MANILA: Demand for office space in the Philippines is fuelling the growth of its property market and the outsourcing sector is the key driver of demand.
Round-the-clock construction of new office buildings can be seen all across the Philippines.
At McKinley Hill Cyberpark, multinational firms and business process outsourcing companies have been snapping up office space in its 15 hectare compound.
Jericho Go, first vice president at Megaworld Corporation, said: "We are meeting the demand. Fortunately, we are seeing that demand is really, and will still be going up so that is a reasonable challenge for us to speed up the work and make those offices come on line sooner rather than later, which is a good problem to have."
Demand for commercial office space, particularly from the business process outsourcing companies, remain the driving force behind the country's robust real property market.
And despite the rental rate increase in 2012, the Philippines remains one of the most cost-effective office destinations in Asia.
Joey Radovan, vice chairman at CBRE Philippines, said: "Compared to places like for example Singapore and Hong Kong where their annual cost is at about $200 per square foot per annum and we're only on the low 20's, that tells you that we are really very cost competitive."
Strong pre-leasing commitments from the outsourcing sector account for 80 to 90 per cent of total office space, taking up at least 4.5 million square feet annually.
And this is expected to rise, with the West still facing an uncertain economic climate.
Rick Santos, chairman of CBRE Philippines, said: "As the US is in their financial dilemmas and the Eurozone is having some financial difficulties, we see those US multi-nationals, European multi-nationals continue to set up in the Philippines, their back office here not only for our labour arbitrage element but also as a life boat to keep their businesses going."
The Philippines aims to generate US$25 billion in revenue from the business process outsourcing sector by 2016.
And with such growth, property developers are now collaborating with the outsourcing sector to address the surging demand for office space.
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