Latest REIT offerings highlight office spaces
NEWS
Filinvest Land, Inc (FLI) has filed its application for a REIT (Real Estate Investment Trust) initial public offering (IPO) in March. The REIT portfolio includes 16 office buildings in Northgate Cyberzone and 1 office tower in Cebu Cyberzone. FLI said majority of the tenants of their buildings are business process outsourcing (BPO) companies. Meanwhile, Megaworld Corporation’s MREIT will include 10 office assets whose tenants are mostly BPO companies. Both firms highlighted office spaces in their portfolio amid the rise of work-from-home arrangements and use of flexible workspaces.
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RESEARCH VIEW
Colliers believes that the successful launch of REITs in the Philippines bodes well for the property market. In our view, REITs should also support the growth of the construction sector which has significant multiplier effects to the economy. REITs should be instrumental in helping developers raise fresh capital even after the pandemic. REIT also places the Philippines at par with other Asian economies that have fully developed capital and real estate markets. Colliers believes that the continued implementation of REIT in the Philippines will result in the further differentiation and innovation of property development projects which should eventually benefit Filipino investors and end-users.
Telus opens Iloilo site, plans to hire 800 employees
NEWS
Outsourcing firm Telus International launched its first site outside of Metro Manila as it aims to hire 800 employees for their Iloilo office. Currently, its Iloilo site has over 350 trainees and will be soon hitting the 800 employee target. The firm’s marketing director, Carlos Giammattei, said that Telus is open to further expansions outside the country’s capital. Telus’ newest office in Iloilo is the company’s seventh site in the Philippines.
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RESEARCH VIEW
In Q1 2021, Colliers recorded about 29,700 sq metres (319,600 sq feet) of provincial office transactions, down 15% from the 34,900 sq metres (375,500 sq feet) of office deals in Q1 2020. Iloilo transactions reached 13,600 sq metres (146,400 sq feet) in Q1 2021 or 46% of total provincial transactions. Large BPO companies continue to occupy space in Iloilo as they take advantage of PEZA-proclaimed buildings, availing of tax incentives. Colliers has observed that a mix of call centre and higher value outsourcing firms including those that provide legal transcription and health information management have started to take up office space in the province. Colliers believes that landlords should be proactive in identifying demand outside of Metro Manila. We see more firms locating outside of the capital region as they take advantage of the tax and non-tax incentives offered by the government.
Local air travel slumps 83%
NEWS
Data from the Civil Aeronautics Board (CAB) show that local airlines flew only 988,212 passengers in Q1 2021, down from the 5.9 million passengers in Q1 2020. The extended travel restrictions and suspension of leisure flights last March resulted in a further decline in passenger traffic this year. Meanwhile, domestic carriers are still operating below 30% of their pre-pandemic capacity. The Department of Transportation (DOTr) has permitted domestic commercial operations for areas under general community quarantine (GCQ) after the government eased the MECQ status in Metro Manila and other major parts of the country starting June 1.
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RESEARCH VIEW
Data from the Department of Tourism (DOT) show that foreign arrivals as of Q1 2021 reached 29,383, down from the 1.4 million arrivals in Q1 2020. Among the top source markets during the period were the United States (5,226 arrivals) followed by Japan and China at 3,232 and 1,866 arrivals, respectively. Meanwhile, Colliers saw hotel occupancy in Metro Manila declining to 20% in H2 2020 from 25% in H1 2020. Colliers believes that average occupancy will likely remain below 30% by the end 2021 as tourists are still cautious of travelling due to the pandemic. Hence, we do not see demand recovering to pre-Covid levels in the next 12 to 18 months. Colliers encourages hotel operators to monitor the perks granted by the government to the leisure sector. These include the tax incentives given by the Board of Investments (BOI) to tourism enterprises that upgrade and modernize their facilities for health and safety purposes.
