Vol. XXII, No. 18 [ BusinessWorld Online]
Wednesday, August 20, 2008 | MANILA, PHILIPPINES
LISTED AYALA LAND, Inc. intends to make a strong push in the office real estate segment, which is now booming due to rising space demand from the business process outsourcing (BPO) sector.
The property company has 17 projects comprising 37 buildings in various stages of planning and construction. These are expected to be finished five years from now, the company said.
The projects will be pursued by the firm’s corporate business group, which has been renamed AyalaLand Businesscapes.
In an interview, Ma. Carmela K. Ignacio, AyalaLand Businesscapes assistant vice-president, said the projects would focus on BPO office spaces, but would also include industrial parks and spaces used as corporate headquarters.
She said about three-quarters of the projects would be built in Luzon. At least two buildings will be constructed in Mindanao, with a Davao office building with a mall component expected to start next year.
Ms. Ignacio said the company is confident that rising construction costs would not dampen demand for office spaces due to the continued expansion of BPO firms.
Major property developers like Ayala Land, Megaworld Properties and Robinsons Land are all gearing up for major expansions.
In July, property service firm CB Richard Ellis said a total of 731,871 square meters of Metro Manila property — the size of almost 200 football fields — have been earmarked for new offshoring and outsourcing facilities this year. A quarter of that has been precommitted even before construction.
The Business Processing Association of the Philippines (BPAP) expects demand for BPO space in the next three years to grow by an additional three million square meters.
The group also expects the sector to generate $13 billion in revenues and employ close to one million people by the end of 2010.
Last year, office space rent went up by more than a quarter due to strong demand from BPO companies.
Ms. Ignacio said the projects would be financed using internally generated funds, existing cash reserves, debt and asset sales. She declined to say how much the projects cost.
AyalaLand Businesscapes has an inventory of five office buildings in Makati and Alabang, Muntinlupa, and three BPO facilities in Makati and Sta. Rosa, Laguna.
The first two buildings of the 10-building University of the Philippines-AyalaLand Technohub science and technology campus on 38 hectares leased from the state university have been fully leased out.
About three-quarters of the next three buildings have been committed to locators.
Six buildings in the Diliman project will be completed by yearend, while the last four buildings will be finished by the third quarter of 2009. — Don Gil K. Carreon
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