The continued flow of investments into the Philippines will continue driving the rising demand for more office spaces in the country, leading property consultant Jones Lang LaSalle (JLL) said recently.
JLL Chief Executive Officer for Asia-Pacific (Apac) Anthony Couse told reporters last week that investments in the country are not expected to slow down anytime soon, as the Asia-Pacific region now exceeds the United States as the top market.
“Foreign investors that are here in the Philippines or in Asia-Pacific are already comfortable,” he said, noting the Philippines has even the best returns after Australia.
Couse also said US President Donald Trump’s “America First” stance has minimal impact on existing business-process outsourcing (BPO) businesses, but may provide challenges for new entrants.
He added that the Philippines remains an attractive location, given its low attrition rate and labor costs, which are about 12 percent of those in the US.
A JLL research indicated that the increased entry and activity of the BPO and offshoring-and-outsourcing (O&O) industries remained the driving force behind the need for space and the rise in property values.
The BPO and O&O industries accounted for 46 percent of office-space demand. This was followed by the banking and information-technology (IT) sectors, which each accounted for 12 percent of leased space.
“The demand for office (spaces) remains very strong. Particularly here in Manila, the BPO industry continues to drive the office market,” Couse said.
In terms of location, Bonifacio Global City (BGC) in Taguig City has been the go-to-site for lessees, accounting for 45 percent. Makati City is next with 21 percent, followed by Alabang at 14 percent; Quezon City, 12 percent; and Ortigas Center in Pasig City, 7 percent.
Among cities in Metro Manila, Makati remains the most costly in terms of rent. From 2016 to 2017, lease rates in that city’s commercial business district increased by 12 percent to between P1,200 and P1,500 per square meter.
Rent in BGC also rose by 12 percent, as lease rates in the area now average between P800 and P1,200 per sqm.
JLL Philippines Inc. said there is a 5-percent vacancy across all Metro Manila business districts.
“Market remains to be favorable to landlords, and tenants continue to consider pre-committing to space to mitigate the higher real-estate cost,” it said. PNA