Determining the Housing Demands of BPO Workers Subdivision & Housing Developers Association National Convention September 22, 2016
Overview of the IT-BPO Market
BPO Market Conditions Philippine BPO Industry Performance 1.40 25.0 • IBPAP: FTEs reached 1.14M 1.20 (+14%), with revenues of US$22B 22 B 20.0 No. of FTE in Millions (+16%) in FY2015 1.00 .0 M 15.0 0.80 In US$ Bn 0.60 10.0 0.40 5.0 0.20 .0 M 1.5 0.00 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 E* 2012 2013 2014 2015e 2016e Direct Employment 777,000 917,000 1,071,000 ~1,200,000 1,385,000 - 1,440,000 Contribution to GDP (%) 5.3% 5.7% 6.6% ~7.5% 7.3 - 7.6% Global Share of IT / BPM (%) ~10% ~11.3% ~12.3% ~13% ~13.5 - 14.0% 4 Source: IBPAP, Colliers International Research
BPO Market Conditions Next Wave Cities 2015 These IT hubs are Centers of Excellence ranked based on talent Metro Manila Metro Cebu availability, infrastruct Clark ure, good business Bacolod environment, and cost Davao competitiveness. Iloilo Next Wave Cities Emerging Cities Baguio Balanga, Bataan Cagayan de Oro Batangas City Dagupan Iriga Dasmarinas Laoag Dumaguete Puerto Princesa Lipa City Roxas Malolos Tarlac Naga Tuguegarao Sta. Rosa Legazpi Taytay Zamboanga 5 Source: IBPAP 2015
BPO Market Conditions Philippine BPO Industry Performance Percentage of BPOs and SSCs The BPO industry has been evolving toward the higher value skills. IBPAP foresees that a shift into mid and high level services will be seen in the coming years. This is a response to growing threats such as higher costs and automation. IBPAP forecasts that by 2022, there will be around 1.7 million to 2.1 million BPO Full-Time Employees BPO SSC (FTEs) Source: DART Institute 2015 2022 BPO Worker Types Based on Skill No. of FTEs % of Total No. of FTEs % of Total Low Level FTEs 473,000 43% 445,000 25% Mid Level FTEs 468,000 43% 838,000 47% High Level FTEs 160,000 15% 500,000 28% Total ~1,101,000 100% 1,783,000 100% Source: IBPAP 8 Note: FTE refers to Full-Time Employees
What is the housing demand of those working in the BPO industry?
BPO Housing Demand Estimation Methodology • The BPO Roadmap to 2022 is still being finalized by IBPAP. Limited information has been released so far. While the IBPAP foresees that more BPO activity will be found outside of Metro Manila, no information on the estimates are available as of yet. • Estimates on the total number of FTEs by 2022 from IBPAP are used. • The Centers of Excellence and Next Wave Cities identified by IBPAP were referred to. Since the IBPAP, DOST and other organizations have extensively studied the strengths of these areas, it is assumed that these areas will see the bulk of BPO activity and therefore BPO worker housing demand in the future. • . A survey of BPO workers were conducted by Colliers in Metro Manila, Metro Clark, Metro Cebu and Davao . The housing preferences of the BPO workers were obtained through the survey. • The housing affordability requirements per pricing segment was compared to the salary ranges of BPO workers per rank to determine the pricing segment most affordable for each BPO worker rank. This was then compared to their preferred pricing segment. 10
Housing Affordability Financing Affordability by Pricing Segment The required monthly payments per housing segment are based on terms from Pag-Ibig (socialized to Mid-End) and major banks (High-End). Based on these, the corresponding required monthly incomes are calculated. Total Contract Price Required gross Required gross BALANCE THROUGH BANK FINANCING/PAG-IBIG (TCP) Range annual income monthly income Pricing Category Term Low High Balance Int. Rate Min Max Min Min (months) Socialized 0 450,000 100% 180 4.50% 2,677 3,442 123,019 9,463 Economic A 450,001 750,000 90% 180 6.50% 3,528 5,880 163,900 12,608 Economic B 750,001 1,700,000 95% 180 8.59% 7,054 15,989 283,887 21,837 Low Cost 1,700,001 3,000,000 80% 180 8.59% 13,464 23,761 675,916 51,994 Mid End 3,000,000 6,000,000 80% 180 8.59% 23,761 47,521 1,219,556 93,812 High End 6,000,001 and above 80% 180 10.39% 52,732 263,661 2,749,265 211,482 Source: HDMF; Colliers International Research 11 Note: 15 year term loan refers to 180 months
BPO Housing Demand Estimation Number of Employees and their Intent to Buy City/Municipality Est. No. of FTEs (2015) The Full-Time Employee (FTE) Metro Manila 886,500 Luzon 54,700 counts per area from IBPAP are Baguio 6,000 used to forecast the number of Dagupan 250 BPO workers by 2022. Malolos/Bulacan 250 A survey of BPO workers in key Metro Clark 20,000 Lipa 1,000 areas revealed their intent to Metro Cavite 10,000 either buy or rent housing as Santa Rosa/Laguna 12,200 well as their income levels. Taytay/Rizal 500 Naga 4,500 Visayas 217,000 Metro Metro Cebu 160,000 Survey Results Cebu Clark Davao Manila Overall Bacolod 25,000 No Intent 12% 12% 12% 8% 4% Iloilo 21,000 Whatsoever Dumaguete 11,000 Intend to Buy 77% 70% 77% 87% 85% Mindanao 38,000 Intend to Rent 11% 18% 11% 5% 11% Davao 33,000 Cagayan de Oro 3,500 Total: 1,200,000 13 Source: IBPAP; Colliers International Research
BPO Housing Demand Estimation Summary Forecasts – Housing for Sale Demand The calculations on average demand projections indicate a very high theoretical indicative demand based on number of workers, their salaries and the prevailing purchase terms. City/Municipality 2016 2017 2018 2019 2020 2021 Metro Manila 47,637 43,378 41,337 51,836 55,493 56,068 Luzon Baguio 232 262 284 307 332 359 Dagupan 10 11 12 12 13 14 Malolos/Bulacan 10 11 12 12 13 14 Metro Clark 772 873 944 1,021 1,104 1,195 Lipa 38 44 48 51 55 59 Metro Cavite 386 436 473 510 552 598 Santa Rosa/Laguna 471 532 576 623 674 728 Taytay/Rizal 19 22 24 26 28 30 Naga 174 197 213 230 248 269 Visayas Metro Cebu 6,568 7,429 8,034 8,688 9,397 10,164 Bacolod 1,027 1,161 1,255 1,358 1,468 1,589 Iloilo 862 976 1,055 1,140 1,234 1,334 Dumaguete 452 511 552 597 646 699 Mindanao Davao 1,367 1,546 1,672 1,809 1,956 2,116 Cagayan de Oro 144 164 177 192 207 224 14 Total: 60,168 57,550 56,665 68,412 73,420 75,460 Source: Colliers International Research
BPO Housing Demand Estimation Findings – Preferences vs. Affordability A disparity in pricing segment preference and what is actually affordable was observed. Segment they can Afford Overall Preferred Segment Min Max Rank and Economic B Economic A Economic B (P450K – P750K) (P750K - P1.7M) (P750K - P1.7M) File Economic B Economic A Economic B Supervisors (P450K – P750K) (P750K - P1.7M) (P750K - P1.7M) Economic B Low Cost Low Cost (P1.7M – P3.2M) Managers (P1.7M – P3.2M) (P750K - P1.7M) Mid End High End Directors High End (P6M and above) (P3.2M – P6M) (P6M and above) Source: Colliers International Research 15
Metro Manila Supply – Demand Gap Analysis 2016 2017 2018 2019 2020 2021 2022 Adjusted Ave. Demand 3,543 3,227 3,075 3,856 4,128 4,171 4,436 Socialized (up to 450K) Economic (450K – P1.7M) 38,179 34,765 33,130 41,544 44,475 44,936 47,796 Low Cost (P1.7M – P3.2M) 2,835 2,581 2,460 3,084 3,302 3,336 3,549 3,080 2,805 2,673 3,352 3,588 3,625 3,856 Mid End (P3.2M – P6M) 0 0 0 0 0 0 0 High End (Above P6M) Overall 47,637 43,378 41,337 51,836 55,493 56,068 59,637 Assuming that no further launches are made as of 2016, the unsold inventory is adjusted to take into account the demand from the BPO workers. Unsold Inventory 2016 2017 2018 2019 2020 2021 2022 (End-Year) Socialized (up to 450K) (3,543) (6,770) (9,845) (13,700) (17,828) (21,999) (26,435) Economic (450K – P1.7M) (38,179) (72,944) (106,074) (147,618) (-192,093) (237,029) (284,825) Low Cost (P1.7M – P3.2M) 24,410 21,829 19,369 16,285 12,983 9,646 6,097 Mid End (P3.2M – P6M) 29,448 26,643 23,970 20,618 17,030 13,404 9,548 High End (Above P6M) 11,163 11,163 11,163 11,163 11,163 11,163 11,163 Unsold Inventory (Cumulative) 23,299 (20,079) (61,416) (113,252) (168,746) (224,814) (284,451) 16
Metro Clark Supply – Demand Gap Analysis Adjusted Ave. Demand 2016 2017 2018 2019 2020 2021 2022 347 392 424 458 496 537 580 Socialized (up to 450K) Economic (450K – P1.7M) 412 466 504 545 589 637 689 Low Cost (P1.7M – P3.2M) 5 6 6 7 8 8 9 Mid End (P3.2M – P6M) 8 9 10 11 12 13 14 0 0 0 0 0 0 0 High End (Above P6M) Grand Total 772 873 944 1,021 1,104 1,195 1,292 Unsold Inventory 2016 2017 2018 2019 2020 2021 2022 (End-Year) Socialized (up to 450K) (347) (739) (1,163) (1,621) (2,117) (2,654) (3,234) Economic (450K – P1.7M) 930 464 (39) (584) (1,173) (1,810) (2,500) Low Cost (P1.7M – P3.2M) 1,248 1,242 1,235 1,228 1,220 1,212 1,203 Mid End (P3.2M – P6M) 902 893 883 873 861 848 835 High End (Above P6M) 8 8 8 8 8 8 8 Unsold Inventory (Cumulative) 2,741 1,969 1,096 152 (869) (1,973) (3,168) 17
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