This week, Colliers Research provides insights on the IT-BPM sector reporting revenue and jobs growth in 2021 and its positive implications to the country’s office sector, and Moody’s Analytics raising its economic growth forecast for the Philippines to 7.2%, which may potentially make the country the second fastest growing economy in Asia Pacific.
IT-BPM sector posts growth in revenue, jobs
SUMMARY
The Information Technology and Business Process Association of the Philippines (IBPAP) reported that the Information Technology and Business Process Management (IT-BPM) industry’s revenues grew by 10.6% to USD29.5 billion (PHP1.6 trillion) from USD26.7 billion (PHP1.4 trillion) in 2020. The number of full-time employees also increased by 120,000 to 1.44 million, higher by 9.1% from 1.32 million a year ago. IBPAP attributed the higher revenues to the growth of e-commerce, healthcare, and financial technology subsegments. IBPAP is also working with government agencies to streamline registration of new investors.
RESEARCH REVIEW
Colliers recorded about 146,100 square meters (1.6 million square feet) of office deals in Metro Manila in Q1 2022, up 30% YOY. In our opinion, the improvement in business confidence has driven the expansion of local and multinational firms in the country, including outsourcing companies. Colliers saw about 60,200 square meters (648,000 square feet) of office transactions from outsourcing firms in Q1 2022, up 68% YOY. Outsourcing companies such as Alorica, ePerformax, and Michael Page took up office space in the Bay Area, Makati Fringe, and Makati CBD during the period. We believe outsourcing firms as well as traditional occupiers will likely lead office space demand for the remainder of 2022. Colliers recommends that occupiers take advantage of rental corrections in major business districts. Average office rents in Metro Manila have dropped by about 30% compared to pre-Covid-19 pandemic rates. In our view, this should provide an opportunity for occupiers to implement flight-to-quality measures and move to core areas such as Makati CBD and Fort Bonifacio.
Moody’s Analytics hikes Philippine GDP growth forecast
SUMMARY
Moody’s Analytics has raised its economic growth forecast for the Philippines to 7.2% from 6.1% for 2022 following a faster-than-expected expansion in Q1 2022. The revised GDP growth forecast is well within the revised 7% to 8% GDP growth target set by the Development Budget Coordination Committee (DBCC). The research arm of Moody’s highlighted that household spending expanded due to looser mobility restrictions. With the revised growth projection, the Philippines may now emerge as the second fastest growing economy in Asia Pacific. Meanwhile, Moody’s Analytics is expecting the Bangko Sentral ng Pilipinas, the country’s central bank, to raise interest rates by 100 basis points.
RESEARCH REVIEW
Colliers believes that improving business and consumer sentiment due to relaxed mobility restrictions is likely to buoy Philippine property. In our view, this should result in greater absorption of office and retail spaces, improvement in pre-selling condominium demand in Metro Manila as well as house and lot take-up outside the capital region. A positive market sentiment, however, should be supported by the implementation of policy reforms. We are optimistic that the push to ramp up infrastructure spending will benefit property developers and investors over the near to medium term. These pro-business and pro-property policies should also assist developers with their expansion strategies. Despite the recovery prospects, Colliers believes that the local property market should closely observe the impacts of rising inflation and interest rates.
