Representing the majority of tenancy of office space in the country, the business process outsourcing (BPO) sector is a catalyst for the property industry growth, according to the Asia Pacific Real Estate Association (APREA), as cited in this Philippine News Agency (PNA) report.
The organization called the BPO sector a “pillar” for the industry, saying that it will carry on propping up real estate businesses in the country.
BPO’s Robust Growth
In a separate, earlier report by the PNA, consultancy firm Lobien Realty Group said that the BPO sector had the most number of office space demand in 2020 amid the pandemic. It overtook the Philippine Offshore Gaming Operators (POGOs), which dominated the market in 2019.
It can be noted that several POGOs have stopped operations and vacated commercial spaces in the middle of 2020, with only over 20 left in September, as reported by CNN Philippines.
The information technology-business process management sector expects recovery in terms of employment and revenues in 2022 after a flat growth in the year of the pandemic, according to the projections by the IT and Business Process Association of the Philippines reported in Manila Standard.
The organization forecasts a headcount growth at 2.7 to 5 percent, totaling in 1.37 million to 1.43 million full-time employees, and revenue growth at 3.2 to 5.5 percent, about $29.09 billion.
Support for REITs
Providing support for the property industry, the continued growth of the BPO sector will specifically bolster real estate investment trust (REITs) in the country, APREA added. Most of the portfolio of REITs are concentrated in offices.
The initial assets of the first publicly listed REIT in the country AREIT were three properties in Makati accommodating multi-national and BPO companies. These are Solaris One, Ayala North Exchange, and McKinley Exchange, which feature a gross leasable area of 152,755.80 square meters all in all.
A month after its launch in August, the Ayala-backed trust acquired a grade-A BPO building in Cebu, a 12-story tower with a total gross leasable area of 18,092 square meters. It’s located in the mixed-use estate Cebu IT Park.
Meanwhile, the second REIT listing introduced by Double Dragon Properties Corp., DDMP REIT, features six office towers in its portfolio, four properties in Double Dragon Plaza, the DoubleDragon Center East, and DoubleDragon Center West.
On the other hand, Filinvest’s REIT, formerly Cyberzone Properties Inc (CPI), includes office buildings in Northgate Cyberzone in Filinvest City in Alabang and Filinvest Cyberzone in Cebu City. BPO firms are among the locators in these properties.
Other real estate giants in the country looking to introduce their own REITs, including Robinsons Land Corporation and Vista Land, are eyeing to include BPO-office spaces in these offerings.
While acknowledging that the projection on REITs is bearish with the implementation of strict community quarantine measures in Metro Manila and nearby provinces, APREA is optimistic that this trend is only temporary. Demand will likely recover within a year.
Strong Demand in CBDs
The projected recovery of the BPO sector in the next two years will likely contribute to optimistic trends projected in the central business districts this 2021, outlined in the forecast trend report Lamudi published. The commercial real estate demand for Quezon City, for instance, will grow by 3.29 percent from the first half of the year to the second half. The interest for Makati, on the other hand, will climb by 8.53 percent in the same period.
There will be a 15.87-percent growth in Taguig and a 7.01-percent increase in Pasig. Demand for Muntinlupa is expected to jump by 17.91-percent from the first half of the year to the second half.
The infrastructure developments happening in the area can further prop up the strong real estate demand. The Bonifacio Global City-Ortigas Bridge, designed to cut travel time between the two business districts from an hour to 12 minutes, will partially open in May, specifically, the road connecting Sta. Monica and Lawton, as reported in ABS-CBN News.
Meanwhile, the biggest train station in the country located in North Avenue, Quezon City, will be completed in December, as it reached the halfway mark in construction, according to Manila Standard. When finished, it will be a common hub for the Metro Rail Transit Line 3, Light Rail Transit Line 1, and the future MRT-7.
The Metro Manila Subway, which is set to begin partial operations by year-end, will also spur real estate appetite, as it links key cities in the capital region.
Sources: PNA, CNN Philippines, ABS-CBN News, Manila Standard