Good news, everyone! It looks like the local real estate will continue to bloom in the coming years. According to Pinnacle Real Estate Consulting Services Inc., a property and consultancy firm, the Philippine real estate will expect a double digit growth within this year.
The exciting news is due to the continuous and unstoppable growth of the said sector. Because of this, the plan to revive the Real Estate Investment Trusts (REIT) in in full speed.
But what is Real Estate Investment Trusts and how does this law affect the local real estate? We give you the lowdown on what this law is all about and what will happen if the new finance secretary, Carlos Dominguez, implements it.
The meaning
REIT is a stock corporation formed to own real estate properties that generates income such as hotels, shopping malls, medical facilities, etc. The companies that own these establishments that will be included must be stock holders and they are asked to put 90% of their net for the whole group of stockholders. It was first proposed by Sen. Edgardo Angara in 2009 and promises that it can help become a catalyst to the further improvement of the capital of the country.
To abide or to not?
Like any other law, REIT has some benefits and some setbacks.
Pros
- Promise of a higher return
- Competitive returns to all stockholders
- Tax incentives
- Encourages people to invest and let their money roll
Cons
- Real estate can sometimes be tricky. The national government may experience lose of income due to forgotten revenues.
- The dividend yield and growth of income tax returns.
But nevertheless, the law promises growth in many sectors of the economy, not just in real estate. Unfortunately, the REIT has not yet become fully realized since investors are still in doubt. But let’s just hope that certain amendments can be done to the law so that it can pull more people towards it.
To learn more about this law click here.
