- Details
- Category: Properties
- 14 Jan 2014
- Written by Rizal Raoul Reyes
BUSINESS-process outsourcing (BPO) and, more recently, back-office operations for multinational companies in the finance sector have become the favorites of foreign executives searching for investments in the Philippines.
In its “Emerging Trends in Real Estate Asia Pacific 2014” report released recently by the Urban Land Institute (ULI) and PriceWaterhouse Coopers (PWC), the Philippines has been getting the attention of foreign capital because of its current political environment, strong macroeconomic fundamentals and impressive credit ratings given by major institutions.
Alistair Meadows, head of the international capital group of Jones Lang LaSalle, said the 2014 survey indicated investors are more interested in Manila as compared to the previous year’s, citing its fourth position in investment prospects and eighth for development prospects in 2014. “I think the fundamentals are there to attract foreign investors over the next few years,” said Meadows in an interview with reporters at the sidelines of the ULI event in Makati City.
Further, Meadows said ULI sees the retail market as the “most exciting sector” in the next 10 to 15 years in Asia Pacific as it will be driven by strong consumer spending, growing middle class and rapid urbanization. He said this will also be experienced by Manila as consumer spending continues to grow driven by the solid remittances of overseas Filipino workers.
However, Meadows said the Philippines needs to address structural issues, particularly the real-estate investment trust (REIT), to strengthen the ability to attract its way into the market specifically foreign capital. He added a combination of domestic and foreign capital would be healthy for the property market and the whole economy as there would be more funds circulating in the market.
Nevertheless, the report stressed there are good prospects as capital rates are pegged at the 9-percent to 10-percent range, while developer returns range from 15 percent to 20 percent.
Although the country’s economic fundamentals are good, a foreign investor said the Philippines is considered a dark horse. “I like the Philippine economy from a demographic perspective, and they do manufacture more people than people think,” remarked Meadows.
“The problem is just lack of political leadership and the amount of corruption, which, at the end of the day, stops infrastructure works from being completed,” he pointed out.
In the same report, another foreign investor active in the Philippines noted the huge amounts of office space taken up in Manila two years ago, “which, at some four million square feet, rivaled uptake in Tokyo,” whose 400 million to 450 million square feet was much larger. “So, Manila is where India was 10 years ago,” said the investor.
“Multinationals, not just call centers, will be adding employees in Manila over the next three years, the reason that you have an English-educated workforce who is 95-percent literate,” he added.
The IT and Business Process Association of the Philippines (ITBPAP) is eyeing $25-billion revenue for the country in 2016. In 2012 the ITBPAP reported the industry posted $13.2 billion in revenues.
In Photo: Multinational companies in Metro Manila
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