By Louella D. Desiderio (The
Philippine Star) | Updated September 24, 2014 - 12:00am
MANILA, Philippines - The Philippine
real estate sector is expected to remain strong beyond 2016, amid sustained
demand from the business process outsourcing (BPO) sector, real estate
consultancy and service provider CBRE Philippines said.
“The resiliency of the Philippine
economy and the real estate sector is expected to continue beyond 2016,” Rick
Santos, CBRE Philippines founder, chairman and chief executive officer said in
a press conference yesterday.
This, as the sustained momentum of the
BPO sector is seen to drive the continued growth of the real estate sector.
“Philippine BPO expansion looks to be
on a strong 10-year run in Philippine real estate,” Santos said.
Even as 2016 is an election year and
politics is always a factor considered by investors, BPO firms are looking to
set-up or expand in the Philippines due to continued demand for
services
from overseas.
“With the BPO sector, like overseas
Filipino workers remittances, it is based on external factors…basically the
need to reduce costs and perform jobs in other areas at lower costs. It is
pretty easy going to continue well past 2016,” Santos said.
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John Corpus, CBRE director for
corporate agency and brokerage said in the same event that based on feedback
from clients, there are no signs of a slowdown in demand from the BPO sector
with firms already looking to secure office space from new supply expected to
come in next year and in early 2016.
“We don’t see signs of slowdown in the
next 24 months mainly because our clients are expanding. Those that tested
market initially are looking at second sites…2015 and early 2016 stocks are now
on the radar of these companies,” he said.
For his part, Jason Abraham, CBRE
associate director for corporate agency and brokerage said the demand for BPO
services is not only coming from US firms, but also from Japanese companies.
With strong demand for BPO services
and office space, Joanie Mitchell, CBRE consultant for corporate agency and
brokerage, said clients want developers to build at a much faster pace.
“Demand is so much. Speed to market is
what it is all about,” she said.
Of the 700,000 square meters (sqm) of
new office supply expected this year, about 600,000 sqm would be taken up, with
80 to 90 percent to be accounted for by the BPO sector.
Apart from the BPO sector, expansion
among multinational firms is also driving demand for office space.
CBRE associate director Morgan
McGilvray said an important factor in the strong demand seen for office space
here is Metro Manila’s rental rate which is by far, the cheapest in the region
at $29 per square foot per annum.
“The difference is about five times.
Even if rates rise, there is still cushion,” he said.
The country’s strong macroeconomic
fundamentals and available young talent pool are also factors driving continued
growth in the BPO sector as well as expansion of foreign firms.
As the BPO sector grows, demand for
retail space and residential properties are expected to follow.
CBRE senior director for research and
consultancy Jan Paul Custodio said the country’s retail sector, like the office
sector offers the lowest rate at $38 per square foot per annum, making it an
attractive location for brands.
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