Booming Office Sector Spurs Growth of Cebu’s Residential Sector, CBRE Shares

Thursday, November 03, 2011

Cebu, Philippines – Leading real estate services and advisory firm CB Richard Ellis Philippines (CBRE) is bullish on growth prospects for Metro Cebu’s real estate sector. Based on recent findings by CBRE, developments in the office sector—particularly with the growth of the outsourcing & off-shoring industry in Cebu, provided impetus for residential investments.

“Cebu is fast emerging as the preferred BPO and IT destination not only in the country, but also in Asia. This favourable business environment provides immense opportunities for growth in the residential market, and a synergy of opportunities across Cebu’s real estate sector,” said CBRE Philippines CEO and Chairman Rick Santos.

This uptrend is seen to be sustained as Cebu has one of the lowest rental rates in the Asia Pacific Region and with approximately 103,146 square meters of gross leasable area of office spaces in the pipeline.

This expansion in the office market is further driving residential condominium developments in Cebu. The influx of expatriates working in BPOs, business tourism, and subsequently, local demand has whetted the market’s appetite for high-rise dwellings and are observed to be moving closer from the fringe areas to Cebu’s business centers. The entry of major developers such as Ayala Land, Federal Land, Filinvest Land and Robinsons Land to in the Queen City of the South also reflects this strong demand. Increase in tourist arrivals and OFW remittances are seen to further support this demand for residential spaces.

There are 8,082 residential condominium units for turnover in Metro Cebu in 2011, which is thrice the number of units in the previous year. The profitable high-rise residential market drove the costs of units up, with prices ranging from PhP70,000 to PhP 105,000 per square meter in Asiatown IT Park district and at least PhP94,000 per square meter with certain three bedroom units breaching PhP150,000 per square meter at the Cebu Business Park area.

CBRE Study Cites PHL as Top Outsourcing Site

Wednesday, November 16, 2011

THE Philippines is one of the best outsourcing destinations in Asia, according to CB Richard Ellis Philippines (CBRE)

In a press briefing on Wednesday, CBRE chairman and Chief Executive Officer Rick Santos said the company’s recent latest research indicated the country is competitively priced as far as property prices are concerned.

“The Philippines is one of the most-cost effective real-estate markets in Asia. For instance, it is significantly less expensive than Hong Kong and Singapore which is around 12 times more expensive. This is also why demand in the office services sector in terms of business process and knowledge process outsourcing has been growing in the country. This year’s projected takeup of office space in Manila is anywhere between 330,000 and 360,000 square meters which is quite large when compared with Singapore’s 150,000 square meters a year. We see continued expansionary demand from multinational companies as there is good value in the Philippine real estate market,” said Santos in media briefing held in Makati City. 

In a recent study by CBRE, Santos said the Philippines ranked second-cheapest with lease rates of $19.1 per square feet (psf)/annum next to Jakarta with $16.3 psf/annum. Other Asian central business districts included in the survey are Tokyo, Singapore, Hong Kong, Mumbai, Beijing, Shanghai, Seoul, Taipei, Ho Chi Minh, Hanoi, Guangzhou, Kuala Lumpur and Bangkok. 

Similarly, the Philippines has one of the highest office rental yields in Asia at 10 percent for the third quarter of 2011, ranking second to India’s 11 percent. 

Overall, Santos said the BPO sector continues to be a growth driver as  existing BPO office supply in Metro Manila has reached almost 3.6 million square meters of leasable area. Makati remains as the biggest office space provider with a supply of almost 1 million square meters, followed by Quezon City (784,308 square meters), Taguig City (499,464 square meters), Pasig City (440,588 square meters), and Mandaluyong City (326,972 square meters), Pasay City (259,494 square meters), and Muntinlupa City (209,823 square meters).  

In the last five years, BPO office annual takeup has hovered between 250,000 to 350,000 square meters.  By the end of 2011, direct employment from BPO companies now operating in the Philippines is expected to reach approximately 600,000 employees earning at least double the minimum wage. 

In the same briefing, CBRE Philippines Associate Director for global corporate services John Corpus said the outstanding growth of the BPO industry in the Philippines has made it the main growth driver for office demand in Metro Manila. Corpus added that the BPO industry has created demand for office space in other urban centers of the country such as Metro Cebu and Metro Davao, among other choice sites.

“As we continue to see more and more BPO buildings being built in designated Philippine Economic Zone Authority areas, vacancy rates for this type of commercial space have remained at a comfortable single-digit level of 5 percent.  In fact, it is no longer that easy to get a contiguous space of about 6,000 square meters of BPO space for a typical 1,000-seater operation in Makati or Fort Bonifacio, ready for occupancy,” said Corpus.

As multinational companies such as banks, financial services and the like strategize to save their business, Corpus said offshoring and outsourcing will be the top approach to sustain their business.

However, Corpus said there is a need to boost the supply of qualified labor for the BPO Industry in the next three to five years to enable the country to sustain the growth of the industry. “The needs of these BPO companies are simple, qualified and cheap labor and much reduced operating expenses,” said Corpus.

“Thus, for the office sector, the BPO industry will be its “bread and butter” for the near future.  The downturn and uncertainty in Europe and US boosts BPO and off shoring demand for office space in the Philippines.  US and European banks and financial institutions accelerate expansion plans and offshoring—bolstering office leasing market,” Corpus added.

Real Estate Boom to Continue in ’12

Wednesday, November 16, 2011

The real estate boom that the country has been experiencing these past few years is expected to continue through 2012, according to real estate advisory firm CB Richard Ellis Philippines. The company said the surge in property transactions over the years was due to the expansion of the business process outsourcing sector.

CBRE Philippines chairman Rick Santos said the BPO sector would continue to fuel the growth of real estate, not only in the office space segment, but also in the residential market.
“All eyes will be towards the Philippines as the desirable ‘live, play, and work environment’ this side of the globe,” Santos said during a recent briefing.

While developers would continue to roll out new leasable office spaces, Santos related that next year would also see the rise of many more condominium developments. According to CBRE Philippines asset services group executive director Lui Matti, Filipinos are increasingly adapting to condominium living, prompting developers to undertake more vertical developments.

This year, out of the 37,441 residential units built, 34,775 units had already been taken up, Matti said. Next year, 25,703 condominium units are expected to be constructed, with take-up seen reaching 20,107 units, he added.

Santos said the middle-income condominiums in strategic locations in Metro Manila would continue to be a viable option for developers. Supply of luxury condominiums, on the other hand, will continue to be limited, he added.

In the retail sector, CBRE Philippines executive director for research and consultancy Vic Asuncion said 2012, like this year, would see the rise of more supermarkets, particularly major players such as SM and Puregold.

Neighborhood malls and hypermalls will be the trend in 2012, driven by an expected increase in mixed-used development, Santos said.

In the leisure and tourism sector, boutique hotel development will expand next year to cater to a broader domestic market.

Asuncion also said that for foreign tourists, the Philippine Gaming Corp.’s Entertainment City would just be the first step toward the Philippines’ bid to become “the next leisure tourism hub.”

“Casinos and gaming developments are getting a lot of interest from investors,” Asuncion explained.

http://business.inquirer.net/30267/real-estate-boom-to-continue-in-%E2%80%9912

Philippines Still a Cheap Site for BPOs says CBRE

Wednesday, November 16, 2011

THE PHILIPPINES remains an attractive destination for business process outsourcing (BPO) investments despite increasing lease rates and declining vacancies, a property consultancy yesterday said, pointing to cheaper operations costs in business districts here.

“The Philippines is one of the most cost-effective real estate markets in Asia,” Rick M. Santos, chairman and chief executive officer of the local arm of CB Richard Ellis (CBRE) said at the company’s yearend press briefing.

He conceded that rental costs here have grown. Rents in leading business districts such as Makati City, Fort Bonifacio, Ortigas, Alabang and Quezon City stood at an average of P628.14 per square meter in the third quarter, rising by 7.84% from an average of P582.44 recorded a year ago.

The rise was attributed to more pronounced rental growth among BPO buildings and stronger demand from local companies, CBRE Philippines said.

Nevertheless, Manila is the third cheapest city for BPO operations in Asia, with lease rates at a $19.10 per square feet per annum, he said.

Makati City was further deemed as the country’s top office space provider with nearly a million square meters, followed by Quezon City at 784,308 square meters.

“[The Philippines] is still significantly less expensive than Hong Kong and Singapore which is around 12 times more expensive. This is also why the demand in office services sector in terms of BPO and KPO (knowledge process outsourcing) expansion has been growing in the country,” Mr. Santos said.

New Delhi, India ranked the cheapest at $12.70, followed by Jakarta, Indonesia at $16.30, according to a recent study conducted by CBRE Philippines among 16 central business districts across the continent.

Further, the economic uncertainty in Europe and the United States is boosting BPO and offshoring demand for office space in the country, and expansions are accelerated by US and European financial institutions, he added.

The Philippines ranks second in Asian office rental yields in Asia at 10% compared to India’s 11%, with the regional average being at around 6%, he added.

This was reflected in a robust take-up of BPO office supply in Metro Manila, which amounted to approximately 3.6 million square meters in leasable area this year.

The BPO industry is projected to hike its full-year revenues this year by 20% to $11 billion, while employees are also expected to grow by 21% to 640,000 this year from 525,000 in year-ago levels, according to the Business Processing Association of the Philippines.

For the next year, CBRE Philippines expects the BPO industry to continue to prosper amid the Western countries’ economic woes, with BPO firms continuing to expand in Metro Manila and labor-rich urban centers across the country.

Business investments will also be reportedly encouraged by the development of the Diosdado Macapagal International Airport in Clark, Pampanga.

“We see continued expansionary demand from multinational companies...,” Mr. Santos said. -- Franz Jonathan G. de la Fuente

http://www.bworldonline.com/content.php?section=Property&title=Philippines-still-a-cheap-site-for-BPOs&id=41333

Pinoy Condo-Buying Style Changing, CBRE Study Claims

Wednesday, November 16, 2011

THE proliferation of high-density vertical subdivision complex in Metro Manila in the last five years has changed the first-home preferences of newly formed households, according to property management and consulting firm CB Richard Ellis (CBRE) Philippines.

Victor Asuncion, CBRE Executive Director for Research and Consultancy at CBRE Philippines, said the company is conducting a five-year study which started this year until 2016 to track approximately 135,000 condominium units for completion. About 31-percent of this stock is sold at a price range of P40,000 to P80,000 per square meter. These are predominantly studio and one -bedroom units with an average floor area of 30 to 40 square meters.

He said mid-market condominiums are relatively new to the market given that the earlier condominium projects come with bigger sizes and are sold at a higher price. Before mid-market condominiums became a big hit among property buyers, ownership is limited to the upper class given its restrictive acquisition cost. “However, the advent of mid-market condominium in the fringe of the business districts across Metro Manila has opened up a broader base market,” he said in his presentation during the recent year-end briefing of CBRE Philippines held in Makati City.

“The new trend in housing or accommodation is accessibility. First home buyers are now ready to forgo ownership of house and lots in the suburbs in exchange for short travel from home to work and any other necessities e.g. school, shopping centers and tertiary hospitals. In addition, affordable condominiums now found in Metro Manila have made the idea of buying over renting a house a sound option,” added Asuncion.
Unlike in previous cases when buying a condominium unit is not acceptable home investment for the mid-market, Asuncion pointed out that first-time buyers are now more open to acquiring an affordable condo unit as their new homes. 

Home loan fixed rates has also reached 5.75 percent one-year fixed rate for repricing which makes payments affordable to as low as P10,000 monthly, depending on the project details. 
In view of the scarcity of land in Metro Manila for housing development, Asuncion said even the government has embraced the concept of affordable condominium development for the mid-market by way of providing development loan facility to developers and cheap end-use loans to borrowers. 

He said buyers of affordable condominiums can now avail of long-term housing loans to purchase condo units for as much as P2.5 million per unit with mortgage rates of 11 percent. 

“Property developers are now recognizing the market range and debt of affordable condominiums for the urban dwellers. Thus, we expect more of these type of condominium project coming up for the broad mid-market class,” said Asuncion.

Asuncion said supply of affordable condominiums will definitely out-phase demand but will not cause a glut similar to the events of 1997.  He said property developers have learned  from their experiences and will only break ground on projects upon getting at least 50-percent commitment form buyers. “Hence, we expect a growth of this product niche in the near future particularly in Metro Manila and other key urban centers like Metro Cebu and Metro Davao,” said Asuncion. 

http://www.businessmirror.com.ph/home/companies/19242-pinoy-condo-buying-style-changing-cbre-study-claims

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CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm. With over 31,000 employees, CB Richard Ellis serves real estate owners, investors and occupiers through more than 300 offices and 50 countries worldwide. In the Philippines, CB Richard Ellis has established its presence in 1998 and has emerged as the leading real estate service provider through its comprehensive portfolio of offerings: global corporate services, commercial office leasing, BPO/call center solutions, residential sales & leasing, research & consultancy, valuation and advisory, capital markets, and asset services. For more information, visit www.cbre.com.ph or call +632.752.2580.