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Market Intelligence | Philippines July 15, 2022

OFW remittances, Bangko Sentral ng Pilipinas, Lazada, Logistics, Fulfillment centers

This week, Colliers Research provides insights on the Bangko Sentral ng Pilipinas report that OFW remittances have reached USD2.4 billion in April 2022, up 3.9% from a year earlier, and how this crucial sector helps buoy the residential market. In addition, e-commerce platform Lazada has recently partnered with Great Deals E-commerce Corp. to launch fulfillment centers in Cebu City and Davao City, which will allow customers to receive their parcels three days after placing their orders. Colliers believes that the growth in e-commerce should provide more opportunities for the retail and industrial sectors beyond 2022.

 

Remittances rise in April

SUMMARY

Data from Bangko Sentral ng Pilipinas (BSP) or central bank show that overseas Filipino worker (OFW) remittances reached USD2.4 billion (PHP124.5 billion) in April 2022, up 3.9% from April 2021. The increase in remittances was due to the growth in receipts from land-based and sea-based workers. The depreciation of the Philippine peso also encouraged Filipino migrants to send more money. In 4M 2022, cash remittances reached USD10.2 billion (PHP528.7 billion), up 2.7% YOY. The United States accounted for about 41% of total remittances during the period, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Qatar, South Korea, and Taiwan. The central bank maintains its projection of 4% growth in remittances in 2022.

RESEARCH REVIEW

Based on the BSP’s latest Consumer Expectations Survey, the number of OFW households that utilize remittances to purchase a house increased to 9.7% in Q1 2022 from 7.3% in Q1 2021. Colliers sees the growth in remittances supporting the demand for horizontal units outside Metro Manila, particularly projects that are within the affordable to mid-income (PHP1.7 to PHP6 million) price segments. Colliers recommends that developers be aggressive in promoting their projects outside Metro Manila especially in Central Luzon and CALABARZON (Cavite–Laguna–Batangas–Rizal–Quezon) regions, which accounted for about 32% of deployed OFWs in 2020. As of the end of 2021, we have observed a sustained take-up for house-and-lot and lot-only units in provinces, including Pampanga, Bulacan, Cavite, Laguna, and Batangas, where projects launched between one to five years ago are about 78% to 86% sold.

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Great Deals ties up with Lazada to improve logistics

SUMMARY

Great Deals E-commerce Corp. has partnered with Lazada for the launch of its fulfillment centers in Cebu City and Davao City. The new fulfillment centers will allow customers to receive their parcels three days after placing their orders. According to Great Deals, the project brings an improved online shopping experience through shorter delivery time and reduced shipping fees. Additionally, a 70,000-square-meter (753,500 square feet) fulfillment center in San Rafael, Bulacan, is under construction, which will utilize robots to accommodate up to a million orders daily.

RESEARCH REVIEW

GlobalData projects e-commerce transactions in the Philippines to grow to PHP495.2 billion (USD9.5 billion) by 2025 from PHP270 billion (USD5.2 billion) in 2021. Colliers believes that the growth in e-commerce should provide more opportunities for the retail and industrial sectors beyond 2022. Based on our Q3 2021 retail survey, about 34% of respondents noted that e-commerce platforms must prioritize logistics and committed delivery time. Colliers recommends that retailers as well as e-commerce platforms strengthen their partnership with logistics firms that have modern warehouses and efficient delivery systems to streamline orders especially with the rising demand for same-day deliveries.

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