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Market Intelligence | Philippines August 31, 2021

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Cebu BPOs see remote work arrangements in place for up to five years
NEWS

Cebu Information Technology-Business Process Management (IT-BPM) said that about 60–75% of outsourcing employees are likely to continue remote work arrangements for the next two to five years and called for accelerated network expansion outside of central business districts. According to the 2020 Digital Quality of Life Index, the country ranked 66th out of 85 countries due to expensive and low-quality Internet infrastructure. Cebu IT-BPM President Exuperto Cabañata added that areas such as Clark and Iloilo are likely to be favored by occupiers as these locations offer more space and are less congested compared to Cebu.

RESEARCH VIEW

Data from the IT & Business Process Association of the Philippines (IBPAP) showed that the number of full-time employees rose by 1.8% in 2020 to 1.32 million despite the impact of Covid-19 pandemic. Industry revenues also grew by 1.4% to USD26.7 billion in 2020. Meanwhile, Colliers recorded about 11,500 square meters (123,700 square feet) of office deals from outsourcing firms in Cebu in H1 2021, up from the 3,300 square meters (35,500 square feet) recorded in H1 2020. Colliers believes that firms taking a wait-and-see attitude and assessing post-pandemic options should consider short-term leases. In our opinion, occupiers may opt to renew or sign up in flexible workspaces and implement a hub-and-spoke model to minimize capital expenditures and save on operating expenses. Among the locations with a significant amount of available serviced offices are Cebu Business and IT Parks.

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DoubleDragon adds warehouse lease space
   

NEWS

DoubleDragon Properties Corp. said that the third phase of its CentralHub-Tarlac development is already completed, adding 10,464 square meters of leasable space to their industrial warehousing portfolio. By the end of 2021, the company is aiming to reach more than 1.2 million square meters of leasable space. DoubleDragon’s total equity stands at PHP59.23 billion (USD1.2 billion) as of March 2021, and they are aiming to reach PHP120 billion (USD2.5 billion) by 2030 through the continuous expansion of their real estate portfolio and business units.

RESEARCH VIEW

Colliers believes that the industrial sector will thrive beyond 2021 as we see recovery in both local and global demand supported by the growth of domestic manufacturing, e-commerce, and ramped up vaccination efforts across the country. Data from the Philippine Statistics Authority (PSA) also showed that foreign direct investments committed to fund manufacturing projects amounted to PHP11.1 billion (USD231 million) in Q1 2021, about 11% higher compared to the amount committed to the sector in 2020. Colliers believes that bulk of these investments will likely be channeled onto the Cavite–Laguna–Batangas (CALABA) and north Central Luzon industrial zones. We encourage developers to remain proactive in acquiring parcels of land that can be developed into industrial parks and in refurbishing existing assets to meet the growing demand for modern warehouses and other logistics facilities.

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OFW remittances may rise by up to 7% this year

NEWS

Digital payments services provider WorldRemit said that they expect overseas Filipino worker (OFW) remittances to grow between 6% and 7% in 2021 from a 0.8% decline in 2020. Country director Earl Melivo added that the resilience of OFW remittances has been proven in the past, including the pandemic. WorldRemit’s projection is higher than the central bank’s forecast of a 4% growth in remittances in 2021. Data from the central bank show that cash remittances grew by 6.3% to USD12.3 billion (PHP618 billion) in 5M 2021 from only USD11.6 billion (PHP583 billion) in the same period of last year.

RESEARCH VIEW

Colliers has noted that OFW remittances are among the primary drivers of residential demand in the country, particularly projects that are within the affordable to mid-income (PHP1.7 to PHP6 million) price segments. In our view, we expect take-up of condominium units in Metro Manila to gradually pick up starting H2 2022 on the back of an economic rebound, accelerated Covid-19 vaccination, construction of key infrastructure projects within and outside of Metro Manila, and steady interest rates. Meanwhile, demand for residential units outside the capital region has also been stable as Filipino families prefer larger spaces and gravitate towards less dense communities in key urban areas in northern and southern Luzon.

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