BPO COMPANIES EXPANDING TO NEXT WAVE CITIES AND URBAN AREAS

MANILA, Philippines — With BPO companies expanding out to next wave cities and other key urban areas, Robinsons Land Corporation announced that it has completed mall-based BPO spaces in Luzon and Mindanao that are ready to receive tenants.

RLC’s Arlene Magtibay, business unit general manager of Commercial Centers Division, said the firm has already completed office spaces for lease, ideal for BPOs, in its malls in Paco in Manila, Tarlac City, and Davao City.

She added that RLC’s mall complexes in Tacloban and Dumaguete also have available spaces for the construction of an office building if there is demand from the market.

Magtibay said the three malls have a total of over 21,000 sqm of available office area for lease while the size of the Tacloban and Dumaguete BPO buildings will depend on the prospective tenants’ specifications.

Construction is also underway for two more RLC BPO buildings in Ortigas Business Center which will add a total of 80,000 sqm to its office leasing portfolio, making it one of the top BPO lessors in the country, according to Henry Yap, business unit general manager for Office Buildings Division.

Recent industry reports indicate that rents of office buildings are rising as strong corporate expansionary demand drives up leasing requirements for both BPO and traditional offices. Because of this, vacancy rates in Metro Manila’s business districts have remained at low levels despite the upward trend in rates.

This is just the start of the projected up-cycle for the Philippine property market as determined by real demand and strong macroeconomic fundamentals.

Magtibay said the BPO spaces in the three Robinsons malls, aside from enjoying the convenience of shopping and dining outlets in the same building, are also accredited by the Philippine Economic Zone Authority, equipped with 100 percent back-up power, and support facilities to operate 24/7.

Robinsons Otis in Paco, Manila has three levels of office spaces above the mall with a total leasable area of around 11,000 sqm. Aside from the convenience of the mall below, the area is also near the University Belt area with over 40 colleges that will make it easy to recruit personnel. The City of Manila still has a large untapped labor pool that can service BPO requirements.

On the other hand, Robinsons Luisita in Tarlac City has over 5,000 sqm of available space in two levels which are ideal for the business process outsourcing sector — whether it is for the voice or non-voice segment.

In Quezon City, while the vacancy rate has gone down to just 2.79 percent at the end of the first half, an additional 105,241 square meters in new space will be completed next year.

Robinsons Luisita is strategically located between northern and southern Luzon and is accessible via the Subic-Clark-Tarlac Expressway and McArthur Highway. It is the only commercial center with BPO space in Tarlac.

Meanwhile, Robinsons Cybergate Davao has 2,700 sqm of leasable office space located at the second level of the mall. Other than Metro Manila, Davao City is the only city in the country with a population of over a million. Davao also scored the highest among the top 10 Next Wave Cities, according to the Business Processing Association of the Philippines.

WB SEES PHL REMITTANCES AT USD23B IN 2011

AMID the growing uncertainty caused by the European debt crisis, remittances from overseas Filipino workers (OFWs) worldwide are expected to remain resilient and reach as much as $23 billion by the end of the year, according to the latest Migration and Development Brief released by the World Bank on Thursday.

This would make the Philippines the world’s fourth-largest remittance-receiving country in the world, the report said.

The top three countries this year, according to the World Bank, are India, with remittances expected to reach $58 billion; China, $57 billion; and Mexico, $24 billion.

“Despite the global economic crisis that has impacted on private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of 8 percent in 2011,” World Bank Development Prospects Group Director Hans Timmer said. “Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.”

Total remittances sent home by some 8 million or 10 million overseas Filipinos from January to September this year have so far totaled $14.8 billion, or an increase of 7.1 percent from the same period last year, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

BSP officials are optimistic these will be at least 7 percent higher than last year, to more or less $20 billion by the end of 2011.

An e-mail sent to Timmer, who is based in Washington, D.C., on the discrepancy was not answered as of press time.

The World Bank said remittance flows to developing countries like the Philippines are expected to total $351 billion this year.

Despite the global uncertainties, the bank expects global remittances to stay on a growth path and, by 2014, reach $515 billion.

Of that, around $441 billion will flow to developing countries and some $127 billion will be directed to countries in East Asia and the Pacific, where two of the world’s biggest remittance recipient countries are located—China and the Philippines.

The bank expects continued growth in global remittance flows going forward, by 7.3 percent to $437 billion in 2012; 7.9 percent or $473 billion in 2013; and 8.4 percent or $515 billion in 2014.

However, the bank said there are some downside risks to the outlook for international remittance and migration flows.

For the Philippines, this includes the “indigenization” programs being considered by some countries like Saudi Arabia.

The kingdom, where many OFWs are located, has implemented a “Saudization” policy that encourages the employment of Saudi nationals in the private sector.

“There are also concerns about the minimum wages and the welfare of female domestic workers who account for a large share of OFWs in Saudi Arabia. While the indigenization may not affect remittances in the near term, they highlight the importance of destination-country policy changes for the future sustainability of remittance flows to developing countries,” the brief stated.

Globally, these risks include the persistent unemployment in Europe and the US, which may affect employment prospects of existing migrants and hardening political attitudes toward new immigration.

Risks also include the volatile exchange rates; the uncertainty of the direction of oil prices also presents further risks to the outlook for remittances.

More recently, some of the Gulf Cooperation Council countries, which are critically dependent on migrant workers, were considering tighter quotas for migrant workers to protect jobs for their own citizens.

However, the bank noted that domestic helpers from the Philippines and Sri Lanka have been exempt from the indigenization policy.

“Such policies may impact remittance flows to developing countries in the longer term,” report co-author and World Bank’s Migration and Remittances Unit Manager Dilip Ratha said. “But in the medium-term the risk of disruption to these flows is relatively low.”

Meanwhile, the bank said remittance flows would receive a further boost if the global development community achieved the agreed objective of reducing global average remittance costs by 5 percentage points in five years, or the “5 by 5” objective of the G-8 and the G-20.

Remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011 due to increasing competition in large-volume remittance corridors such as UK-Nigeria and UAE-India. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a lifeline to the poor.

“In addition to streamlining regulations governing remittance- service providers, there is a pressing need to improve data on remittance-market size at the national and bilateral corridor level,” Ratha said. “That will stimulate market competition and also help in more accurate monitoring of progress toward the ‘5 by 5’ objective.”

REMITTANCES TO PROP UP ECONOMY

THE remittances to developing economies will rise by 7 to 8 percent a year until 2014, providing a steady support to economies such as the Philippines, the world’s fourth-largest country recipient of such funds, the World Bank predicted on Thursday.

The remittances from Filipinos overseas are projected to hit $23 billion in 2011, the World Bank said. Filipinos send money home through banks and non-banking channels. Bangko Sentral data show that the remittances they coursed through banks alone rose 7.1 percent to $14.8 billion in the first nine months of this year.

World Bank economists Sanket Mohapatra, Dilip Ratha and Ani Silwal said the top recipients of remittances in 2011 were India ($58 billion), China ($57 billion), Mexico ($24 billion) and the Philippines ($23 billion).

After falling 5.2 percent to $307 billion in 2009, the remittance flows to developing countries rose 6.0 percent to $325 billion in 2010.

“Despite the global economic crisis that has impacted private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of 8 percent in 2011,” said Hans Timmer, director of the World Bank’s Development Prospects Group.

“Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.

“Following this rebound in 2011, the growth of remittance flows to developing countries is expected to continue at a rate of 7 to 8 percent annually to reach $441 billion by 2014.”

The remittances are expected to increase 8.0 percent to $351 billion in 2011, 7.3 percent to $377 billion in 2012, 7.9 percent to $406 billion in 2013, and 8.4 percent to $441 billion in 2014.

Global remittance flows, including those to high-income countries, are expected to exceed $515 billion by 2014.

Remittances to the developing economies in East Asia and the Pacific are projected to rise 7.6 percent to $101 billion in 2011 and 7.3 percent to $109 billion in 2012. They are forecast to increase by another 8.0 percent to $117 billion in 2013 and 8.7 percent to $127 billion by 2014.

Still, the World Bank said there were serious downside risks to the remittance growth outlook because of the persistent unemployment in Europe and the United States.

“Volatile exchange rates and uncertainty about the direction of oil prices also present further risks to the outlook for remittances.”

The flow of remittances would receive a further boost if the global development community achieved the agreed objective of reducing global average remittance costs by 5 percentage points in five years.

Remittance costs have fallen from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. But remittance costs continue to remain high in Africa and in the small nations where remittances provide a lifeline to the poor.

A NEW CAPITAL OF CALL CENTERS

Jes Aznar for The New York Times People Support workers in Makati City, near Manila. About 400,000 Filipinos work in call centers, roughly 50,000 more than in India.

MANILA — Americans calling the customer service lines of their airlines, phone companies and banks are now more likely to speak to Mark in Manila than Bharat in Bangalore.

Over the last several years, a quiet revolution has been reshaping the call center business: the rise of the Philippines, a former United States colony that has a large population of young people who speak lightly accented English and, unlike many Indians, are steeped in American culture.

More Filipinos — about 400,000 — than Indians now spend their nights talking to mostly American consumers, industry officials said, as companies like AT&T, JPMorgan Chase and Expedia have hired call centers here, or built their own. The jobs have come from the United States, Europe and, to some extent, India as outsourcers followed their clients to the Philippines.

India, where offshore call centers first took off in a big way, fields as many as 350,000 call center agents, according to some industry estimates. The Philippines, which has a population one-tenth as big as India’s, overtook India this year, according to Jojo Uligan, executive director of the Contact Center Association of the Philippines.

Jes Aznar for The New York Times Filipinos at People Support are more familiar with American culture than Indians are.

The growing preference for the Philippines reflects in part the maturation of the outsourcing business and in part a preference for American English. In the early days, the industry focused simply on finding and setting up shop in countries with large English-speaking populations and low labor costs, which mostly led them to India. But executives say they are now increasingly identifying places best suited for specific tasks. India remains the biggest destination by far for software outsourcing, for instance.

Executives say the growth was not motivated by wage considerations. Filipino call center agents typically earn more than their Indian counterparts ($300 a month, rather than $250, at the entry level), but executives say they are worth the extra cost because American customers find them easier to understand than they do Indian agents, who speak British-style English and use unfamiliar idioms. Indians, for example, might say, “I will revert on the same,” rather than, “I will follow up on that.”

It helps that Filipinos learn American English in the first grade, eat hamburgers, follow the N.B.A. and watch the TV show “Friends” long before they enter a call center. In India, by contrast, public schools introduce British English in the third grade, only the urban elite eat American fast food, cricket is the national pastime and “Friends” is a teaching aid for Indian call center trainers. English is an official language in both countries.

The Philippines has “a unique combination of Eastern, attentive hospitality and attitude of care and compassion mixed with what I call Americanization,” said Aparup Sengupta, chief executive of Aegis Global, an outsourcing firm based in Mumbai, India, that acquired Manila-based People Support in 2008 and now employs nearly 13,000 Filipinos. American companies are reluctant to discuss their outsourcing strategies, but privately some executives acknowledged that early on, they focused primarily on saving money. But as they gained experience in different countries, they realized that was not the best strategy.

“Certain phrases people use and idioms are important,” said an executive at a large American company that handles service calls through the Philippines. He spoke on the condition that he and his firm not be identified. “We are getting better at it, but of course it is still a hot button.”

Analysts said call centers in the Philippines appeared to have helped American businesses respond to complaints from consumers who said they could not understand Indian agents. But it is unlikely to satisfy critics who say outsourcing is sending too many jobs abroad as millions of Americans struggle to find work.

This year, for instance, US Airways stopped outsourcing customer service to Manila and hired 400 agents in Arizona, California and North Carolina as part of an agreement with the Communications Workers of America union.

Jes Aznar for The New York Times A light moment inside the People Support office. AT&T, JPMorgan Chase and Expedia use Philippine call centers.

Some American companies like Delta Airlines have said they moved call centers back to the United States to appease angry customers who wanted better English. Entry-level American call center agents earn about $20,000 a year, about five times as much as similar agents in the Philippines and six times as much as Indian agents.

Nevertheless, the financial benefits of outsourcing remain strong enough that the call center business is growing at 25 to 30 percent a year here in the Philippines, compared to 10 to 15 percent in India, according to Salil Dani, research director at the Everest Group, a firm that tracks the market.

American outsourcing or back-end companies like I.B.M., Accenture and Convergys along with Indian firms like Aegis, Infosys and Tech Mahindra have thousands of employees working from gleaming glass towers and even inside malls, which executives say young workers prefer so they can be close to shops and restaurants.

In addition to language skills, the Philippines has better utility infrastructure than India — so companies spend little on generators and diesel fuel. Also, cities here are safer and have better public transportation, so employers do not have to bus employees to and from work as they do in India.

Many of the workers are like Mark, 26, who answers tech support calls from employees of an American chemical company. He studied engineering but dropped out of college to support his parents and two younger siblings. He now makes 26,000 pesos ($600) a month, about the same as his father, who has a small school-bus business. (The average Filipino family earns 17,000 pesos a month.)

He spoke on the condition that his full name and the name of his employer were not revealed because he was not authorized to talk to reporters. His office is in a new development known as Eastwood City, east of Manila that, locals said, used to be fields a few years ago. Now, it is home to companies like I.B.M. and Dell, and has McDonald’s, Starbucks and bars where happy hour starts at 6 a.m. for call center workers who want a beer after their shift.

Mark is trim and has sharp features. He wears stylish canvas shoes and a striped shirt. His accent is more middle America than eastern Manila. He said his parents made him watch American movies and TV shows, read English books and speak the language starting at age 5. Still, he said he was fired from his first call center job after just two weeks because customers said they could not understand him.

“Sometimes, they would insist on being transferred to an American agent,” he said. “After a year, I was able to speak in an accent that they would like to hear.”

But now he is tiring of answering phones and is thinking about trying his hand at acting because he has a little money in the bank and his siblings have college degrees and are working.

The call center boom has also benefitted his country, previously a laggard among Southeast Asia’s tiger economies — its most popular exports were nurses. Last year, revenue from outsourcing, which also includes things like health insurance processing, animation development and software programming, totaled $9 billion, or 4.5 percent of the Philippine gross domestic product, up from virtually nothing in 2000. The government has tried to support the industry with tax breaks and subsidies.

In spite of its recent growth, the Philippines is a much smaller destination for outsourcing more broadly — India earns about 10 times as much revenue from outsourcing. That is unlikely to change in the foreseeable future given India’s 1.2 billion people, 31 percent of whom are 14 years old or younger. (The Philippines has 93 million people, about 35 percent of them 14 or younger.)

Executives expect the Philippines to continue growing at a fast pace and move up to higher-value services like accounting or the processing of insurance claims. But, like India, companies are grappling with higher costs and losing their best workers because of high domestic inflation and a shortage of skilled professionals. In the last two years, the Philippine peso climbed nearly 10 percent against the dollar, to 42.14, before weakening recently.

If the peso appreciates to 35 to the dollar, many of the call centers in the Philippines will not survive, said Narasimha Murthy, president of HGS USA, the American arm of an Indian outsourcing company that employs 4,000 people here. But things look upbeat for now, and Mr. Murthy was recently in Manila with a prospective American client.

Five years ago, he said, many clients would ask him if customer calls could be handled in the Philippines. “From that,” he said, “it has gone to ‘How well will you do it?’”

OUTSOURCING SEEN TO GROW BY 20 TO 25 PERCENT

The contact center industry is expected to grow at a faster clip of 20 to 25 percent per year over the next five years, according to Benedict Hernandez, president of the Contact Center Association of the Philippines (CCAP).

In an interview, Hernandez said the industry originally saw 15-20 percent growth until 2016 despite an already high base.

"We earlier thought the growth rate would be closer to 15 percent until 2016, but now it’s in the 20 to 25 percent range," said Hernandez, adding that the sustainability of the industry has not been more prevalent than today.

He said the growth is expected from a combination of expansion and new investments in offshoring and outsourcing.

Hernandez also sees better opportunities since there are many companies that have not outsourced their needs and would now begin to look at cost advantages.

Hernandez also said there could be plenty of "captive" businesses that be brought about by the crises in the United States and Europe.

"The crises put a lot of cost pressures on these companies," Hernandez said, adding that these firms may well look beyond their shores, including the Philippines, which is already enjoying a boom in the outsourcing industry.

"Despite the volume of activities that we already have, there are still a lot of companies which have yet to outsource, both US and non-US," said Hernandez.

Based on CCAP’s mid-year assessment, the full-year target of 15 percent to 20 percent growth of revenues and workforce this year is achievable.

Hernandez said the worst crisis the industry has experienced was the financial debacle in the US in 2008 and 2009.

Yet, he said, the industry grew "significantly" during those years when bigger companies globally became aggressive in offshoring their manpower to manage their costs.

"Crisis or not, they are looking at ways to reduce costs – through offshoring," Hernandez said.

CCAP recently signed a memorandum of cooperation with the Commission on Higher Education for a five-year partnership that aims to improve college curricula, provide training programs for teachers, and evaluate student graduate skills

"We want to make a module for the aspiring call center agent," Hernandez said.

A student can take "BPO 101" as part of the core curriculum. He can also take 21 units BPO services management as a minor course.

Hernandez said that the course will be offered in selected colleges and universities by next school year 2012-2013.

However, Hernandez said the industry faces increasing challenges that could constrain growth.

The challenges include long-term sustainability of a qualified labor pool supply, talent retention, government support for the industry, favorable regulatory policies and incentives and, lastly cost concerns that include labor, inflation, infrastructures and utilities.

For this year, CCAP projects revenues will grow 18 percent to $7.1 billion, with the sector employing about 406,000 compared with last year’s $6.2 billion revenues and 344,000 workforce.

BPO DEMAND HIGH, TOP DEVELOPERS IN CONSTRUCTION 'FRENZY'

The property sector’s strength was focused on the vertical developments and the BPOs and the emergence of new growth centers.

Exactly 35 days before 2011 bids adieu, Inquirer Property has asked analysts to assess the performance of the Philippine real estate industry in 2011. Their unanimous reply:
1. It has been a banner year for the business process outsourcing (BPO) sector.
2. The mid-income condo development is in the midst of a “construction frenzy.”
3. The demand for spaces in the Makati, Bonifacio Global City and Ortigas central business districts was even higher this year compared to last year.
4. The emerging growth centers like Eastwood and Bonifacio Global City have “arrived” this year.
5. Leading global real estate services company Colliers International, which claims its research team had been tracking all the residential condominium developments in Metro Manila since 2008, said that in 2010 preselling activities were able to sell 36,000 units, and that in 2011 that number is projected to be surpassed by more than 11 percent to breach the 40,000 units sold mark.

This was revealed by Paul Vincent Chua, associate director for valuation and advisory services and head of consultancy and research.

Top 5
“There are a lot of developers who performed well this year, however, in terms of condominium units sold in Metro Manila, SM Development Corp. remains to be number one. The top five include developers Ayala Land Inc., Century Properties, DMCI and Megaworld,” said Chua.
Enrique Soriano, professor at the Ateneo Graduate School of Business and senior adviser at Wong+Bernstein Business Advisory, also cited Megaworld, ALI, SMDC and Robinsons Land Corp. (RLC) as the top-performing developers in 2011.
Soriano also added that the property sector in 2011 “was single-handledly fueled by private initiatives.”
Soriano also observed “no movement in the high-end condominium segment, and aggressive construction frenzy in the mid-income condo segment representing 80 percent of all residential developments in 2011.”

4% vacancies
Chua said that in terms of commercial space uptake, the demand from the BPO sector is still remarkably high.
“If you look at vacancies in Makati, Bonifacio Global City, and Ortigas, the average vacancy for the third quarter is now less than 4 percent compared to the same period last year, which had an average vacancy rate of more than 6 percent. Even with the (addition of a) number of planned office developments in the next couple of years, we expect vacancies to remain low as the demands for these spaces are still very high.”
Soriano said the industry’s strength was “focused on the vertical developments and the BPOs and the emergence of new growth centers following the success of Eastwood and BGC.”
But have there been any downsides to this year’s flurry of developments? “The singular focus on the mid-income segment, and neglecting other asset classes,” replied Soriano. He reasoned, however, that the property sector was just keeping up with “unmet demand, fueled by buyer demand, especially (from) overseas Filipino workers (OFWs) and overseas Filipino expats (OFEs).

Morale booster
The positive analyses for 2011 and the strength of the Philippine real estate industry this year come as a morale booster, coming at a time when the city of Manila has recently been tagged as “below fair” to “abysmal” by foreign investors in the Emerging Trends in Real Estate Asia Pacific 2011 survey conducted by the Urban Land Institute.
Global real estate investors, who participated in the survey, gave Manila a score of 4.56 points out of a possible 9. Topping the survey in the Asia-Pacific region was Singapore with a score of 5.96 points, followed by Shanghai with 5.87, Mumbai with 5.79 and Hong Kong with 5.70.
Chua countered that the Philippines has been one of the few countries in Asia where foreign land ownership is limited to 40 percent. He urged the sector to look at the brighter side, particularly the lower rental rates compared to other Asia-Pacific countries.
He pointed out that for the office sector alone, with 25 Asia-Pacific cities covered by Colliers International, Makati City offers the third lowest rent, ranking No. 22 on the list with an average net rent of $21.48/square feet. The city that commands the highest rent, Hong Kong, has an average net rent of $185.91/square feet. Looking at the capitalization rate or prime yield of these cities, Makati ranked second with 9.77 percent, following topnotcher Mumbai with 10.6 percent.
Soriano said the low ranking was a wake-up call, and that the Real Estate Investment Trust law must now be implemented in the country, citing Hong Kong, Thailand, Singapore and Malaysia significantly benefiting from REIT. He added that implementing REIT would open more opportunities for investment.

BPOs EXPAND TO NEXT WAVE CITIES SAYS ROBINSONS LAND

Robinsons Cybergate Davao

With BPO companies expanding out to next wave cities and other key urban areas, Robinsons Land Corporation announced that it has completed mall-based BPO spaces in Luzon and Mindanao that are ready to receive tenants.

RLC’s Arlene Magtibay, Business Unit General Manager of Commercial Centers Division said the firm has already completed office spaces for lease, ideal for BPOs, in its malls in Paco in Manila, Tarlac City, and Davao City.

Robinsons Otis

She added that RLC’s mall complexes in Tacloban and Dumaguete also have available spaces for the construction of an office building if there is demand from the market.

Magtibay said the three malls have a total of over 21,000 square meters of available office area for lease while the size of the Tacloban and Dumaguete BPO buildings will depend on the prospective tenants’ specifications.

Construction is also underway for two more RLC BPO buildings in Ortigas Business Center which will add a total of 80,000 square meters to its office leasing portfolio, making it one of the top BPO lessors in the country, according to Henry Yap, Business Unit-General Manager for Office Buildings Division.

Recent industry reports indicate that rents of office buildings are rising as strong corporate expansionary demand drives up leasing requirements for both BPO and traditional offices. Because of this, vacancy rates in Metro Manila’s business districts have remained at low levels despite the upward trend in rates.

It said this is just the start of the projected up-cycle for the Philippine property market as determined by real demand and strong macroeconomic fundamentals.

Magtibay said the BPO spaces in the three Robinsons malls, aside from enjoying the convenience of shopping and dining outlets in the same building, are also accredited by the Philippine Economic Zone Authority, equipped with 100 percent back-up power, and support facilities to operate 24X7.Robinsons Otis in Paco, Manila has three levels of office spaces above the mall with a total leasable area of around 11,000 sqm. Aside from the convenience of the mall below, the area is also near the University Belt area with over 40 colleges that will make it easy to recruit personnel. The City of Manila still has a large untapped labor pool that can service BPO requirements.

On the other hand, Robinsons Luisita in Tarlac City has over 5000 sqm of available space in two levels which are ideal for the business process outsourcing sector—whether it is for the voice or non-voice segment.Robinsons Luisita is strategically located between northern and southern Luzon and is accessible via the Subic-Clark-Tarlac Expressway and McArthur Highway. It is the only commercial center with BPO space in Tarlac.

Meanwhile Robinsons Cybergate Davao has 2,700 sqm of leasable office space located at the second level of the mall. Other than Metro Manila, Davao City is the only city in the country with a population of over a million. Davao also scored the highest among the top 10 Next Wave Cities, according to the Business Processing Association of the Philippines.

Yet, he said, the industry grew "significantly" during those years when bigger companies globally became aggressive in offshoring their manpower to manage their costs.

PH IS BEST OUTSOURCING DESTINATION IN ASIA SAYS CBRE

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.

OFWs AND BPO TO DRIVE REAL ESTATE GROWTH

CEBU, Philippines - The Philippines will continue to enjoy a dynamic real estate industry owing to the growth rate of the country’s top market contributor, the Overseas Filipino Workers (OFWs) and the Business Process Outsourcing (BPO) industry.

Economist Jonas Ravelas of the Banco de Oro Universal Bank predicted that developers will continue to build projects in real estate, specially residential developments, as the Philippines is still facing backlog of residential supply.

This strong confidence from the property developer is prompted by the growing demand from the Philippine market, despite the gloomy economic prospects in other countries, like United States and Europe.

Ravelas said what also activates the market further, aside from the desperate demand for housing units, is the banks’ active stance to offer attractive loan packages for residential consumers, boosted by the low interest rate environment.

Ravelas said Filipinos are now seeing the significance in investing their money into real estate. And today is the right time to take a grip on real estate investments, as the banking sector is offering the lowest interest rate in recent times.

In the next five to six years however, interest rates are expected to rise, while prices for real estate products also increase considerably.

Those who have money and has the capability to get a loan from banks, are encouraged to invest now, he said.

The only danger that Ravelas is seeing is the recovery of the US economy, wherein capital inflows that boost the Philippine economy are seen to decelerate.

Although, the BPO sector in the Philippines is expected to be here for long term, some loose investments however, may leave the country, once US and Europe will get its feet again—economically.

Thus, Ravelas said Filipinos should make their decision in investing into real estate at least within the next three years, while the economy is still on its strong position, and foreign capital inflows are still coming in, to flood the system with more monetary circulation.

Ravelas recommended that Filipinos, across all segments, should invest now, instead of depositing their money in the banks. Also, in order to help the economy moving, Filipinos are also urged to spend or consume more, while saving more.

Now is the time to borrow money from the banks, as liquidity is swelling the inthe Philippine banking system. Banks are more agressive now, although they (bank) are also prudent in their “credit scoring” strategy.

Latest record from Housing and Urban Development and Coordinating Council (HUDCC) revealed that there is a total 170 thousand un-served market that needs affordable housing facilities, in Cebu.

Cebu, which is becoming a metropolitan and urban center in the Southern Philippines, is now embracing the condominium living lifestyle, specifically because land area is limited. (FREEMAN)