PH is best outsourcing destination in Asia: CBRE
11/09/2011
MANILA, Philippines - The Philippines is the most cost-effective outsourcing destination in Asia, according to real estate advisory firm CB Richard Ellis.
In a recent study by CBRE comparing 15 central business districts in Asia, the Philippines was ranked the second cheapest with lease rates at $19.1 price per square foot/annum, next to Jakarta's $16.3. This despite an increase in office lease rates in Metro Manila and a decline in vacancy rates this year.
The Philippines also ranked second in terms of office rental yields in Asia, at 10% in the third quarter of 2011, following India's 11%.
"The Philippines is one of the most-cost effective real estate markets in Asia. For instance, it is significantly less expensive than Hong Kong and Singapore which is around 12 times more expensive. This is also why the demand in office services sector in terms of BPO and KPO expansion has been growing in the country," said Rick Santos, CBRE chairman and CEO.
Amid financial uncertainty in the US and Europe, Santos noted the Philippine business process outsourcing (BPO) industry continues to thrive. The downturn is seen to have spurred global financial institutions to accelerate expansion plans and off-shoring, much to the benefit of the Philippines.
The BPO office annual take-up was between 250,000 to 350,000 square meters in the last 5 years.
"This year’s projected take up of office space in Manila is anywhere between 330,000 and 360,000 square meters of new take-up which is quite large when compared to Singapore’s 150,000 square meters a year.
We see continued expansionary demand from multinational companies as there is good value in the Philippine real estate market," Santos said.
The growth of the BPO industry in the country has fueled office demand in Metro Manila.
The existing BPO office supply in Metro Manila has reached almost 3.6 million square meters of leasable area.
Makati has the biggest BPO space with a supply of almost 1 million square meters of leasable space, followed by Quezon City (784,308 square meters). Most of the supply in Quezon City is from Eastwood City, UP-Techno Hub and Cubao.
However, CBRE said there is a need for the Philippines to increase its supply of qualified labor for the BPO industry in the next 3 to 5 years.
"The needs of these BPO companies are simple: qualified and cheap labor and much reduced operating expenses.Thus, for the office sector, the BPO industry will be its 'bread and butter' for the near future," the real estate consulting firm said.
The Philippines also ranked second in terms of office rental yields in Asia, at 10% in the third quarter of 2011, following India's 11%.
"The Philippines is one of the most-cost effective real estate markets in Asia. For instance, it is significantly less expensive than Hong Kong and Singapore which is around 12 times more expensive. This is also why the demand in office services sector in terms of BPO and KPO expansion has been growing in the country," said Rick Santos, CBRE chairman and CEO.
Amid financial uncertainty in the US and Europe, Santos noted the Philippine business process outsourcing (BPO) industry continues to thrive. The downturn is seen to have spurred global financial institutions to accelerate expansion plans and off-shoring, much to the benefit of the Philippines.
The BPO office annual take-up was between 250,000 to 350,000 square meters in the last 5 years.
"This year’s projected take up of office space in Manila is anywhere between 330,000 and 360,000 square meters of new take-up which is quite large when compared to Singapore’s 150,000 square meters a year.
We see continued expansionary demand from multinational companies as there is good value in the Philippine real estate market," Santos said.
The growth of the BPO industry in the country has fueled office demand in Metro Manila.
The existing BPO office supply in Metro Manila has reached almost 3.6 million square meters of leasable area.
Makati has the biggest BPO space with a supply of almost 1 million square meters of leasable space, followed by Quezon City (784,308 square meters). Most of the supply in Quezon City is from Eastwood City, UP-Techno Hub and Cubao.
However, CBRE said there is a need for the Philippines to increase its supply of qualified labor for the BPO industry in the next 3 to 5 years.
"The needs of these BPO companies are simple: qualified and cheap labor and much reduced operating expenses.Thus, for the office sector, the BPO industry will be its 'bread and butter' for the near future," the real estate consulting firm said.
