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Market Intelligence | Philippines August 10, 2022

Infrastructure, Government spending, Department of Tourism, MICE

This week, Colliers Research provides insights on government increasing spending on infrastructure and how this will benefit the property sector, and the Department of Tourism recording more than 800,000 foreign arrivals since the start of 2022 until mid-July, and how eased international travel will be a boon to the country’s tourism sector.

 

Gov’t infra spending inches up in May

SUMMARY

Data from the Department of Budget and Management (DBM) show that government infrastructure spending reached PHP80.5 billion (USD1.5 billion) in May 2022, up 2.1% YOY. Infrastructure spending as of 5M 2022 totaled PHP334.6 billion (USD6.4 billion), up 0.7% from PHP332.3 billion (USD6.4 billion) a year ago. According to DBM, this can be attributed to the payments for the Malolos–Clark Railway and the Metro Manila Subway projects. The Marcos administration projects infrastructure spending-to-GDP ratio to range between 5% and 6% annually from 2023 to 2028. Budget Secretary Amenah Pangandaman cited that the new administration aims to “prioritize spending on enhanced infrastructure projects, including digital infrastructure, and utilization of renewable energy sources.”

RESEARCH REVIEW

According to the Development Budget Coordination Committee (DBCC), the government aims to spend PHP1.2 trillion (USD23.1 billion) on infrastructure in 2022, up 6% YOY and about 5.5% of the country’s GDP. Colliers believes that the government’s increased infrastructure spending should benefit the property sector. In our view, the implementation of big-ticket infrastructure projects such as railways, expressways and airports should boost property development and support capital appreciation in key provinces such Cavite, Laguna, Batangas, Pampanga, and Bulacan, as well as fringe areas in Metro Manila, including Makati Fringe and Caloocan–Malabon–Navotas–Valenzuela (CAMANAVA) corridor. In the next three to five years, Colliers sees these locations benefitting from the completion of major infrastructure projects including the Metro Manila Subway, Makati Subway, North–South Commuter Railway, NLEX–SLEX Connector Road, MRT-7, and the New Manila International Airport.

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PH tourism to recover with eased international travel

SUMMARY

The Department of Tourism (DOT) recorded more than 800,000 foreign arrivals as of July 15, 2022. Tourism Regional Director for National Capital Region, Sharlene Batin, noted that the resumption of meetings, incentives, conferences, and exhibitions (MICE) events has been driving the tourism sector. Global travel technology firm HotelPlanner highlighted that MICE events and leisure trips should increase hotel bookings in the country. Batin is also looking into boosting domestic tourism with the aggressive promotion of “lesser known” regions in Visayas and Mindanao.

RESEARCH REVIEW

Colliers recorded hotel occupancy in Metro Manila reaching 47% in H1 2022 from only 24% a year ago. In our view, this should be sustained by the rising demand for staycations and the arrival of more foreign tourists with the easing of travel restrictions. The gradual resumption of MICE events should also drive hotel demand in the country. Results from our Q2 2022 Hotel Survey show that 72% of the respondents are now willing to attend a face-to-face event, an improvement from only 57% who responded in the affirmative in Q4 2021. This should encourage more hotel operators to re-open their MICE facilities. Colliers recommends that hotel operators highlight their health and safety protocols, and offer flexible MICE packages to corporate clients.

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