The Philippines remains an attractive destination for global outsourcing companies because of the country’s affordable office space market, property consultant and advisor Santos Knight Frank said Tuesday.
“There seems to be no jitters from the BPO companies. The Philippines fits into the three major qualifications BPOs are looking for”•ability, accessibility and affordability,” Santos Knight Frank senior director on occupier services and commercial agency Joey Radovan said.
“The cutting down on incentives may or may not happen. Nevertheless, all factors are generally lower compared to other locations. Many BPOs are expecting this already,” said Santos Knight Frank senior director for research and consultancy Jan Custodio.
Santos Knight Frank said recent major transactions proved that BPOs continued to invest heavily in the Philippines. Santos Knight Frank recently brokered between JP Morgan Chase & Co. and Megaworld Corp. for a long-term lease of 70,000 square meters of office space in Bonifacio Global City. It is by far the largest single office lease transaction in the Philippine real estate history in terms of value and size, the company said.
Santos Knight Frank predicted that the popular hubs outside Metro Manila such as Cebu, Clark, Davao, Bacolod and Iloilo would continue to benefit from BPO expansions.
The next wave of expansions in the next three to five years is expected to happen in the 80-kilometer corridor from Metro Manila going to North of Pampanga as new infrastructure projects connect the cities of Bulacan and Pampanga, making these places accessible to the BPO leadership based in Metro Manila.
Meanwhile, Leechiu Property Consultant said net office take-up breached the 1-million mark as of September, indicating the continued strong demand from both BPO companies and online gaming firms.
LPC chief executive David Leechiu said in a news briefing that Metro Manila accounted for 74 percent of total office take-up at 799,653 sqm, exceeding the 2017 full-year office take-up of 744,957 sqm. For the whole year of 2017, LPC expects Metro Manila office take-up to reach 950,000 sqm.
It said the bulk of the demand came from the information technology and business process management, which took up 301,275 sqm, followed by the offshore and online gaming space with 170,940 sqm.
“Metro Manila has enjoyed an eight-year streak of low vacancy rates and increasing rent driven by stable demand from the IT-BPM industry. 2018 looks like it will still be another banner year for the office segment, not just in Metro Manila but also for other cities,” Leechiu said.
“Rents will continue to move upward this 2018 with new deals being transacted at higher rates,” he said.
“We’re seeing unprecedented growth in Metro Manila as well as in key cities outside the capital like Clark and Cebu,” Leechiu said.