No ‘goat year’ for PH real estate in 2015

MANILA, Philippines – The prospects of the Philippine real estate industry this year are bright, anchored by the continuing growth of the Business Process Outsourcing (BPO) sector and supported by the resurgence of the retail, hospitality and gaming sectors.

“We just rang in the year of the goat during Chinese New Year, but this certainly won’t be a goat year for Philippine real estate. It’s going to be another strong year,” said Rick Santos, founder, chairman, and CEO of CBRE Philippines.

CBRE Philippine is the local subsidiary of the CBRE group, the largest real estate services company in the world.

The BPO sector remains the top driver for investment in the country due to the country’s cost-effectiveness and demographics dividend, according to CBRE.

The continued expansion of the BPO sector has also significantly accelerated the services sector, which has grown at 3.3 percentage points of the GDP and is the top drawer of economic growth in the fourth quarter of 2014, he added.

“By 2016 BPO revenue is estimated to exceed $25 Billion (P1.10 trillion) and $48 billion (P2.12 trillion) by 2020. With that amount of money coming in, businesses linked to the sector will see great opportunities,” Santos said.

The sector continues to be the main source of demand for the office market, according to John Corpus, director of agency and brokerage at CBRE. “The Philippines has overtaken India in voice call centers including Western banks and IT firms due to client preference for local English accent. Call center numbers are growing at about 20% per decade,” he said.

Corpus added that for every one BPO job, an additional two and a half jobs are created in construction, administration and services and in this way, they “build cities.”

Advent of ‘retail-tainment’

Retail is going to be the next battleground for profits, a logical progression for an economy that is rising at such a rapid pace, said Morgan McGilvray, another director of at CBRE who specializes in the retail sector.

This is happening as real estate developers, such as Ayala Land and Megaworld, continue to diversify into the retail segment according to him.

The estimated new supply in 2015 is 233,000 square meters (sqm), according to CBRE, which is the equivalent of 6 new high-rise buildings worth of retail space.

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