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Manila Market Intelligence June 30, 2021

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Remittance growth fastest since 2016 

NEWS

Overseas Filipino Worker (OFW) remittances grew by 12.7% in April, the fastest since November 2016 (+18.5%) due to prospects of a global economic recovery. Data from the Bangko Sentral ng Pilipinas (BSP) or the central bank show that cash remittances reached USD2.3 bilion (PHP112 billion) in April, up from the USD2.0 billion (PHP97 billion) recorded in the same period of last year. As of 4M 2021, remittances have reached USD9.9 billion (PHP482 billion), higher by 4.8% compared to 4M 2020. In 2021, the central bank expects remittances to grow by 4% after declining by 0.8% in 2020.

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RESEARCH VIEW

Anecdotally, OFWs partially drive the demand for affordable to mid-income (PHP1.7 to PHP6 million) condominiums. In 2020, these price segments accounted for 57% of total take-up of pre-selling condominiums in Metro Manila. Colliers believes that developers will likely continue to cater to families that receive remittances from abroad. We recommend that developers monitor the COVID-19 situation in countries that are major sources of remittances. In 4M 2021, the United States, Singapore and United Kingdom accounted for about 53% of total OFW remittances. Aside from vertical developments, developers should also explore the viability of horizontal projects such as House & Lot and Lot Only units in urban areas outside of Metro Manila.

DPWH opens 440-meter Santa Monica-Lawton bridge in Metro Manila
   

NEWS

The Department of Public Works and Highways (DPWH) recently opened the 440-meter Santa Monica-Lawton bridge in Metro Manila. The bridge aims to ease traffic congestion and make travel time shorter across key business districts in Metro Manila, namely, Pasig, Mandaluyong, Makati, and Bonifacio Global City. The bridge is a major component of the PHP1.8 billion (USD 37.5 million) BGC-Ortigas Center Link Road Project which is a part of the government’s flagship infrastructure program, Build Build Build.

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RESEARCH VIEW

The Santa Monica-Lawton (BGC-Ortigas) bridge was designed as part of the government’s initiative to reduce traffic congestion in Metro Manila’s major thoroughfares such as EDSA and C5. In our view, the completion of infrastructure projects will likely contribute to an increase in the demand for office spaces and residential condominiums.Colliers also believes that infrastructure projects have the potential to raise property prices and spur more economic activity. We encourage developers to consider land-banking in areas near infrastructure projects due for completion in the next 12 to 36 months.

 

BPO industry eyes $29-billion revenue, more jobs by 2022

NEWS

The Information Technology and Business Process Outsourcing (IT-BPO) sector is poised to grow its revenue to about USD29 billion (PHP) and an additional 160,000 jobs by 2022 as it the industry remained resilient despite the pandemic. IT & Business Process Association of the Philippines (IBPAP) chair Bendict Hernandez said that the sector generated USD26.7 billion in 2020, with employee headcount reaching 1.32 million. Despite firms’ implementation of cost-cutting measures, the IT-BPO sector was able to hire 23,000 in 2020. During the pandemic, IT-BPM firms were able to invest in work-from-home setup configurations such as the provision of pocket WiFis and laptops. Hernandez added that the successful adoption of work models, vaccination rollout will likely allow the country to remain competitive in the outsourcing industry.


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RESEARCH VIEW

In Q1 2021, Colliers recorded 8,000 sq metres (86,100 sq feet) of office deals from outsourcing firms, down 77% from the 35,000 sq metres (376,600 sq feet) in Q1 2020. The Department of Trade and Industry (DTI) is recommending the extension of the work-from-home authorization given to IT-BPM companies beyond September 2021. IBPAP is also considering the implementation of hybrid working models such as a mix of remote working and reporting on site for BPO firms in the long term to stay competitive. In a survey conducted by IBPAP, 87% of IT-BPM firms are projecting a 5-15% growth in 2021 while only 13% are expecting a flat growth. In our view, office leasing recovery will likely hinge on the pace of the Covid-19 vaccination program.

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Joey Bondoc

Associate Director

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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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Martin Aguila

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Martin Aguila graduated in February 2019 from the De La Salle University with a degree in AB Economics. He joined Colliers Philippines in the same month and works as an analyst under the Research department. He has presented in several property market briefings with developers and investors and has assisted in the preparation of reports related to property such as Market Intelligence, GDP Flash, Quarterly Market Updates and Radar Reports. He also helps the team maintain and develop databases.

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