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Manila Market Intelligence: December 18, 2020


ITBPM industry sees flat growth


Everest Group Partner H. Karthik projects that the revenues of the IT-Business Process Management (IT-BPM) industry of the Philippines will likely remain flat in 2020. Based on the IT Business Process Association of the Philippines (IBPAP) Roadmap 2022, industry headcount is projected to grow between 2.7% to 5% annually until 2022. During the period, revenue is forecasted to rise at an annual growth of3.2% to 5.5%. This translates to USD27.88 billion to USD29.09 billion (PHP1.34 trillion to PHP1.4 trillion). IBPAP President and CEO Rey Untal believes that the growth should be supported by digital transformation, a skilled workforce, and sustained support from the government. These include the improvement of telco infrastructure, implementation of talent development programs, and investments in cybersecurity.



In 9M 2020, Colliers recorded 105,000 sq metres (1.1 million sq feet) of office deals from the outsourcing sector, down 66% from 309,000 sq metres (3.3 million sq feet) in 9M 2019. Due to the pandemic, outsourcing firms have started to consider rationalizing their office footprint in the short-medium term as they implement remote working for their employees. Colliers believes that tenants are adopting a wait-and-see approach and this is resulting in slower office space absorption from the outsourcing sector. Colliers recommends that firms actively scout for expansion sites in non-core locations where office lease rates are about 30% to 50% lower compared to ffice spaces in major business districts. This is particularly important for firms that are planning to implement the hub-and-spoke model for a more dispersed office strategy.

Robinsons Land hotel secures BoI approval


The Board of Investments (BOI) has approved Robinsons Land Corporation’s (RLC) application for incentives for its PHP4.1 billion (USD85.3 million) Westin Sonata Palace Hotel in Mandaluyong City. The hotel will likely feature an air filtration system and information technology (IT) solutions such as online bookings, contactless payments, thermal scanners, and disinfecting stalls with sensors. RLC plans on including these components to reduce cross-contamination and ensure the safety of guests. The hotel is scheduled to be completed in March 2022 and will offer 303 rooms; meetings, incentives, conferencing and exhibition (MICE) facilities;  a spa; and restaurants.

The pandemic and the imposition of travel restrictions have disrupted the hotel sector. Data from the Department of Tourism (DOT) showed that tourist arrivals for the first ten months of 2020 reached 1.32 million, down 81% compared to the 6.8 million recorded in 10M 2019. Tourist receipts also dropped by 80% to PHP81.05 billion (USD1.7 billion) in 10M 2020 from PHP398.93 billion (USD8.3 billion) in the same period of last year. Meanwhile, Colliers sees the completion of about 1,725 hotel rooms in Metro Manila, this is lower than the average of 2,000 new hotel rooms completed from 2010 to 2019. We also see the impact of the pandemic resulting in hotel occupancy dropping to 30% by the end of 2020 from 71% in 2019. Colliers projects average daily rates (ADR) declining by 20-30%. Given the subdued arrivals, we recommend that hotel operators consider other leasing models and repurpose their facilities into co-living and flexible workspaces. These measures should comply with physical distancing protocols  and be promoted aggressively on different social media platforms and target the mobile workforce and millennials.

OFWs carry pandemic economic load, raise remittances in October 


Data from the Bangko Sentral ng Pilipinas (BSP) central bank showed that personal remittances from Overseas Filipino Workers (OFWs) reached USD3.04 billion (PHP145.92 billion) in October 2020, up 2.5% YOY. In 10M 2020, personal remittances reached USD27.35 billion (PHP1.31 trillion), down 1.0% from USD27.61 billion (PHP1.33 trillion) in the same period of 2019. The decline is slower than the -1.4% recorded at the end of September 2020. In addition, cash remittances in October 2020 grew by 2.9% to USD2.75 billion (PHP132 billion) from USD2.67 billion (PHP128.16 billion) in October 2019. This brings total cash remittances for the first 10 months of 2020 to USD24.63 billion (PHP1.18 trillion), down 0.9% YOY. The United States accounted for 40.2% of total remittances followed by Singapore, Saudi Arabia, Japan, and the United Kingdom.
In our view, the resiliency of OFW remittances despite the pandemic and global economic slowdown should help sustain residential demand beyond 2020. Anecdotally, Colliers has observed that OFW remittances partially drive the demand for affordable to mid-income (PHP1.7 million to PHP6 million or USD35,400 to USD124,900) residential units. At the start of 2020, analysts were projecting a 10% to 20% or a USD3-6 billion (PHP144-288 billion) drop in remittances. Economic analysts expect a recovery in remittances in Q4 2020 and this should temper drop in remittances for the entire 2020. Meanwhile, the central bank sees remittances rebounding by about 4% in 2021. In preparation for the recovery, we recommend that developers continue offering their condominium units to families receiving remittances Residential developers should be more proactive in mounting sales rallies targeting OFW households. In our view, developers should also monitor COVID-19 developments in countries that are main sources of remittances. Latest data from the central bank showed that the United States, Saudi Arabia and Singapore accounted for about 53% of OFW remittances in 10M 2020. 



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Joey Bondoc

Associate Director



Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

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