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PH continues to be attractive outsourcing destination

/ 12:03 AM May 09, 2015

The Philippines continues to be an attractive outsourcing destination, and because of this, the demand for office space remains high.

This was revealed by Claro dG. Cordero Jr., Jones Lang LaSalle (JLL) Philippines Inc.’s head of research, consulting and valuation.

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“For office space rentals, the offshoring and outsourcing (O&O) sector remained the major driver of demand, while both rental rates and capital values registered positive growth rates. The continued attractiveness of the Philippines as an outsourcing destination supported this trend. Further, several multinational companies (MNCs) are expanding (notably, foreign banks) their presence (adding to the total office space demand), in anticipation of the impending Asean Economic Community,” said Cordero.

Asked if this would also reflect the behavior of office spaces in other urban areas in the Philippines, Cordero replied in the affirmative. “New urban areas are being developed in order to accommodate the expansion of the O&O/BPO companies, as well as other MNCs.”

Similar scenario

In a separate interview, Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business, told Inquirer Property that he expects a similar scenario all the way up the third quarter of 2015. “I expect demand to taper off slightly in the last quarter of 2015 as more than half a million square meters of office space come on stream. Effectively, this will ease the shortage. The office demand and supply market will always mirror the state of our economy,” he said.

Asked what factors were contributing to this trend, Soriano cited the robust economy and the sustained gains attributed to the BPO sector.

“This general confidence in the economy has also created opportunities for SMEs (small and medium enterprises), and as a result we have seen the emergence of small businesses expanding their operations via compact and modular-sized office spaces in CBDs, e.g. Mindanao- and Cebu-based businesses expanding in BGC,” said Soriano.

New demand for better site

He added that the trend may not be reflective of the behavior of office spaces in other urban areas in the Philippines. “But I can only count the traditional CBDs in Metro Manila and the developer-driven CBDs in Cebu, Davao and Iloilo that have created new demand for better location and appropriated zoned office districts,” he said.

Cordero said that Makati CBD remains the top location in Metro Manila in terms of quantity (with over 3.5 million square meters) and price (prime office spaces in Makati CBD continue to command premium rates in the market). Bonifacio Global City (BGC), on the other hand, is seen as the location of majority of the upcoming office developments in Metro Manila (with 1.94 million sq m to be completed by 2020). Outside Metro Manila, Metro Cebu has the most number of office developments.

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The JLL Philippine property market monitor dated April 2015 cited the following:

Emerson Philippines recently opened its fourth facility at SM Cyber West Avenue in Quezon City. The $35-million facility is expected to support the expansion of different company functions such as data, integrated-solutions, climate-technology, technical-support and service and training centers. Seven of the 16 floors of the building will be occupied by Emerson and will accommodate around 2,000 employees.

Acquisition

Ayala Land Inc. (ALI) has announced the acquisition of the Aegis building in Cebu IT Park. ALI reportedly acquired the building for P435 million to support its goal of expanding its office leasing business. The building is a certified Leadership in Energy and Environmental Design (LEED)-Gold office with a GLA of around 18,000 sq m.

Avida Land, a subsidiary of ALI, recently launched its second boutique office building in BGC. Named Capital House, the 26-story office building has a total of 222 office units ranging from 62 to 159 sq m, and whole floor units as large as 1,400 sq m. Office space will be offered for sale from P9.9 million to P25.6 million.

Capital House is envisioned to house start-up companies and expanding businesses such as SMEs, design firms, advertising agencies and holding companies. The office building features retail space on the ground floor, an open deck, a roof deck and parking space. The project is set for completion by end of 2017, while turnover is scheduled mid-2018.

Philippine Long Distance Telephone Co. (PLDT) chair Manuel V. Pangilinan has announced the company’s interest in establishing an IT hub at Palacio del Gobernador in Intramuros, Manila. PLDT is keen on bringing innovation and increasing economic activity within the University Belt. The upcoming IT center is likely to be financed by PLDT and will occupy around 500 to 600 sq m of office space at Palacio del Gobernador.

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TAGS: outsourcing destination, Philippines, property
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