How does the owner of a subdivision project acquire a license to sell

And when is he exempted from same?

The National Housing Authority upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. A license to sell and performance bond shall not be required if:

(a) Sale of a subdivision lot resulted from the partition of land among co-owners and co-heirs.

(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.

(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.

(Section 5 and 7, P.D. 957)

Before an owner of a subdivision or condominium project may sell, he or she is required to secure a license to sell. Presidential Decree No. 957 or the Subdivision And Condominium Buyers’ Protective Decree is instructive.

The law provides that –

License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project.

The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent.

(Section 5, P.D. 957)

Aside from license to sell, are there any other requirements before an owner of subdivision/condominium project can sell?

Yes. He/she must have filed a performance bond.

Section 6 of P.D. 957 provides that, “No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations.

The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree.

Are there any instances where an owner is exempted from securing a license to sell and performance bond?

Yes. Section 7 of P.D. 957 provides that, a license to sell and performance bond shall not be required in any of the following transactions:

(a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs.

(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.

(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.

When can license to sell be suspended?

Section 8 of P.D. 957 provides that, upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner’s or dealer’s license to sell pending investigation and hearing of the case as provided in Section 13 hereof.

The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers.

The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis.

Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated.

(Sections 5-8 of the Presidential Decree No. 957 or the Subdivision and Condominium Buyers’ Protective Decree)

Source: Alburolaw

Reinforcing tailwinds: Cashing in on PHL hotel sector’s recovery

Revenge spending, dining, and travel continue to lift the country’s tourism sector. The segment is a key job-generating sector and post-pandemic gains should help restore the sector’s contribution to the country’s national economic output.

Undeniably, more needs to be done to improve the sector’s competitiveness and ensure that the Philippines will stand out globally not just with its beaches but also with its quality infrastructure backbone. After all, we won’t be able to attract millions of tourists if we do not have airports capable of welcoming foreign visitors and an efficient road network that will allow local tourists to go around the country.

The return to normalcy has been a positive for the Philippine leisure sector. More face-to-face events across the country should boost the meetings, incentives, conferences, and exhibitions (MICE) segment. Developers are lining up major projects across the archipelago and these include foreign and homegrown brands, as they anticipate demand from business and leisure travelers. The recalibration of the Department of Tourism’s (DoT) strategy, including its branding, should entice more international travelers to visit the Philippines and raise tourism’s contribution to the economy.

Colliers projects the completion of a record-high 5,300 new hotel rooms in 2023. This is a positive development for the Philippine tourism sector, especially now that the sector is rebounding. With the continued rise in international and domestic tourists as well as return of more in-person events, hotel developers are now lining up expansion plans for the near to medium term. Colliers sees more foreign brands opening while Filipino homegrown brands are also expanding.

Among the new hotels that will be completed include: Lansons Place Manila, Grand Westside Hotel, Red Planet Hotel The Fort, Hotel 101 The Fort and Ibis Styles Hotel. We project that more than a third (35%) of the new hotels that will open for the remainder of the year will be foreign brands. From 2023 to 2025, we estimate the completion of 3,000 new hotel rooms every year.

BREACHING THE DOT’S TARGET

The reinvigorated hotel sector remains one of the most vibrant property segments in the country. Foreign arrivals are likely to breach the Tourism department’s target for 2023 while the domestic market continues to lift occupancies and daily rates.

The return of business travelers and in-person corporate events have also been propping up the demand for MICE facilities.

MORE MICE FACILITIES

People are now more willing to attend face-to-face meetings.

Corporations, business groups, and even families have been holding in-person events, especially after the government relaxed restrictions on face-to-face meetings and dropped mask mandates.

In our view, these should be complemented by global sporting events that the Philippines will be hosting.

Colliers believes that hotel developers and operators should assess the future demand for MICE facilities given the segment’s potential for a strong rebound. This should also be aligned with the government’s thrust of modernizing existing and building new airports across the country.

The Tourism department is also priming the Philippines as a major MICE destination, and this should enable the country to corner major global MICE events and further boost tourist arrivals and spending across the archipelago.

HOMEGROWN, FOREIGN BRANDS

Colliers believes that developers need to strategically plan their expansion, especially now that the sector is gradually recovering. In fulfilling expansion plans, developers should carefully assess whether to launch or expand their own homegrown brands or partner with foreign hotel operators.

Colliers data show that about 42% of new hotels that will open in Metro Manila this year through 2024 are foreign brands. While we see more Metro Manila openings in the pipeline, Colliers believes that there are also opportunities to build more accommodation facilities in key destinations including Pampanga, Cebu, Bohol, Davao, Palawan and Bacolod.

Aside from the traditional growth areas, developers should also build hotels near major convention centers and newly modernized and expanded airports.

HOTEL OCCUPANCY TO REACH 65%

Data from the Philippine Statistics Authority showed that the share of the tourism industry to the country’s economy reached 6.2% in 2022, up from 5.2% in 2021. However, this is lower than the record-high 12.8% share in 2019.

Domestic tourism expenditure grew by 92.3% in 2022 to P1.5 trillion ($26.7 billion) from only P782.6 billion ($14 billion) in 2021. Meanwhile, employment in tourism-related industries rose by 9.3% in 2022 to 5.35 million jobs from 4.9 million in 2021.

In the first half of 2023, average hotel occupancies in Metro Manila reached 61%, higher than the 55% recorded in the second half of 2022. Colliers attributes the increase in occupancy to the continued rise in foreign tourists, return of in-person events and sustained demand from the local staycation market.

By the end of 2023, Colliers projects average occupancy in the capital region to reach 65%, partly driven by holiday spending as well as year-end MICE activities. Metro Manila occupancy is now near pre-coronavirus disease 2019 (COVID-19) level. In 2019, average occupancy peaked at 70%, before plummeting to 20% in 2020 due to COVID-19 disruptions arising from mobility restrictions. Note that the occupancy in 2019 was achieved on the back of record-high foreign visitors, which reached 8.26 million.

MORE REASONS TO LOVE PHL

There’s no doubt that the Philippines has a lot to offer to domestic and foreign travelers. Our beaches are recognized globally and Filipinos are known for their warm and genuine brand of hospitality. But these shouldn’t be trumped by dilapidated airports and unpaved roads.

Our global travel and tourism competitiveness needs to improve if we want to bag a greater slice of the global tourism pie and attract more long-haul and high-spending tourists.

The country is finally recovering from the pandemic, and we see tourism stakeholders — from hotel developers/operators to retailers of souvenir items — benefiting from this rebound.

Source: Business World

Building permit approvals fall 14.9% in Q2

Approved building permits fell 14.9% to 36,136 in the second quarter, the Philippine Statistics Authority said on Wednesday, accelerating from a 0.9% decline in the three months to March.

Approved projects were valued at P87.83 billion and covered 7.24 million square meters (sq.m.). The value of the projects declined from the first-quarter total of P104.33 billion and the year-earlier tally of P106.02 billion.

Domini S. Velasquez, chief economist at China Banking Corp. attributed the decline in construction projects to persistently high building vacancy rates dating from the pandemic.

“Although many workers are now onsite, some companies opted to continue their flexible working arrangements, leading to overcapacity in buildings. Hence, developers have been slow to build new non-residential buildings,” she said.

Nicholas Antonio T. Mapa, ING Bank N.V. Manila senior economist, also said base effects from the year-earlier period could also be a factor.

“Last year applications likely jumped upon the reopening of the economy after lockdowns were lifted,” he said.

He also added that rate hikes have made borrowing for construction activity more difficult.

Since May 2022, the central bank has been aggressively raising interest rates by a cumulative 425 basis points in response to inflation, pausing the tightening cycle only in May 2023.

In the second quarter, permits for residential projects accounted for 66.9% of the total, declining 20% to 24,175. These projects were valued at P41.36 billion with a combined floor area of 3.49 million sq.m.

Single homes accounted for 90.8% of approved residential projects, down 16.5% at 21,942.

Applications for apartment buildings decreased 41.7% to 1,949. Approvals for duplex or quadruplex homes totaled 244 (down 55.3%) and other residential applications 28 (down 15.2%). Residential building approvals totaled 12 (up 9.1%) during the period.

Non-residential approvals, on the other hand, totaled 7,928 during the period, up 10.1%. These accounted for 21.9% of all approved permits.

Approved commercial construction applications, which accounted for 71.2% of all non-residential projects, grew 15.7% to 5,645.

Approved institutional building permits fell 5.9% to 1,170, while industrial project approvals rose 0.5% to 579.

Approved agricultural projects totaled 308 in the three months to June period, down 2.2%, while other non-residential works receiving permits totaled 226, up 22.2%.

Permits for additions to existing structures increased 14.7% to 1,553 during the period.

Alteration and repair permits fell 33% to 2,480 approvals.

Calabarzon, composed of the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon, had the highest number of approved construction projects, accounting for 26.3% of all approvals during the period, with 9,504 permits issued.

The Central Visayas had a 12.5% share of approved permits with 4,523, while Central Luzon accounted for 10.2% with 3,682 approved permits.

By value, approved construction projects in Calabarzon amounted to P24.13 billion followed by those in the National Capital Region with P10.12 billion and those in Central Luzon with P10.02 billion.

Ms. Velasquez said she expects the next few quarters to reflect lower vacancy rates.

“However, as interest rates are set to remain high, we think that real estate developments will also be slow in gaining traction. 2024 should be a better year for the industry as interest rates are bound to come down,” Ms. Velasquez said.

Source: Business World