Office space take-up is expected to reach 850,000 square meters in 2018, up 13 percent from the projected 750,000 sq. m. this year, on strong demand from the resurgent business process outsourcing sector and sustained growth of online gaming companies.
Leechiu Property Consultants chief executive David Leechiu said in a news briefing the BPO take-up was expected to hit 500,000 sq. m. next year, while online gaming, currently the fastest growing sector, was expected to lease as much as 350,000 sq. m. of office space.
Leechiu said the expected “resurgence” of the information technology and business process management industry resulting from reaffirmed relations with the US and the bicameral version of the comprehensive tax reform law which would be friendly to the BPO sector.
The recent upgrade of the Philippines’ credit rating is also a positive development, he said.
Leechui said a number of the world’s largest companies were in the final stages of setting up shared services in the Philippines. “This serves as reassurance for the rest of the world that all is well in the Philippines,” said Leechiu.
Leechiu said office take-up from the IT-BPM sector slowed down to 350,000 as of end-November this year from 485,000 sqm in 2016. The slowdown was offset by the 306-pervent growth in office take-up by the online gaming sector to 230,000 sq. m. from only 56,700 in 2016.
“Exponential growth from the offshore online gaming industry fueled robust office demand and more than made up for a slack from the IT-business process manufacturing industry,” Leechiu said.
Online gaming firms took up spaces mostly in Bay City, the business district rising along Manila Bay. Bay City accounted for 67 percent of all online gaming takeup as of end-November.
Leechiu said the resurgence of the BPO sector and the continued growth in online gaming would keep office vacancy rates across Metro Manila at low levels while rents.
Leechiu said many other sectors outside the BPO and online gaming sectors were also interested in putting up office in the Philippines because of the sustained growth of the economy.
He said with the government’s move to increase spending for infrastructure, he expected a massive influx of foreign construction firms wanting to set up offices in the Philippines.
Leechiu said he was also bullish on the residential market with land values expected to continue rising.
He said the sustained demand and a limited supply of high-end condominiums in Makati and Bonifacio Global City pushed prices to an all-time high, peaking at a little over P300,000 per sqm.