The Philippines will likely see a dramatic resurgence in the business process outsourcing (BPO) industry next year on the back of improved relations with the United States, in turn boosting office space take-up to another record high and making Metro Manila one of Asia’s top office markets.
This is according to property veteran David Leechiu, president of property consulting firm Leechiu Property Consultants (LPC). He predicted that office property take-up in the metropolis next year could reach a new record high of 800,000 to 850,000 square meters (square meters) from around 750,000 sqm this year.
Leechiu said rental rates in Metro Manila could likewise rise by 10-15 percent next year for Philippine Economic Zone Authority (PEZA)-accredited buildings while non-PEZA buildings with online gaming tenants could still command a 10-percent rental rate growth.
If Metro Manila would be able to achieve the take-up target, Leechiu said it would become the third biggest office market in the region after Shanghai and Beijing.
LPC is currently helping a number of the world’s largest companies set up shared service hubs in the Philippines, easily taking up 100,000-130,000 sqm within this year. Leechiu said these were among the top 20 companies globally in terms of market capitalization and were entering the Philippines for the first time.
Leechiu said the BPO sector might resume the strong office take-up seen in previous years. In 2016, the sector took up 480,000 sqm of office space, equivalent to 77 percent of property deals. But from January to November this year, the sector’s demand eased by 28 percent to 350,000 sqm, equivalent to 48 percent of total transactions year-to-date.
Online gaming firms accounted for 32 percent of total transactions so far this year, surging in contribution from only 9 percent last year. Online gaming expanded their take-up of office space by 306 percent to 230,102 sqm in the first 11 months.