CAPS ON foreign ownership of real estate in the Philippines pose the biggest hindrance to growing the local property sector, an international consultancy firm yesterday said.
While the real estate industry here is indeed growing, larger investments are kept at bay as the government restrains foreign participation, David A. Young, managing director of Colliers International Philippines, told BusinessWorld in an interview yesterday.
“The fundamental constraint [to growth] is that foreigners cannot own land,” he said. “Sure, foreigners can buy as much as 40% of condominium buildings in the Philippines…but that cannot give foreign owners much control over investments,” Mr. Young said.
Under status quo, only Filipinos and Filipino entities are generally allowed to own land.
Republic Act 4726, or the Condominium Act allows foreigners to purchase units as long as they comprise not more than 40% of the building’s equity.
Foreign firms, meanwhile, have to form joint ventures with Filipino firms or just resort to leasing land.
Granting foreigners the ability and opportunity to own land in the country would mean a significant boost to the local property sector, Mr. Young said.
Sought for comment, analyst Astro C. del Castillo, managing director of brokerage firm First Grade Holdings, Inc., said extending land ownership to include foreigners, while welcome, is a long shot.
“Definitely, it would help…but it would take some time, a move from Congress, in order to implement it,” he said.
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By: Franz Jonathan G. de la Fuente
Source: Business World, Sept. 21, 2011
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