Ecozone reset supports office demand

From AB Capital's The Opening Bell: Three Moves

Event

The Department of Trade and Industry (DTI) and Department of Finance (DOF) endorsed lifting Administrative Order (AO) 18, the 2019 moratorium on new Metro Manila ecozone applications, with final approval now subject to the Office of the President. The Philippine Economic Zone Authority (PEZA) expects strong demand once lifted, with Makati, Arca South, and Bridgetown cited as early test cases.

View

In our view, this is positive for office landlords because it expands the incentive-eligible supply pipeline for information technology-business process management (IT-BPM) locators in core Metro Manila. The policy could improve leasing optionality in business districts where tenants want access to talent, transport, and established support infrastructure.

Catalyst

Key sensitivities are timing of the new AO, PEZA application approvals, and actual IT-BPM expansion. If approvals move quickly, take-up could improve in Makati, Taguig, and Pasig. If policy execution is slow, the benefit may stay more sentiment-driven this year.

Action

We think this is constructive for developers with Metro Manila office exposure and scalable mixed-use estates. The main upside case is faster business process outsourcing (BPO) absorption; the risk is weaker provincial decentralization optics and limited net new demand.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.