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Market Intelligence | Philippines April 13, 2022

Damosa Land, Damosa Diamond Tower, IWG, Davao City, Infrastructure spending

This week, Colliers Research provides insights on Damosa Land inking a partnership with global serviced-office provider IWG and Davao City office market, and the government allocating PHP1.2 trillion for infrastructure spending in 2022, 15% higher than in 2021, and why this bodes well for the property sector especially in areas outside the National Capital Region.

Damosa Land sees office spaces opportunity amid BPO expansion

SUMMARY

Damosa Land announced that it signed a franchise partnership agreement with International Workplace Group (IWG). Under the agreement, Damosa will develop and operate IWG centers in Davao City, Cagayan de Oro, and General Santos over the next five years. The Davao office will be located in Damosa Diamond Tower. Damosa Land attributed the growth in demand for office spaces in 2022 to outsourcing companies looking to expand outside Metro Manila. Damosa said that inquiries from business process outsourcing (BPO) firms and other office tenants have picked up in Q1 2022 as companies abroad consider the Philippines for their expansion plans.

RESEARCH VIEW

Colliers recorded a total of 10,400 square meters (111,900 square feet) of office space deals in Davao City or 9% of total provincial transactions in 2021. Outsourcing companies accounted for 82% of total transactions in Davao during the period. Colliers recommends that developers highlight Davao’s viability as an outsourcing hub with its improved infrastructure and skilled manpower. The city produces about 15,000 college graduates annually. We also encourage tenants to maximize opportunities with the availability of Philippine Economic Zone Authority (PEZA)-registered office space in Davao. As of 2021, the city has a total of 55,000 square meters (592,000 square feet) of available PEZA office space, the third largest in the country after Metro Manila (1.1 million square meters) and Cebu (311,000 square meters).

Damosa Diamond_Front View

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State’s 2021 infrastructure spending hits P895 Bn
   

SUMMARY

The national government’s infrastructure expenditures increased by almost a third to PHP895.1 billion (USD17.6 billion) in 2021 from PHP681 billion (USD13.4 billion) in 2020. The figure is also higher than the PHP761.2 billion (USD14.9 billion) target of the government. The increased spending is partly attributable to eased lockdown restrictions across the country. In December 2021, infrastructure expenditures increased by almost 14% YoY PHP172.1 billion (USD3.4 billion). Official data show that the government spent PHP2.5 billion (USD49.0 million) on rail projects. Analysts expect an annual infrastructure allotment of at least PHP1 trillion (USD19.61 billion) or about 5% of the country’s economic output supporting employment generation and business expansion.

RESEARCH VIEW

Data from the Department of Budget and Management show that the national government has allocated PHP1.2 trillion (USD23.1 billion) for infrastructure spending in 2022, 15% higher YOY. The Department of Public Works and Highways will receive bulk of the budget with PHP655 billion (USD12.8 billion). Colliers believes that the implementation of roads and railways should stoke residential demand outside Metro Manila. Aside from improving connectivity, the public projects should also help unlock property values and the raise the attractiveness of integrated communities outside the capital region. In Luzon, we see the completion of New Manila International Airport and Subic–Clark Railway raising residential demand in Bulacan and Pampanga, respectively. In addition, the PNR South Long Haul, C-5 Southlink Expressway, and LRT 1 Cavite Extension Project should benefit property investors from Laguna, Batangas, and Cavite. Meanwhile, Colliers sees the Cebu–Cordova Link Expressway (CCLEx), Metro Cebu Expressway, Davao City Bypass, Mindanao Railway, and Davao–Samal Bridge boosting the viability of residential hubs in Visayas and Mindanao, especially Cebu and Davao.

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