation.

LARA will create the Land Administration Authority (LAA) which will be the primary government agency responsible for land administration and public land management, especially in surveying, mapping and charting, classification, disposition of alienable lands of the public domain and patrimonial lands, registration of titles, and resource information generation and management.

LAA will be a one-stop office that will consolidate the powers and functions of all the existing land administration agencies like the Department of Environment and Natural Resources (DENR), Department of Agrarian Reform (DAR), National Mapping and Resource Information Authority (NAMRIA), to name a few.

Through an efficient land administration system, security of people's land tenure including efficient mapping of the land, registration of land titles, and public land management will be achieved. A national database of land titles will also be a key to better land titling.

LARA will bring a lasting cure to land titling and bureaucratic defects of land administration.

The second is the property appraisal.

At present, we have at least 23 national government agencies (NGAs) undertaking real property appraisals, each using its own system and methodology. This lack of a single agency responsible for property valuations has created inadequate technical supervision on valuation matters. It has constrained optimal management and use of our valued land resource. The use of multiple appraisal systems and procedures has resulted in the lack of uniformity and equity in real property appraisal.

We hope to address this inefficiency through the Real Property Appraisal and Assessment Reform Act of 2007.

The bill will ensure equity in real property taxation, the separation of the valuation and assessment function from tax setting and political influence.

Third is ensuring a level playing field for both small and large investors through the Real Estate Investment Trust (REIT) Act.

REIT Act will provide both small and large investors equal opportunity to participate directly in the ownership and financing of large-scale real estate projects at affordable rates of investments, without the disadvantage of illiquidity, high transaction and management costs.

REIT will provide a steady income to the investor and the national government and allow cross boarder investments that will encourage strategic foreign investment in the capital market.

Good news is, REIT is not a new concept. USA, Europe and our Asian neighbors have long introduced this in their countries. Since early 2000, governments around Asia have actively promoted REIT and the private sector responded positively.

The number of REIT in Asia grew from five in 2001 to 80 in 2006. Late last year, the total real estate investment trusts' market capitalization in Asia was estimated to be worth $50 billion.

Fourth is the growing problem on government housing programs. At present, there are seven housing agencies addressing the housing problems, namely, Housing and Land Use Regulatory Board (HLURB), Housing and Urban Development Coordinating Council (HUDCC), National Home Mortgage Finance Corporation (NHMFC). National Housing Authority (NHA), Home Guarantee Corporation (HGC), Home Development Mutual Fund, better known as the Pag-ibig Fund, and Socialized Housing Finance Corporation (SHFC). We need a clear definition of the role of each agency.

The creation of a Department of Housing will provide better coordination among housing agencies and stronger policies for land banking and disposition and distribution of available units.

And finally, the professionalization of the real estate business. Real estate brokers, appraisers and consultants are at the heart of the industry. Our biggest and most important investment should go to the professionalization of the business through course offerings in universities.

Investing in education creates the biggest return on investments. Training and education for all real estate industry players is the single most important investment where no one will lose.

Thank you.