By: Charles E. Buban
Philippine Daily Inquirer
12:30 AM September 12th, 2015

In a recent performance report, National Economic Development Authority (Neda) chief Arsenio Balisacan said the economy grew by 5.6 percent for the second quarter, an improvement from the previous quarter (5.0 percent) and indicative of the expanse of the country’s resiliency from the prevailing weakness of the global economy. “This growth is currently the third highest among Asia’s major economies, behind China and Vietnam,” he said.

Balisacan added: “Both exports and imports of services showed robust growth in the quarter. Exports of services jumped to a 31.1 percent growth in the second quarter, from a 5.9-percent contraction in the same period last year. This dispels doubts about the sustainability of growth in service-oriented industries, especially in the business process outsourcing or BPO sector.”

With this positive development in key areas of the country’s growth, Balicasan believes the country is now looking at an economy that can sustain a high-growth trajectory in the future quarters.

No wonder members of the country’s major and leading organization of housing and real estate developers are using adjectives like “great” and “incredibly positive” as they head to next week’s 24th Subdivision and Housing Developers Association (SHDA) national developers convention that will be held at the Makati Shangri-La Hotel.

At the forefront

SHDA president Armenia Ballesteros agreed: “Indeed, the country’s property sector is at the forefront of Philippine growth in the medium and long term. There is a consensus among industry stakeholders that growth will continue as a result of the country’s rapid urbanization growth that continues to fuel demand for more residential properties. This growth is mainly driven by the prospering middle class as well as healthy inflow of remittances from the 11 million overseas Filipino workers (OFWs), stronger demand for BPO services, and the ever-thriving global retirement market.”

For Rodel Racadio, SHDA first vice president and this year’s convention chair, these are SHDA’s major markets that its more than 200 members nationwide must find ways to reach more effectively. “This is the reason why we have lined up the topic, ‘Understanding the Market’ in one of our panel discussions.”

Indeed, for the housing market, the bulk of its buyers are still OFWs. “Just last year, they repatriated about $24.3 billion (P1.13 trillion) of which $7 billion (P328 billion) were allocated into property investments,” shared Ballesteros.

But aside from the OFWs, there is also the ever-thriving BPOs. Developers are expecting the money generated by these outsourcing firms to overtake remittances sent home by OFWs and eventually become the country’s main economic engine. The Bangko Sentral ng Pilipinas said BPO revenues are expected to grow by at least 15 percent compared to the 6 percent growth of OFW remittances.

Income from BPOs, which employ more than a million Filipinos, already reached $18.4 billion (P845 trillion) in 2014, up 18.4 percent from the previous year. Mirroring the BSP forecast, the IT and Business Process Association of the Philippines said it expected the industry’s earnings to rise by 15 to 17 percent this year.
By 2016, industry estimates showed that BPOs would earn $25 billion (1.17 trillion) annually.

Interesting trend

Another interesting trend that developers are looking into is that for the first time in human history the old will outnumber the younger generations. Global aging will affect every nation with new economic challenges which are already tangible nowadays.

Racadio said: “However, the demographic shift will not only bring challenges but also bring forth economic opportunities—the possibility for a successful establishment of retirement communities in the Philippines for elderly citizens from developed countries. As developers, we should also be preparing for this development.”

Racadio said the principal appeal for retirement in the Philippines is the lower cost of living as housing, food and labor costs are quite reasonable. “Global Filipinos as well as foreign retirees can retire in the Philippines and enjoy not only the lower cost of living but also the very favorable currency-exchange rate,” he added.

Since May 2009, the Department of Tourism’s Philippine Retirement Authority has sought to promote the Philippines as an attractive retirement and investment destination for foreign nationals and former Filipino citizens with the end view of accelerating the country’s socioeconomic development. At present, the agency is already recording close to 40,000 foreign retirees in the Philippines with those coming from China enjoying the largest market share at 34 percent.

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