Metro Manila (CNN Philippines, May 14) – One of the country’s largest real estate service providers called on business and residential landlords to give rent relief to tenants amid the COVID-19 pandemic.
Rick Santos, chairman and CEO of Santos Knight Frank, said landlords must work with their tenants in ensuring the resilience of the real estate sector during the crisis.
“We just experienced two black swans, one being in health and the other one being in economic,” he said in an interview on Thursday with CNN Philippines Rico Hizon. “We’re talking about ICU so what we need to focus here is the CPR, and that’s cash, pivot, and resilience.”
The leading property consultant mentioned the significance of having “healthy buildings,” where landlords check on the health and wellness of their staff and tenants.
“Healthy building is gonna move from a nice-to-have into a must-have,” he noted.
Santos recognized the immense growth of the office sector in the country, with the influx of business process outsourcing companies and offshore gaming entities.
But he pointed out that for these companies to cope with economic losses due to the COVID-19 crisis, international-based companies need to cut costs in their business operations.
Santos also said the offshore gaming corporations, dependent on migrant workers, will also struggle as airlines are not flying in the country.
“For landlords (in the office sector), I advise to look for win-win scenario,” he said. “Work with your tenants, rent to relief, and work on the abatements.”
In the residential sector, Santos emphasized the importance of remittances as a key driver in the real estate market.
He also underscored the job market in the country as a primary component in the residential sector because people need to keep their jobs in order to pay their rents.
“It’s moving from a sellers’ market to buyers’ market,” he said. “Landlords can defer payments and work with tenants.”
For the retail sector, Santos said he expects its revival once malls re-start their operations in some areas, particularly those placed by the national government under general community quarantine (GCQ).
Santos said some retail businesses such as moviehouses will definitely struggle, given the promotion of physical distancing measures in social settings.
He also advised retail landlords to help their tenants in adjusting to the new normal in the retail industry.
“The retail sector must look for behavioral changes as well,” Santos said. “Landlords should look actually to work with tenants once again, maybe look to charge turnover rents and their retrofitting efforts.”
Despite a tough year for the real estate sector, Santos said he hopes that more investors will come, particularly in the sectors of industrial, healthcare and pharmaceutical, non-bank financing, and alternative asset classes.
“Healthy buildings and international quality proper management is gonna be key,” he said.
The national government identified some essential businesses that are allowed to open in areas under GCQ and modified enhanced community quarantine (ECQ) starting May 16.
The National Economic and Development Authority (NEDA) said that 45 percent of private sector workers lost their jobs during the ECQ implementation.
About 20 percent of businesses were forced to lay off employees during the quarantine to stay afloat, it added.
NEDA unveiled on Thursday its Philippine Program for Recovery with Equity and Solidarity to rebuild the country’s economy from the impact of the pandemic.
Under the program, all businesses will only need to settle 25 percent of their net taxable income starting July if the Corporate Recovery and Tax Incentives for Enterprises Act will be approved by Congress before it adjourns on June 3.
READ: Gov’t eyes more loans, lower taxes to revive economy after lockdown
