BPOs seen to get Brexit boost
WHILE global markets are fretting over Great Britain’s decision to leave the European Union—commonly known as the game-changing Brexit—a property market veteran sees the Philippines raking in windfall gains for its business process outsourcing (BPO) industry.
According to Leechiu Property Consultants founder and CEO David Leechiu, the Philippines “will do well in light of this catastrophic event in the world markets.”
“Brexit will only accelerate the decision of many companies in the west to offshore jobs to the Philippines in order to try and increase profits by cutting costs via migrating to cheaper operational hubs like Manila,” he said.
Proof of this resilience is that 70 percent of all office space supply for completion in the country in 2016 had already been leased out as of this month despite the record supply of office space coming to the market, Leechiu told the Inquirer.
Meanwhile, he noted that 15 percent of new office stock for 2017 had also already been leased out at present.
Last year, about 614,000 square meters (sq m) in office space supply were made available, and another 700,000 sq m of completed inventory will be added this year, the property consultant estimated.
By next year, the additional inventory is estimated to reach another record high level of 1.4 million sq m. “But I bet about 20 percent of that will slip to 2018 and pre-leasing activity will soak up most of that,” Leechiu said.
“It’s amazing that analysts around the world are frightened of what will follow Brexit, but we need to realize that, for us, it is a big opportunity and we need to capitalize on that,” he said.
A referendum conducted in the UK on June 23 revealed that 52 percent of voters favored a Brexit, surprising global markets since the last pre-poll survey had predicted that the country would opt to remain in the EU. This stunning vote was attributed to concerns over cross-border security and immigration issues in Europe.
Economists expect UK’s breakaway from the EU to slow down economic growth in both the UK and the EU. Global credit watcher Moody’s warned that this would herald “a prolonged period of policy uncertainty that will weigh on the UK’s economic and financial performance” and likewise dent investment flows and confidence.
In the Philippines, the impact of Brexit on underlying economic fundamentals is seen to be minimal.
On the office property market, Leechiu noted that rental rates have risen by 15 percent across the board despite the influx of new supply. He said this provided evidence of the strength of the demand at least for this year.
Asked whether the worsening traffic in the metropolis could turn off new BPO investors, Leechiu said while this was indeed a constraint, he noted that most BPO workers were moving around at night. “So the demand for roads is actually divided and at night, the traffic is much much lighter,” he said. “Having said that, I genuinely think that the traffic will now compel the workforce to rent close to work. And so we will see the rise of the corporate dormitories market and investors will see that as a niche to service.”
