One and a half years into this pandemic and many businesses remain in a slump unable to get back on their feet as the health and economic crises drag on. There are, however, a few that managed to stay afloat and were able to bounce back quickly. One of which is the business process outsourcing (BPO) sector.
It wasn’t spared from the blows inflicted by COVID-19. The BPO industry’s operations were disrupted by sharp fluctuations in demand and restrictions on peoples’ mobility in the early part of the pandemic. It was, however, quick to react, make drastic changes in the way it conducts business and adapt to what has become the “new normal.”
By the end of 2020, the BPO sector emerged as among the few that posted growth.
According to a report of the IT & Business Process Association of the Philippines (IT-BPAP), headcount in this sector grew by 1.8 percent to 1.4 million people while revenue rose 1.4 percent to $26.7 billion last year.
Industry analysts say that while the BPO industry does well during good times, it does even better after bad times. This phenomenon was observed after the dotcom bubble of 2000 and the global financial crisis of 2007-2008. Why? Because the bad times make companies in the western world more cost-conscious and turn to BPOs to save on costs. In this arena, the Philippines and India remain the most attractive options in the world, considering their high quality and educated labor force and competitive costs.
Healthy occupancy rates
The resilience it had shown amid the debilitating pandemic and the continued rise in the demand for its services make people in the property sector more optimistic about the prospects of the BPO industry postpandemic.
Even amid the prolonged pandemic, BPO-oriented property firms have been faring well. Megaworld Corp., for instance, recently reported it had so far signed lease contracts covering 415,000 square meters of office space since the start of the pandemic early last year, further noting a significant pickup in inquiries. It said 60 percent of the lease contracts represented renewals while the rest were new leases, involving mostly information technology-BPO companies.
At the rate this is going, Megaworld expects vacancies to be filled up very quickly especially for Peza (Philippine Economic Zone Authority)- accredited buildings in Metro Manila.
Boosted by the performance of the BPO sector, REITs (Real Estate Investment Trust) that are listed on the stock market—AREIT of Ayala Land and FILREIT of Filinvest Land—have been doing well. Since its listing in August last year, AREIT’s price has so far risen by 40.7 percent. FILREIT, which listed on Aug. 12, has so far registered a 2.7-percent increase in price.
Why bet on REIT?
Investing in REIT makes very good sense as it gives investors an easy and less expensive way to take part in the highly resilient BPO sector.
REITs, according to analysts, also become a more attractive investment option as central banks around the world keep interest rates at record lows to stimulate economic growth. Many consider it a better investment than stocks and bonds in times of uncertainty as it provides good yields when interest rates are low and some inflation protection in the form of potential capital appreciation in times of high inflation.
They say REIT provides a safe haven for investors looking for recurring income—much better than other fixed income instruments—and allows them to participate in long-term property appreciation.The Megaworld-sponsored MREIT takes pride in the facts that occupancy rates in its properties remain at healthy levels and that it is the only REIT in the market with zero exposure to Pogos (Philippine Offshore Gaming Operators), the only segment of the market that has been highly volatile due to a host of factors.
It also boasts of the MREIT properties’ locations, which present great capital appreciation potentials. These include McKinley Hill, which is getting a new subway station; Eastwood, which is about to become part of a much larger integrated central business district with mass transit in the north, and Iloilo, now the hottest office market in the country given that property prices and rent in the area are still significantly lower than those in Cebu. INQ