Dominguez sees REITs propelling property sector’s growth beyond pandemic

 

Expanding Opportunities Through REITs

Finance Secretary Carlos Dominguez III said Thursday that the growing roster of Real Estate Investment Trust (REIT) offerings will propel the growth of the Philippines’ property sector beyond the pandemic—and serve as a catalyst for the country’s quick and strong economic recovery. Dominguez emphasized that REITs have proven to be an ideal tool for raising the billions of pesos required to power property development while also opening attractive and dependable investment opportunities for the average Filipino.

As with previous REIT offerings, Dominguez said the latest listing by Filinvest Land Incorporated in the Philippine Stock Exchange (PSE) amid the COVID-19 pandemic underscores investors’ confidence in the economy’s solid recovery from the impact of the global health crisis. The Finance Secretary expressed his optimism that REITs will continue to drive property sector growth and boost investor participation in real estate ventures.

The increasing number of REIT listings in the country has not only provided real estate developers with a more efficient way to raise capital but has also democratized property ownership by allowing retail investors to participate in high-value real estate assets. This accessibility enables more Filipinos, including small investors and overseas Filipino workers (OFWs), to benefit from stable dividend earnings and long-term capital appreciation without the need to directly manage physical properties.

Moreover, the reinvestment requirement mandated under the REIT Law ensures that capital raised from these offerings remains within the domestic economy. This provision compels REIT sponsors to reinvest proceeds into new infrastructure, commercial spaces, and sustainable developments, further enhancing economic activity. By aligning investor interests with national development goals, the government is fostering a real estate market that is both resilient and growth-oriented.

FILREIT: A Testament to Market Confidence

“I wish Filinvest the best and thank its board, officers, and staff for their confidence in the strength of our economy. This REIT offering will be among the catalysts for our quick and strong economic recovery,” Dominguez said during the listing ceremony for the Filinvest REIT Corporation (FILREIT) at the PSE.

Dominguez noted that FILREIT’s portfolio of “Grade A” office and commercial properties, primarily serving the business process outsourcing (BPO) and information technology (IT) sectors, will “surely provide attractive dividend yields for investors.” The demand for office spaces in these sectors has remained strong despite the pandemic, ensuring stable revenue streams for FILREIT and its stakeholders.

Filinvest’s commitment to sustainable and eco-friendly developments further strengthens FILREIT’s market position, aligning with global trends toward green buildings and energy-efficient infrastructure. Dominguez commended Filinvest for its dedication to environmental sustainability, noting that its portfolio of LEED-certified and energy-efficient properties sets a benchmark for the Philippine real estate industry. By prioritizing green initiatives, FILREIT not only enhances its long-term value but also supports the country’s climate goals, reinforcing investor confidence in socially responsible investments.

Furthermore, FILREIT’s successful listing amidst economic uncertainties highlights the resilience of the Philippine REIT market and the increasing willingness of investors to participate in real estate-backed securities. The robust performance of previous REIT offerings has demonstrated the potential of this investment vehicle to generate passive income, making it an attractive option for both institutional and retail investors. As more companies follow in Filinvest’s footsteps, the Philippine REIT market is poised for continued expansion, further integrating real estate into the country’s broader economic recovery strategy.

Promoting Sustainability in Property Development

Filinvest has earned a well-deserved reputation for sustainable and green buildings, which should inspire other developers and set the standard for eco-friendly designs that align with the country’s climate ambitions. Dominguez, who serves as the chairperson-designate of the Climate Change Commission (CCC), commended Filinvest’s commitment to green building practices and encouraged further expansion into sustainable property developments, particularly outside Metro Manila.

“With this REIT offering, I encourage Filinvest to further expand its portfolio of sustainable property developments, especially outside the Metro Manila area,” Dominguez stated. The shift toward sustainable real estate aligns with global trends promoting environmental responsibility while ensuring long-term investment value.

By integrating eco-friendly features such as energy-efficient systems, green spaces, and sustainable construction materials, Filinvest not only enhances the environmental impact of its developments but also improves tenant satisfaction and operational efficiency. Sustainable properties are becoming increasingly attractive to investors and businesses seeking long-term value, reduced operating costs, and compliance with global environmental standards. As the demand for green buildings grows, FILREIT’s commitment to sustainability positions it as a leader in the evolving real estate market, fostering economic growth while contributing to climate resilience.

Economic Recovery and REITs’ Role

Dominguez expressed confidence that the worst of the COVID-19 crisis is over and that the country is on track toward economic recovery. He highlighted the economy’s impressive second-quarter growth of 11.8 percent, the highest quarterly performance in over three decades.

“Despite the recent lockdown to contain the Delta variant, prospects for a strong economic rebound in 2021 remain promising. Our vaccination program, which is the most potent weapon we have against this unseen enemy, is proceeding at pace. This is a step closer to achieving herd immunity in the country,” he said.

FILREIT is the third REIT offering in the country, following Ayala Land Inc. (ALI) and DoubleDragon Properties Corp. (DDPC), both of which successfully listed their REITs in the Philippine Stock Exchange amid the pandemic.

The Road to REIT Implementation

Dominguez had been a strong advocate for the implementation of Republic Act (RA) No. 9856, also known as the REIT Law, since assuming office as Finance Secretary in 2016. Despite being enacted in 2009, the law faced multiple roadblocks, preventing its adoption by major developers due to high friction costs, minimum public ownership requirements, and tax concerns.

The Duterte administration played a pivotal role in setting the stage for REITs to flourish by amending the law’s implementing rules and regulations (IRR) in 2020. These changes facilitated greater investor participation and ensured that capital raised from REIT offerings remained within the domestic economy to fuel growth and infrastructure expansion.

With the revised framework in place, the Philippine REIT market has since seen increased activity, allowing both small and large investors to participate in the real estate sector without the need for direct property ownership. By making real estate investments more accessible and liquid, the REIT framework has not only diversified funding sources for property developers but also provided a reliable investment vehicle for middle-income families and overseas Filipino workers (OFWs) looking for stable returns. This structural shift has strengthened the country’s capital markets, reinforcing the role of REITs in driving long-term economic resilience.

REITs as a Secure Investment Alternative

With the amended REIT Law in place, both small and large investors now have the opportunity to own real estate assets without the complexities of direct property management. This alternative investment instrument provides a secure and transparent option for middle-income families and overseas Filipino workers (OFWs) looking to diversify their portfolios and generate passive income.

Market analysts believe that the increasing number of REIT offerings will enhance the Philippine stock market’s depth and liquidity. By offering stable dividend yields, REITs provide a compelling investment avenue for those seeking long-term financial security while contributing to national economic resilience.

Moreover, the expansion of REITs in the Philippines fosters a more inclusive investment landscape, allowing retail investors to participate in high-value real estate ventures that were once accessible only to institutional players. This democratization of property investment not only empowers individuals to build wealth but also strengthens overall market confidence. As REITs continue to gain traction, they are expected to play a crucial role in promoting financial literacy and encouraging more Filipinos to explore stock market investments as a viable means of growing their assets.

Looking Ahead: The Future of Philippine REITs

The Philippine REIT market is expected to expand further, with more property developers considering REIT listings to capitalize on favorable investment conditions. As the sector matures, increased regulatory support and investor education will be crucial in sustaining momentum and ensuring inclusive economic benefits.

Financial experts foresee continued interest from local and foreign investors, particularly as REITs demonstrate resilience amid economic uncertainties. The government’s commitment to financial market reforms and infrastructure spending will further reinforce the role of REITs in driving the country’s growth trajectory in the years to come.

As more REITs enter the market, diversification across various property segments—such as logistics hubs, industrial parks, and mixed-use developments—will be key to sustaining investor interest and maximizing economic impact. By broadening the scope of real estate assets under REIT structures, the industry can cater to evolving market demands while fostering innovation in property development. This dynamic growth will not only strengthen the real estate sector but also contribute to long-term national progress through job creation, enhanced urban planning, and improved infrastructure.

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