This week, Colliers Research provides insights on the residential market of Iloilo and the launch of a new condo development in the city by Cebu Landmasters Inc.; the projected 8% growth of the IT-BPM sector this year and how it will impact the office market; and the expansion of AyalaLand Logistics Holdings’ Cavite Technopark in Naic, Cavite, and the industrial sector’s growth driven by demand in manufacturing, e-commerce, and logistics.
CLI breaks ground for P1.5-B Iloilo condo
Cebu Landmasters Inc. (CLI) broke ground for Terranza Residences, a PHP1.5 billion condo project in Iloilo City, which is already 75% sold. The 33-storey project is scheduled for completion in 2025 and will consist of 600 units ranging from one-bedroom units to penthouse units (24 to 174 square meters). Amenities include a sky lounge, rooftop garden, play area, fitness gym, and a helipad.
The mid-income segment (PHP3.2 to PHP6 million) accounted for 93% of total condominium take-up in Iloilo City in H1 2021. Colliers believes that residential demand for this price segment is partially driven by overseas Filipino workers (OFW) remittances. In 8M 2021, OFW remittances reached USD22.7 billion (PHP1.1 trillion). In our view, residential demand in Iloilo will likely hinge on the government-forecasted economic rebound in 2022 as well as the progress of infrastructure projects including the expansion of Iloilo International Airport.
IT-BPM to grow 8% this year
The IT & Business Process Association of the Philippines (IBPAP) is projecting an 8% growth in revenues and headcount in 2021 due to the growing demand for outsourcing services despite Covid-19 pandemic. In 2021, IBPAP projects full-time employees to reach 1.43 million, or an additional 110,000 from the 1.32 million in 2020. Meanwhile, revenues are expected to reach USD28.8 billion (PHP1.5 trillion) from USD26.7 billion (PHP1.4 trillion) in 2020. IBPAP Chairman Benedict Hernandez added that the contact center industry will remain a key growth driver in 2022 with sustained demand from outsourcing services for banking, communication, and financial services.
In Q3 2021, office vacancy in Metro Manila reached 13.9% from 12.7% in Q2 2021. Meanwhile, office deals from outsourcing firms in 9M 2021 reached 72,000 square meters (774,700 square feet), down from the 108,000 square meters (1.2 million square feet) recorded in 9M 2020. Despite the drop in demand, Colliers is optimistic that office leasing deals will likely rebound starting 2022. Among the factors likely to support office leasing recovery are the accelerated Covid-19 inoculation, employees reporting back to their workplaces and the rebound of major economies such as the United States which could play a role in sustaining demand from outsourcing firms beyond 2021.
AyalaLand Logistics Holdings Corp. broke ground for the third phase of Cavite Technopark in Naic, Cavite. Initially spanning 118 hectares when it was launched in 2015, the industrial park now expanded to 166 hectares across three phases. Phase 1 of the Cavite Technopark houses PEZA-registered companies, while Phases 2 and 3 are allocated for non-PEZA-registered locators. The third phase is targeted for completion in Q2 2023.
Colliers believes that the growth of industrial sector beyond 2021 will be driven by sustained demand in manufacturing, e-commerce, and logistics across the country. Data from the Philippine Statistics Authority (PSA) show that the manufacturing, transportation, and storage sectors covered 65% of total approved investments in 2020, from only 11% in 2019. We believe that bulk of these investments will likely be channeled to the Cavite–Laguna–Batangas (CALABA) and North–Central Luzon industrial zones. We recommend that developers be strategic in landbanking particularly in Northern and Southern Luzon to meet growing demand for manufacturing and warehousing.