BPO provide boost to real estate sector

By Abigail L. Ho
Philippine Daily Inquirer
April 12, 2009

MANILA, Philippines--The business process outsourcing industry was not only expected to generate more jobs for Filipinos but would also help fill up available office spaces, both in prime business locations and in “next-wave” cities.

According to data from real estate services firm CB Richard Ellis Philippines, the vacancy rate for the Makati Prime/Grade A Office category had surged to as high as 7.5 percent from 1.5 percent just more than a year ago.

By end-2009, the firm said this number could breach the 10-percent mark, due to quality and pricing pressures.

“For 2009, the challenge for the office sector is the immediate absorption of the spill-over space from 2008, estimated at around 145,000 square meters (completed and ready for occupancy),” CBRE chair Rick Santos said in a statement.

“With BPO as the main driver for office take-up, new office absorption is expected to be flat at around 250,000 square meters, with provincial urban centers like Cebu, Davao, Clark, and Baguio taking their share from Metro Manila,” he added.

Since offshoring and outsourcing back-office operations to areas outside of North America and Europe would require capital expenditure from global companies, he said the Philippines had a good chance of continuing to attract these foreign firms with its competitive wage and lease rates.

“Considering the disparity in the Philippine economy versus that of first world countries...we expect that the country will continue to enjoy an influx of BPO companies in the coming months,” Santos said.

“Comparative minimum wages, lower cost of living and per capita income are just some of the indications that the BPO phenomenon remains a sunrise industry in the Philippines, and is here to stay,” he added.

Santos also said growth in the BPO sector would prompt an expansion of the office, residential, hospitality and retail segments of the property sector nationwide.

Areas that are expected to capitalize on this expansion include the so-called “next-wave cities”—Cebu, Davao, Iloilo, Baguio, Angeles, Bacolod, Dumaguete and Cagayan de Oro, he said.