Sans foreign visitors due to COVID-19, tourism receipts dive in June
Department of Tourism (DOT) Secretary Bernadette Romulo-Puyat said that foreign arrivals in H1 2020 reached 1.32 million, down by 68.1% annually. Revenues during the period also reached PHP81.05 billion (USD1.62 billion), down by 66.7% annually. The slump was caused by the temporary closure of airports due to the pandemic. In January 2020, prior to the pandemic, arrivals increased by 8.84% while revenues grew by 9.10%. The agency noted that officials are now focused on re-opening the domestic tourism first to help jumpstart the recovery of the industry.
The drop in foreign arrivals will likely impact the retail industry, especially retailers offering luxury goods. Demand for products under the segment is mainly driven by foreign tourists and the influx of offshore gaming employees. The decrease in arrivals and the erosion of consumer confidence will likely lead to slower retail demand for the remainder of 2020. We recommend that mall operators provide short-term rent concessions for tenants affected by the pandemic. Malls that have already opened should also explore the viability of tweaking tenant layout. The lower foreign tourist arrivals have also been affecting the leisure sector, with Metro Manila hotels’ daily rates now down 20-30% compared to pre-COVID and lockdown rates.
Health BPOs book more orders
The healthcare information sub-sector of the Information Technology-Business Process Management (IT-BPM) industry is planning to hire additional employees. Rogelio Salazar Jr., President of the Healthcare Information Management Association of the Philippines (HIMAP) noted that the industry is continuously growing due to rising demand. Two weeks after the lockdown on March 16, 2020, around 50% to 80% of the employees of HIMAP members started to work from home. Salazar highlighted that 80% of the companies maintained an on-site productivity level after three to four weeks of operation.
Given the uncertainties brought about by the pandemic, we project a slowdown in office leasing activities in 2020. The lower office space absorption will likely lead to vacancy reaching 5.5% to 7% by the end of 2020, from 4.3% in 2019. Assuming that market sentiment improves and the pandemic is contained within H2 2020, we see demand from traditional and outsourcing occupiers gradually recovering in 2021. Knowledge Process Outsourcing (KPO) companies with high demand despite the pandemic, such as healthcare, may partially help boost the recovery of the sector. We recommend that landlords proactively attract these tenants, especially for office space vacated by POGOs.
Vista Residences launches contactless property investing
Vista Residences has introduced contactless solutions to customers and its employees to ensure safety and convenience. Vista added that due to the pandemic, contactless transactions have become part of the new normal in the property sector. Investors and end-users can view Vista Residences’ properties through property lookbooks, e-catalogue and 360-degree virtual tours that are readily available on the developer’s website and social media platforms.
Colliers believes that now is an opportune time for developers to be more proactive in touching base with buyers. In our opinion, the government’s implementation of a lockdown has compelled developers to innovate and implement alternative ways to transact with clients such as the introduction of virtual property tours and digital payment schemes. These initiatives should support the flexible and attractive payment terms being implemented by developers for their pe-selling projects. Colliers believes that proactive developers are likely to stand out once the pandemic wanes similar to those who thrived after the Asian and Global Financial Crises.