The first quarter of 2016 has seen the rebound of the GDP from 5.6% and a second quarter leap to 6.4% which is becoming a rising trend. With the positive forecasts and affirmation from international financial and credit rating institutions like the International Monetary Fund (IMF), Asian Development Bank (ADB) and by Standard and Poor’s (S&P). With these optimistic views, the real estate sector is bringing more developments in various sectors such as retail, office, industrial as well as residential within and even outside of the main city across the country.
Change has also seen in both public and private entities who have been working together to add spice in the business sector in the Philippines. These projects of the so-called public-private partnerships together with the large economic businesses and the young working individuals have filled the high demand of the BPOs. These have been the main factors that boosted the rise of such companies and these will continue to sustain in the future.
According to Santos, the BPO growth is continuous and will maintain its momentum in the Philippines because of the lower rental cost and the many talented people willing to work for them. It is becoming an integral factor in the growth of BPOs with the best and lowest cost in Asia, standing at USD 29 per square foot per annum. With the emergence of BPOs and their high interest in the Philippines, it is also becoming a trend for more office spaces.
In the first 9 months of 2014 alone, there are 124.55 square meters or an impressive 1,340.65 square feet of BPO office spaces have been provided and has been the highest demand seen in the last six years. This dynamic growth has also seen the dramatic escalation of more office spaces to be developed. CBRE has also observed the decrease of vacancy from 3.30% to 2.45% reported in the year’s first quarter. Offset was done by the office supply demand with more than 400,000 square meters of fresh space just within this year.
Currently, the Makati Central Business District still remains to attract more international firms followed by the developing Bonifacio Global City. Tholons, a global outsourcing consultancy firm has stated that the Philippines’ main outsourcing attractions are Davao City, Bacolod City, Cebu City, Iloilo City and Sta. Rosa City together with the PEZA economic zone areas have greatly contributed to the supply demand.
Foreign investors kept their interest in the Philippines’ skilled labor population and have expanded their operations across the country. The Philippines has ranked 7th among the various countries as the primary location for BPO operations as reported by A.T. Kearney Global Services Location Index. The highlight of the study is mainly focused on the country’s growing labor force which is considered as the deepest quality of the workforce. The BPO industry has widened their search for voice and value-added services, IT and other outsourced processes fields like legal, health care, financial, medical or insurance.
Santos also added that the FTEs (full time equivalent) of BPO employees are able to reach a high 1.3 million by the end of 2016. In addition, the integration of the upcoming ASEAN event will be highly favorable to the thrust of the Philippine’s position as one of the top BPO favorite destination.
Other sectors of real estate like industrial, hospitality and retail have also reported a substantial growth. More outlets have begun to rise due to the growth of OFWs or the middle-income earners who have transactions with global retailers all over the country. A surprising 170,000 square meters of fresh retail spaces were even introduced in the start of the year plus more than 100,000 square meters of almost completed new spaces before2014 closes.
Another factor that has added to the demand of the country’s upbeat growth is the rising tourism revenues which had ballooned to PHP 109.8 billion in the first half of 2014. More retail establishments and big hotels in major tourist spots and CBD areas in the Philippines have also blossomed.
For the manufacturing sector which has shown solid lease costs, it has also boosted the country’s industrial operations. Mostly located outside of the CBDs, areas like Cebu and Clark have attracted Japanese firms and have shown expansion for their operational business in the Philippines.
Santos concluded that the BPO sector with its brilliant future coupled with the strong and firm performance of the other real estate sectors, will lead the Philippines through a bright 2016.
This is a revised article from www.cbre.com.ph