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Manila Market Intelligence: June 27, 2019

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BPO REVENUE GROWTH SLOWS TO 5.1% IN '18

NEWS

Business Process Outsourcing (BPO) revenues grew at a faster pace of 5.1% in 2018, from the 2.2% in 2017. Despite the faster revenue growth, this is still short of the IT and Business Process Association of the Philippines (IBPAP) annual growth projection of 8%.  Coming from a challenging year in 2017, 2018 showed optimism as the industry regained its momentum from industry investors and locators. According to IBPAP, the lower job generation was offset by the strong performance from the e-commerce, supply chain management, IT infrastructure support and analytics.

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RESEARCH VIEW

To be able to sustain revenue and employment growth in the BPO industry, Colliers recommends an expedited approval of Philippine Economic Zone Authority (PEZA) applications especially in the provinces to encourage more outsourcing activities outside of Manila.  Colliers believes that outsourcing demand will remain robust over the next 12 months following the 446,000 sq metres (4.8 million sq feet) of PEZA-proclaimed space in Q1 2019. Moving forward, developers’ accelerated office tower completions in key CBDs in Metro Manila should unlock more options for outsourcing locators which, in turn, should spur employment generation in the country’s capital. 

ABOITIZLAND COMPLETES LIMA TOWNSHIP

NEWS

AboitizLand Inc. has completed its PHP7 billion fully integrated township in Lima, Batangas. The 607-hectare township will house the 533-hectare Lima Industrial Park, The Outlets at Lipa, and Lima Exchange that will include a supermarket, department store and other commercial establishments. The township also consists of The Villages at Lipa, a 49-hectare property with residential communities namely Brook and Sierra that is likely to offer single attached and detached units ranging from 50-150 sqm. As Batangas continues to be a sweet spot for investments, the property developer plans to add dormitories, hospitals and even outsourcing firms to their township.

 

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RESEARCH VIEW

The Philippine government’s infrastructure push is encouraging developers to strategically acquire parcels of land outside of Metro Manila. The Southern Luzon provinces of Cavite, Laguna, and Batangas are benefiting from the government’s ambitious infrastructure program and this has resulted in an aggressive development of township projects in these areas. These integrated communities offer offices, malls, residential projects, hotels, and schools making them highly attractive developments for both property investors and end-users. Colliers sees an aggressive township development in these areas as the current administration has committed to improve the country’s infrastructure backbone.

PH ECONOMIC GROWTH SEEN TO RECOVER

NEWS

UK-based Oxford Economics sees the Philippine economic growth bouncing back after months of delay in the approval of the 2019 national budget. Researcher Ben May and economist John Payne from Oxford Economics mentioned that the Gross Domestic Product (GDP) growth of 5.6% for the first quarter of 2019 was due to the delays in public spending as well as the slowdown in net exports. Meanwhile, National Economic Development Authority (NEDA) estimates a 6.6% growth if not for the delays in the budget approval.

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RESEARCH VIEW

The country’s economic managers are expecting 2019 GDP growth to hover between 6.0%-7% as the government is likely to expedite public construction on the back of its “Build, Build, Build” program. This should indicate a sustained growth for 2019 as the central bank is likely to further ease policy rates which should result in a decelerated inflation for the rest of the year. These factors should contribute to a sustained residential and retail demand across the country, benefiting developers. With infrastructure spending likely to reach at least PHP1 trillion per year up to 2022, we see national and local developers being more strategic with their landbanking activities. Colliers believes that airports, railways, and toll roads are likely to unlock land and property values in and outside of Metro Manila. This policy should dictate the strategies of developers moving forward.

 

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Related Experts

Joey Bondoc

Associate Director

Research

Manila

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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