A robust business process outsourcing (BPO) sector—which is expected to remain strong in 2014—will drive the real estate industry further up this year.
The country’s outsourcing industry will still be one of the best in Asia. CBRE Philippines said that as more occupiers relocate to the country, expansionary growth in Metro Manila’s fringes and provinces will be seen.
Metro Cebu, Mactan and Clark were cited as becoming the preferred lifestyle and BPO sites.
For property analyst Enrique M. Soriano III, the office market would continue to grow, and demand will be dispersed out of the traditional central business districts in favor of new CBDs.
“Cebu, Davao and Iloilo will continue to book solid growth for as long as the local government leadership provides regulatory and marketing support,” said Soriano, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory.
CBRE Philippines added that BPO expansion would be among the several factors (the others being the influx of tourist arrivals and the demand for expat housing) that would speed up luxury residential property takeups.
These properties, including luxury and high-end hotels, are scarce and mostly located in Bonifacio Global City, Makati, Cebu and Boracay.
“There is potential for developers to look into investing into this market,” said CBRE.
More office buildings
Colliers International’s real estate market report in the fourth quarter of 2013 indicated the BPO industry to continue to influence the commercial office sector in the next few years.
According to the report, with the recent announcement of Tholons, a global outsourcing research and advisory firm, Manila has overtaken Mumbai as the second leading outsourcing location in the world. Colliers expects that more BPO companies will enter the country and establish operations. As a result, there would be a need for office buildings that cater to the specific needs of their prospective tenants.
Colliers added that this would be well within the forecast of the IT and Business Process Association of the Philippines that the industry will hire 1.3 million full-time workers and earn export revenues of $27 billion by 2016. Complementary to this, Colliers forecasts that through 2014 and 2015, an average of 570,000 square meters of net usable space would be delivered to sustain the office space requirement of the O&O (offshore and outsourcing) industry.
Meanwhile: Jones Lang LaSalle’s January 2014 property market monitor revealed the following:
- Ohio-based O&O company Convergys Corp. is set to acquire Stream Global Services Inc., partly owned by Ayala-led LiveIt Investments Ltd., for around P36 billion. The acquisition is set to be finalized by first quarter of 2014.
- SilkRoad, a US-based, cloud-based human resource solutions provider, recently opened its new office in the Philippines. Its office demonstrates the Philippines’ importance as a growth source for the firm in the Asia-Pacific region, mainly due to the robust performance of the O&O and IT sector in the country, which continues to attract numerous investors.
- Alphaland Corp. is in talks with prospective buyers, particularly foreign firms, for the sale of its recently completed 34-story office building, Alphaland Tower. According to the firm, while there are numerous companies interested in leasing a portion of the building, Alphaland aims to sell the entire development. The Philippine Long Distance Telephone Co. previously expressed its interest to acquire Alphaland Tower, but has decided not to continue with the acquisition.
- The Philippine O&O sector is expected to lead the industry among the members of the Association of Southeast Asian Nations, according to a corporate executive of Teleperformance Asia Pacific. The robust performance of the local sector may be attributed to its cost efficiency, the English language proficiency of the workforce and the quality of services. The rising demand for nonvoice activity is also seen as one of the growth drivers for the O&O sector.