8990 AND MEGAWIDE START CUBAO RESIDENTIAL PROJECT
8990 Holdings Inc. and Megawide Corporation have broken ground for their latest condominium development in Cubao, Quezon City, Urban Deca Towers Cubao. The project shall consist of about 5,200 residential units with prices ranging from PHP1.8 to PHP1.9 million (USD35,300 to USD37,300). The project is located near transportation hubs such as the LRT-2 and MRT-3 Cubao station as well as bus, jeepney and utility vehicles (UV) express terminals. The project also aims to serve as a halfway house for employees who wish to reside near their workplaces.
The worsening traffic situation and the infrastructure project delays have compelled developers to build halfway houses for workers coming from the northern and southern parts of Metro Manila. In our opinion, developers should tap the pent-up demand for halfway houses. Colliers also encourages developers to explore parcels of land in the fringes of central business districts for construction of new residential units. Colliers recorded slower launches in 2019 – 40,000 units from 51,000 in 2018 due to dearth of available land in major business districts as well as surging land values. Given these, we believe that the areas of Quezon City, Manila north, Parañaque and Ortigas fringe are viable areas for new residential projects. Some of these units may also serve as halfway houses.
PH RECORDS 8.26-M INT'L ARRIVALS IN 2019
Data from the Department of Tourism (DOT) show that about 8.26 million tourists visited the country in 2019, up by 15.24% from the 7.16 million arrivals in 2018. This new record in arrivals was supported by the tourism department’s efforts to improve marketing initiatives and strengthen ties with local government units (LGUs). South Korea remained to be the country’s top source market with 1.98 million arrivals, a 22.48% growth YOY, followed by China with 1.74 million, representing a 38.58% growth YOY. Other countries such as Japan, Taiwan, Australia, Canada, United Kingdom, India and Germany have also recorded growth in tourist arrivals.
We see 2020 foreign tourist arrivals unlikely to surpass or match 2019 figures due to the threat of the novel coronavirus 2019 (COVID-19) in the country. As of 2H 2019, Colliers saw hotel occupancy across Metro Manila at 71% due to the continued influx of foreign and domestic tourists. However, for 1H 2020, we expect average occupancy rates to decline to between 60-65% due to numerous hotel room completions as well as the government’s imposition of a travel ban in China, the Philippines’ second largest source of tourists. We believe that the tourism department and other leisure businesses should be more aggressive in promoting domestic travel by offering cheaper flights and hotel accommodations in the country’s key tourist hotspots. These tourism efforts should help fill the void left by slower arrivals from China and South Korea.
REMITTANCES REACH RECORD IN 2019
Remittances from Filipinos working abroad reached a new record high in 2019 despite global economic uncertainties. Cash remittances grew by 4.1% to USD30.1 billion (PHP1.52 trillion) from the USD28.9 billion (PHP1.46 trillion) posted in 2018. Meanwhile, personal remittances grew by 3.9% to USD33.5 billion (PHP1.70 trillion) from the USD32.2 billon (PHP1.64 trillion) in the previous year. According to the Bangko Sentral ng Pilipinas (BSP) or central bank, about 78% of remittances came from the United States, Saudi Arabia, Singapore, Japan, United Kingdom, Canada, Hong Kong, United Arab Emirates, Germany and Kuwait. The central bank expects remittances to grow by 4% in 2020.
Colliers sees the impact of the novel coronavirus (COVID-19) likely affecting the remittances of OFWs in China, Hong Kong and Singapore. In 2019, these countries accounted for about 9% of total cash remittances (USD2.7 billion of USD30.1 billion). Despite the projected dip in remittances, Colliers is optimistic that a part of annual remittances will continuously be set aside by Filipinos for their purchase of residential units within and outside Metro Manila. Among the major beneficiaries of remittances are regions covering key cities and provinces such as Cebu, Iloilo, Bacolod, Davao and Pampanga. Bulk of residential demand in these areas is covered by affordable (PHP1.7 million to PHP3.2 million) and mid-income (PHP3.2 million to PHP6 million) residential segments. Colliers believes that these are also likely to benefit from the public infrastructure projects lined up by the government under its ‘Build, Build, Build’ program.