By ALBERT CASTRO
[ Malaya.com.ph ] October 23, 2008
Real estate consultancy firm CB Richard Ellis (CBRE) yesterday said that developers’ adept response to scale down projects amidst the current crisis will enable the industry to fare well.
Developers have particularly slowed on BPO and residential sectors.
Prospects are better in tourism and retail sectors, according to Victor Asuncion, CBRE research head.
Rick M. Santos, CBRE Philippine chairman, said demand for office spaces in the outsourcing industry will remain robust while the Philippines’ effort to perk up its tourism industry will pick up the tab for deferred projects in the office space and residential projects.
The industry is also continuously challenged by inflation and the declining purchasing power of overseas Filipinos, noted Santos.
At present, the expected available BPO space in Metro Manila by the end of year has been reduced to 500,000 sq.m. from the previously estimated 700,000 sq.m., a 28.57 percent drop, following developers’ decision to scale down on projects to stem a potential oversupply given the current business conditions, noted Asuncion.
This will however stabilize vacancy rates between 5 percent to 6 percent, reducing the problem of having vacant buildings in Metro Manila, said Asuncion.
In the residential sector, developers are currently reviewing their business plans to redirect initiatives on new target markets given the impact of the US financial crisis on overseas Filipino workers primarily US based OFWs.
The industry however will remain resilient amidst the dampening pressures, CBRE stressed, as the Philippines remains a viable venue for business looking for outsourcing sites and the residential sector generates demand from end-users.
Santos noted that projected BPO revenue for the year is expected to hit nearly $7 billion, up from the $4.88 billion posted in 2007.
Trent Frankum, CBRE general manager, added that while the impact of the impending US recession may delay offshore capital expenditures in the near term, Asian outsourcing companies are still taking the tab for the lost demand from their US counterparts. Some BPO companies will also move out of Grade A high-rise buildings into new IT buildings in alternative business districts due to cost.
Asuncion said the local BPO industry cannot be said to be ebbing despite a slowdown in supply as demand continue to come to the Philippines.
The Philippines tourism industry meanwhile continue to draw interest and demand from tourist, primarily Koreans, which will drive the demand for more hotel rooms. Tourist arrivals for the year is estimated to hit 3.5 million from 3.01 million last year, expected to generate $5.8 billion in international tourism receipts.
BPO and leisure trips is expected to sustain the high hotel occupancy level of about 80 percent in Metro Manila.
The government’s continued infrastructure spending at the same time will help the growth momentum of the property sector, according to Frankum.
"With its growing population, the Philippine economy must continue to expand," said Frankum who added that the deficit spending of the government for critical infrastructure projects will put a short-term strain on the government’s coffers but it will ensure continuous economic growth for the future.
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