CB Richard Ellis (CBRE) Philippines chairman Rick M. Santos said opportunities still exist in the Philippines as the country’s real estate industry has remained stable amid the crisis.
“Opportunities continue to abound (amid the crisis)…(and the) property (industry) provides a safe haven,” he said during a press conference yesterday. He added that CBRE is “bullish” in southern Philippines and “very optimistic” for Cebu in 2009,
which is why it is opening a full service office in Cebu that will also serve the rest of the Visayas and Mindanao.
Santos said the Philippines has not been spared by the global economic crisis but the increase in the prices of gold, which boost the country’s mining industry, and a stable real estate sector prevented further adverse effects on the economy.
Stability in real estate can be traced to continuous growth in the business process outsourcing (BPO) sector, he said, adding that Cebu stands to attract more BPO companies.
Mumbai, Thailand incidents
He said the terrorist attacks in Mumbai, India and civil unrest in Thailand will benefit the Philippines and Cebu, in particular.
After Mumbai, more BPO companies are expected to look to the Philippines as tourists would re-think plans to go to
Thailand and consider the archipelago’s 7,100 islands as the better destination.
Santos said CBRE expects more Indian BPO companies to follow Wipro, which has established operations in Cebu.
Trent Frankum, general manager of CBRE Philippines, reported that off-shoring and outsourcing, which include BPO companies, continue to drive the demand in most real estate segments, particularly office space. Tourism and remittances sent by overseas Filipinos also contribute to the development of the country’s property industry, he said.
He said about 115,623 square meters of new office space is scheduled for completion in 2008 across Metro Cebu, to address the demand caused by BPO companies and the traditional office market.
He said that aside from the BPO sector, the tourism industry also continues to grow, resulting in expansion of retail space and accommodation facilities (hotels and resorts).
Industrial space
However, Frankum noted that there is declining demand for industrial space.
“For a year and a half now, the country’s industrial output has been on a successive decline, which is unprecedented in history,” he said, citing data from the National Statistics Office. He described the industrial property sector as a “laggard.”
Still, he identified Metro Cebu, along with Clark and Subic, as “bright spots.”
He said that growth in the industrial sector is moving farther out of urban centers. He added that rising occupancy costs (rent and power) hinder the entry of most multinational manufacturers to the Philippines.
Joey Radovan, CBRE Philippines vice chairman, also pointed out that public spending in infrastructure has been able to sustain economic growth in the country. He cited the South Coastal Road, the North Coastal Road, Cebu Trans-Axial Highway and the upgrading of airports outside Metro Manila.
CBRE officials also dismissed speculations that the United States (US), under the leadership of President-elect Barrack Obama, will impose restrictions on companies outsourcing or off-shoring certain services to keep jobs within the US.
Santos said the economic factors that make a company decide to outsource or off-shore certain functions or services are “very compelling.” He pointed out that the high salaries and health care costs, as well as labor union issues, are just some of the factors that make a company in the US resort to off-shoring or outsourcing.
Victor Asuncion, director for research and consultancy of CBRE Philippines, said it is “politically correct” for Obama to declare that jobs in US-based companies should be for Americans, but the issue of whether to outsource or not is a matter of economic viability on the part of companies.
“Unless Obama provides margins (for these companies), which he cannot do (at this time), he cannot stop them from (establishing) global operations,” he said in the same press conference.
He pointed out that the US Government has to deal with multi-billion dollar bailouts of its financial sector.
Radovan said CBRE even expects a surge in outsourcing to the Philippines in 2009. He said more companies in the US are expected to outsource services as the economy experiences a recession.
He dismissed fears that the financial turmoil in the US has resulted in the displacement of workers in the Philippine BPO industry. (LAPFOR CEBU REAL ESTATE INVESTMENT GUIDE, CALL:
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