Demand from BPO and home buyers to buoy property sector — CBRE Philippines

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Siegfred O. Alegado

GMA News Online

23 January 2013

http://www.gmanetwork.com/news/story/291610/economy/business/demand-from-bpo-and-home-buyers-to-buoy-property-sector-cbre-philippines

Demand for commercial space, particularly from business process outsourcing (BPO), will remain the driving force behind real estate as an industry and supported by a broader market of residential buyers, property consultant CBRE Philippines said Wednesday.
The situation is evolving at a time when the Philippines is fast becoming a global lifestyle hub and Metro Manila is challenging other gaming cities like Macau and Las Vegas.
“Fiscal dilemma in the US will push more business process outsourcing to the Philippines,” said Rick Santos, CBRE Philippines chairman and chief executive officer. Santos also cited the strong pre-leasing commitments, with the BPO sector accounting for 80 to 90 percent of total office space and taking up at least 4.5 million square feet annually.
“The Philippines will remain as one of the most cost-effective office destinations in Asia,” he added.
Joey Radovan, CBRE Philippines vice chairman and global corporate services head, noted that BPO in the past decade has been the source of demand for office spaces in the country and “will remain so for the next five years. Developers will continue to build spaces for them.”
In the next three years, Radovan said a chunk of the available space will be in Ortigas area, Fort Bonifacio, and Quezon City.
And then the supply would largely come from the “next wave cities” of Baguio, Iloilo, Dumaguete, Davao, Cagayan de Oro, Bacolod, Sta. Rosa, Lipa, Cavite, and Malolos. “These are places where BPO firms are looking at putting up office spaces,” Radovan said.
Empowering the residential market
Empowering the market for residential developments is the higher disposable earnings of the mid-income segment, with the demand for homes thriving in a low interest rate regime, CBRE Philippines noted.
“The Philippines is expecting democratization in the housing sector – from a notion of renters to owners – based on low interest rates,” Santos said.
“An empowered consumer-base economy will continue to fuel retail developments in the country,” he added.
Victor Ascuncion, CBRE Philippines executive director, sees the strongest segment of the property sector as the “condominium units priced above P100,000 per square meter… with 76 percent of the total supply in this price range have already been sold.”
There is a “60 percent take-up on projects that are launched,” he added.
An emerging trend in the residential and office sector, known as lifestyle housing and lifestyle BPO destinations, integrates office, lifestyle, and retail spaces, according to CBRE Philippines.
“These will be an alternative for BPO site selection and office developments outside of Metro Manila,” Santos said.
The gaming challenge
“We think the Philippines will really challenge Macau and Las Vegas in gaming revenues in five years time,” Santos noted.
Entertainment City Manila in Pasay City will notch $10 billion in revenues by 2016 from $1.3 billion in 2011, according to CBRE Philippines.
“Leisure destination properties will be acknowledged for their tourism marketability and investment potential,” said Liz Silvestre, CBRE Philippines associate director.
“The country will experience strong global luxury trend of foreign tourists brought about by the islands’ recognition and more aggressive government campaign,” she added.

Orion Support Incorporated (OSI)

Dear Rick,

Following up from my initial request to you for support in finding a new office location for our company, Orion Support Incorporated.   Well, we moved in to the LTA Building on Perea Street, fifty meters or so from Paseo de Roxas this weekend, only a 4 minute walk to AmCham and under excellent terms.

While I think you assigned both Morgan Mcgilvray and Sherdil Rana to support our original request; as you know, Morgan was very tied up with his wife giving birth during the period we identified this location and negotiated with the landlord, Mr. Mike Arroyo. Yes, the former First Gentleman. But in my short interaction with Morgan, I can see that he is a solid, young professional.

With regards to Sherdil, I want to tell you that with 35+ years of interviewing hundreds and hundreds of individuals, I was impressed with his professionalism, focused support and “can-do” attitude  from the point of identifying our potential office space, and through the negotiation stages prior to the signing of our 6 year contract.  I was impressed with his considered opinions, insightfulness with regards to Philippine business culture and his sage advice related to our strategy in the negotiation process.  Sherdil was able to negotiate a rental rate per square meter about 150 – 200 pesos less than the going rate in this area, and with only a 7% increase after 24 months. Add to that, he secured for us three parking slots at no additional cost, two months security deposit versus the standard three, and two months advance rent to be applied to the front end of our contract versus the back end as is the case in most rental contracts. And, he got the landlord to repaint the entire office with three coats of mildew resistant paint at their expense.   But best of all, we were given a 6 year lease, with only having to give two months notice and forfeit only our two month security deposit to move out anytime with no additional penalty!

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