Real estate activities with own or leased property dominates the sector

Final results of the 2010 Annual Survey of Philippine Business and Industry (ASPBI) showed that a total of 2,873 establishments were engaged in real estate activities. About 86.8 percent (2,493) were establishments with total employment of less than 20 while 13.2 percent (380) were establishments with total employment of 20 and over.

About 8 out of 10 establishments were engaged in real estate activities with own or leased property. Figure 1 shows the percentage distribution for all real estate activities establishments by industry group.

Real estate activities with own or leased property employs more workers

The sector employed a total of 40,854 workers in 2010. Of the total, almost all (97.8%) were paid employees and the rest were working owners or unpaid workers.

Being the dominant industry, real estate activities with own or leased property likewise employed more workers with 34,901 or 85.4 percent of the total. Real estate activities on a fee or contract basis accounted for the remaining 14.6 percent (5,953). Figure 2 shows the employment for all real estate activities establishments by industry group.

Employees in real estate activities on a fee or contract basis receive higher compensation

In 2010, the sector paid a total compensation of PHP11.5 billion, equivalent to an average annual compensation of PHP286,778 per paid employee. About 90.5 percent (PHP10.4 billion) of the total was allotted for gross salaries and wages and the remaining 9.5 percent (PHP1.1 billion), for the combined employer’s contribution to SSS/GSIS and the like (4.8%), and separation, retirement, terminal pay, gratuities and others (4.7%).

About 83.7 percent of the total compensation was paid by real estate activities with own or leased property while the remaining 16.3 percent, by real estate activities on a fee or contract basis.

Among regions, the NCR spent the biggest share in compensation amounting to PHP7.3 billion (88.3%) while the Rest of Luzon paid the least with PHP23.3 million (0.3%).

Workers in real estate activities on a fee or contract basis received higher average annual compensation (PHP324,989) than those in real estate activities with own or leased property (PHP280,342). Figure 3 shows the average annual compensation for all real estate activities establishments by industry group.

Real estate activities with own or leased property contributes the major share in revenue and cost

Gross revenue realized by the sector reached PHP326.3 billion in 2010. Real estate activities with own or leased property contributed 88.6 percent (PHP289 billion) while real estate activities on a fee or contract basis shared 11.4 percent (PHP37.2 billion).

Total cost (excluding compensation paid to employees) amounted to PHP246.2 billion in 2010. As the main contributor in revenue real estate activities with own or leased property also incurred higher cost with PHP226.9 billion (92.2%). Figure 4 shows the revenue and cost for all real estate activities establishments by industry group.

Value added totals PHP114.3 billion

Value added derived by real estate activities sector totaled PHP114.3 billion in 2010.

Real estate activities with own or leased property registered higher value added (PHP89.2 billion or 78%) than real estate activities on a fee or contract basis (PHP25.1 billion or 22%).

Real estate activities on a fee or contract basis reports higher labor productivity

Value added per worker, a measure of labor productivity, was estimated at PHP2.8 million. Real estate activities on a fee or contract basis led the sector with PHP4.2 million. Real estate with own or leased property recorded a lower ratio of PHP2.6 million. Figure 5 shows the value added per worker for all real estate activities establishments by industry group.

Total change in inventories amounts to PHP19.1 billion

Total change in inventories (ending less beginning inventory) amounted to PHP19.1 billion in 2010. Real estate activities with own or leased property derived a positive value of PHP19.1 billion. On the other hand, real estate activities on a fee or contract basis recorded a negative value of PHP1.8 million.

Gross addition to tangible fixed assets reaches PHP10.9 billion

Gross addition to tangible fixed assets (capital expenditures less sale of tangible fixed assets) acquired by the sector reached PHP10.9 billion.

Real estate activities with own or leased property acquired bigger gross addition to tangible fixed assets with PHP10.2 billion. Real estate activities on a fee or contract basis got a smaller amount with PHP664.6 million.

TECHNICAL NOTES

Introduction

The 2010 Annual Survey of Philippine Business and Industry (ASPBI), conducted in 2011 with 2010 as reference year, is one of the continuing activities of the National Statistics Office. It will be a source of benchmark levels on the structure and trends of economic activities in the country for the year 2010. Particularly, the data from ASPBI will be used in constructing national and regional income accounts in the country, determining and comparing regional economic structures, and formulating plans and policies of the government in the attainment of economic goals.

The conduct of the ASPBI is governed by legislative acts and presidential directives, specifically Commonwealth Act No. 591 which was approved on August 19,1940.

Scope and Coverage

The 2010 ASPBI covered establishments engaged in 18 economic sections classified under the 2009 Philippine Standard Industrial classification (PSIC) namely:

• Agriculture, Forestry and Fishing (A)
• Mining and Quarrying (B)
• Manufacturing (C)
• Electricity, Gas, Steam, and Air Conditioning Supply (D)
• Water Supply; Sewerage, Waste Management and Remediation Activities (E)
• Construction (F)
• Wholesale and Retail Trade; Repair and Maintenance of Motor Vehicles, Motorcycles (G)
• Transportation and Storage (H)
• Accommodation and Food service activities (I)
• Information and Communication (J)
• Financial and Insurance Activities (K)
• Real Estate Activities (L)
• Professional, Scientific and Technical Activities (M)
• Administrative and Support Service Activities (N)
• Education (P)
• Human Health and Social Activities (Q)
• Arts, Entertainment and Recreation (R)
• Other Service Activities (S)

The scope of the ASPBI was confined to "formal sector" only, which consists of the following:

• Corporations and partnership
• Cooperatives and foundations
• Single proprietorship with employment of 10 and over
• Single proprietorships with branches

Like all other establishment surveys conducted by the NSO, the 2010 ASPBI used establishment as the unit of enumeration. It is defined as "an economic unit under a single ownership or control, i.e. under a single legal entity, engaged in one or predominantly one kind of economic activity at a single fixed location".

Classification of Establishments

Before the actual selection of samples, the establishments listed in the frame were classified based on economic organization EO), legal organization (LO), industrial classification, employment size, and geographic location.

Economic organizations relates to the organizational structure or role of the establishment in the organization. The following are the types of economic organization:

• Single establishment is an establishment which has neither branch nor main office
• Branch only is an establishment which has a separate main office located elsewhere
• Establishment and main office, both located in the same address and with branches elsewhere
• Main office only is the unit which controls, supervises and directs one or more establishments of an enterprise
• Ancillary unit other than main office is the unit that operates primarily or exclusively for a related establishment or group of related establishments or its parent establishment and provides goods or services that support but do not become part of the output of those establishments

The legal organization provides the legal basis for ownership of the establishment. The following are the types of legal organization:

• Single Proprietorship refers to a business establishment organized, owned, and managed by one person, who alone assumes the risk of the business enterprise. The establishment name is that of a person, or it has words such as Owner, Proprietor or Operator
• Partnership refers to an association of two or more individuals for the conduct of a business enterprise based upon an agreement or contract between or among them to contribute money, property or industry into a common fund with the intention of dividing profits among themselves. The establishment name includes words such as Owners , Partners, Limited or LTD., Associates or ASSOCS
• Government Corporation is a private corporation organized for private aim, benefit or purpose and owned and controlled by the government. The establishment name included words such as Corporation or CORP., INCORPORATED or INC
• Stock Corporation is an ordinary business corporation organized by private persons, created and operated for the purpose of making a profit which may be distributed in the form of dividends to stockholders on the basis of their invested capital. The establishment's name includes words such Corporation or Corp, Incorporated or INC
• Non-Stock, Non-Profit Corporation is a business corporation which does not issue stocks to its members and is created not to profit but for the public good and welfare. Of this character are most of the religious, social, charitable, educational, literary, scientific, civic and political organizations and societies. The establishment's name includes words such as Corporation or Corp., Incorporated or Inc
• Cooperative is an organization composed primarily of small producers/consumers who voluntarily join together to form a business enterprise, which they themselves own, control and patronize. The establishment's name includes words such as Cooperative or COOP
• Others are organizations not classified in any of the above classification. It includes private associations, foundations, Non-Governmental Organization, or other forms of legal organizations.

The industrial classification of an economic unit is determined by the activity from which it derives its major income or revenue. The 2009 PSIC is utilized to classify units according to their economic activities.

The 2009 PSIC consists of an alpha character and 5 numeric digits. The alpha character, which represents the major division, is denoted by the characters A to S. The first two numeric digits represent the division; the first three numeric digits, the group; the first four digits, the class; and the 5 digits, the sub-class.

The size of the establishment is determined by its total employment (TE). The following are the employment size classification used in the 2010 ASPBI:

The geographic or physical location of the establishments was classified in accordance with the Philippine Standard Geographic Code (PSGC) as of December 31, 2010 which contains the latest updates on the number of regions, provinces, cities, municipalities and barangays in the Philippines.

The geographic domains of the 2010 ASPBI for establishments with TE of 20 and over are the 17 administrative regions while the whole country serves as the geographic domain for establishments with TE of less than 20.

Hence, the samples of the 2010 ASPBI with TE of 20 and over shall provide data for 17 administrative regions. For samples with TE of less than 20, the data that will be presented is limited only at the national level.

Response Rate

A total of 413 or 93 percent of sample establishments responded. These include receipts of “good” questionnaires, partially accomplished questionnaires, reports of closed, moved out or out of scope establishments.

CONCEPTS AND DEFINITIONS OF TERMS

Economic activity or business is the activity of the establishment as classified under the 2009 Philippine Standard Industrial Classification (PSIC). Generally, the main activity of the establishment is the establishment's principal source of income. If the establishment is engaged in several activities, its main activity is that which earns the biggest income or revenue.

Total employment is the number of persons who worked in or for this establishment as of November 15, 2010.

Paid employees are all persons working in the establishment and receiving pay, as well as those working away from the establishment paid by and under the control of the establishment. Included are all employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers, workers receiving pure commissions only, and workers on indefinite leave.

Salaries and wages are payments in cash or in kind to all employees, prior to deductions for employee's contributions to SSS/GSIS, withholding tax, etc. Included are total basic pay, overtime pay, and other benefits.

Revenue is the value of goods, products/by-products sold and/or services rendered to others whether paid in cash or is considered receivable by the establishment. Valuation of products/by products sold should be in producer's price (ex-establishment), net of discounts and allowances, including duties and charges but excluding subsidies. It also include goods transferred and/or services rendered to other establishment belonging to the same enterprise as the said establishment which should be treated as sales or as if sold to a customer; and revenue from products on a contractual basis from materials supplied by the establishment.

Cost refers to all expenses excluding compensation incurred during the year whether paid or payable. Valuation should be at purchaser price including taxes and other charges, net of discounts, rebates, returns and allowances. Goods received from and services rendered by other establishment of the same enterprise are valued as though purchased.

Valued added is gross output less intermediate cost.

Gross output output (for Real estate activities with own or leased property) is equal to the sum of total revenue (less interest income, rent income from land, dividend income, royalty income and franchise income), capital expenditures of fixed assets produced on own account, and change in inventory of goods for resale; less cost of goods purchased for sale.

Gross output output (for Real estate activities on a fee or contract basis) is equal to the sum of total revenue (less interest income, rent income from land, dividend income, royalty income and franchise income) and capital expenditures of fixed assets produced on own account.

Intermediate cost is equal to the sum of the following cost items: materials and supplies; fuels, lubricants, oils and greases; electricity and water; cost of industrial services done by others; cost of non-industrial services done by others (less rent expense for land); research and experimental development expense; environmental protection expense; royalty fee; franchise fee and other cost; less change in inventory of materials and supplies; fuels, lubricants, oils and greases.

Tangible Fixed assets are physical assets expected to have productive lives of more than one year and intended for use and/or being used by the establishment. Included are land, buildings, other structures and land improvements, transport equipment, machinery and equipment, furniture, fixtures, and other tangible fixed assets.

Book value of tangible fixed assets is the initial value or acquisition cost of tangible fixed assets less the accumulated depreciation.

Gross additions to tangible fixed assets is the sum of cost of new and used fixed assets acquired during the year, cost of alteration and improvements done by others and cost of fixed assets produced by the establishment less the value of sales of fixed assets during the year.

Inventories refer to the stocks of goods owned by and under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation should be at current replacement cost in purchaser's price at the indicated dates. Replacement cost is the cost of an item in terms of its present price rather than its original price.

Change in Inventories is equivalent to the value of inventories at the end of the year less the value at the beginning of the year.

Subsidies are special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry or production and to protect it against competition.