Quantcast
Latest Stories

BPO sector to affect developers’ profitability

By

BONIFACIO Global City is one of the top choices of BPO investors in the country

The office and residential segments this year will benefit from the thriving Business Process Outsourcing industry in the country, but large tenants would also mean a renegotiation of lease terms, which could impinge on developers’ profitability.

Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, says the BPO industry, which has seen impressive growth in the last decade, will continue to fuel the demand for office space and even residential units, while remittances of overseas Filipinos would fuel demand in the low- to mid-range residential market.

Securing better deals

He adds that the influx of new companies and the expansion of existing ones have resulted in a much faster take-up of office space in central business districts.

The downside of this flourishing sector, he pointed out, is that “BPOs are large tenants that have more influence. They leverage their bigness by securing better deals, and in the process affect a developer’s profitability. Brokers are naturally part of the equation and will pursue the deal relentlessly. It’s time to expand the office development portfolio customized to local entrepreneurs.”

Claro dG Cordero Jr., Jones Lang LaSalle’s head of research, consulting and valuation, says the BPO/O&O (offshoring and outsourcing) industry would continue to be the major driver of office demand. The demand for office spaces will be coming mainly from expansion of existing operations and new entries from other high-value O&O services.

“We estimate office demand in 2013 to remain in the 400,000-(unit) level, and as historically suggested, approximately 60 percent of the figure will be coming from the BPO/O&O industry,” Cordero says.

Continue to rise

Colliers International, in its 10 predictions in the property sector, sees the BPO sector to continue to shine, driving the office market. It cited its research arm and the Business Process Association of the Philippines as its sources. BPAP indicates that BPO full-time employees (FTEs) will reach over 1 million by 2016 and will increase annually by 10 percent in the next four years. The number of new BPO FTEs for next year is estimated at 70,000 workers, leading to approximately 250,000 square meters of additional office space.

Rick Santos, CB Richard Ellis Philippines chair, founder and managing partner, says the Philippines is becoming the BPO banking hub of Asia. He adds that the office sector will continue to perform well in Asia Pacific, as it is one of the most cost-effective outsourcing destinations in the region.

CBRE says that “in the major business districts where office space requirements are on a steady uptake with no signs of a slowdown, demand is catching up with supply. Average occupancy rates during the first quarter hovered at 96 percent.”

CBRE notes that the demand from the sustained expansion of the O&O industry and the limited tenant turnover continue to put pressure on the already tight supply situation. It adds, “although new supplies of traditional and BPO office space are scheduled to come online in the second half of this year, it is not expected to do much to alleviate the supply situation. Already, of the approximately 583,000 sq m of anticipated new supply for 2013, about 130,000 sq m have been pre-committed as of end 2012. The limited supply continues to put an upward pressure on office lease rates.”

Next: Boom time for hotels


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: bpo industry , office and residential segments , property

  • reizo

    As I see it, only big developers and real estate people are going to complain about difference in profit but the growth on BPO is something very welcomed since it will provide a lot of work. At Aicom, this growth is very evident with the great improvement in manpower. 



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • Anti-gay demo in Ethiopia cancelled
  • Obama launches measures to support solar energy in US
  • Nebraska toddler gets stuck inside claw machine
  • Philippine eagle rescued by Army turned over to DENR
  • Gunmen attack Iraq military base, kill 10 soldiers
  • Sports

  • Vietnam says it will not host Asian Games
  • Nadal passes clay landmark with 300th victory
  • Wawrinka waltzes through with Monte Carlo walkover
  • Power Pinays smash India in Asian Women’s Club volleyball opener
  • PH youth boxers off to stumbling start in AIBA World tilt
  • Lifestyle

  • Ford Mustang turns 50 atop Empire State Building
  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • This is not just a farm
  • Clams and garlic, softshell crab risotto–not your usual seafood fare for Holy Week
  • Entertainment

  • Cannes film festival launches race for 2014 Palme d’Or
  • Jones, Godard, Cronenberg in competition at Cannes
  • Will Arnett files for divorce from Amy Poehler
  • American rapper cuts own penis, jumps off building
  • Jay Z to bring Made in America music fest to LA
  • Business

  • Total says makes ‘very promising’ oil find off Ivory Coast
  • ‘Chinese Twitter’ firm Weibo to go public in US
  • World stocks subdued, Nikkei flat on profit taking
  • Asia stocks fail to match Wall Street gains
  • Fired Yahoo exec gets $58M for 15 months of work
  • Technology

  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Filipinos #PrayForSouthKorea
  • Taylor Swift tries video blogging, crashes into fan’s bridal shower
  • DOF: Tagaytay, QC best at handling funds
  • Smart phone apps and sites perfect for the Holy Week
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • Malaysia quarantines 64 villagers over MERS virus
  • DFA: 2 Filipinos survive Korean ferry disaster
  • PH asks airline passengers to check for MERS
  • Syria most dangerous country for journalists, PH 3rd—watchdog
  • Japan says visa-free entry still a plan
  • Marketplace