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Business outsourcing seen driving property sector in Philippines


November 2, 2008

Business outsourcing seen driving property sector in Philippines

The strong take-up of office space by Business Process Outsourcing (BPO) companies in the last three years has revived the Philippine property sector, reported state news agency PNA.

Multinational companies (MNCs) continue to outsource and or offshore for both survival and preservation of profitability.

Major developers have exercised caution by securing pre-commitments of lease before constructing new office facilities for incoming companies that are expanding outsourcing and offshore activities, the agency said, quoting a report from Rick Santos, chairman of CB Richard Ellis (CBRE) Philippines.

Only credible and reputable property companies were able to get pre-lease contracts while new entrants still need to put their money where their mouths are and build before prospective locators consider signing leases with them six months into completion, Santos said.

CBRE is tracking roughly about 501,925 square meters of leasable office space mainly for BPO companies in 2008, higher than last years monitored take-up of about 330,000 square meters.

Furthermore, BPO companies are branching out of Metro Manila, going regional into emerging cities such as Metro Cebu, Clark, and Metro Davao.

Santos said: "The demand for office space remains strong; however, the speculative supply is moving ahead of it.

"Moreover, it should be noted that most BPO office projects are scalable, meaning to say that any slowdown in demand can be remedied by deferment of actual construction," Santos explained.

The primary difference between massive traditional office buildings and BPO office buildings is the speed of completion.

BPO projects have the flexibility to respond to surges in demand for additional office space within 16 to 18 months.

The location of new office buildings remains to be a major consideration for occupiers/ tenants.

Therefore, stubborn and first-time developers who insist to construct on off locations will be second considerations for new tenants.

He said that even with the lingering global financial crisis and the recession in the US, outsourcing and off-shoring remains to be a major economic and property industry driver of the country.

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