Property sector outlook still bright despite financial crisis

by: Michelle Orosa

Source: abs-cbnNEWS.com

 

 

Real estate consultancy firm CB Richard Ellis (CBRE) remains upbeat on the prospects for the local property sector despite the ongoing global financial turmoil.

CBRE chairman Rick Santos said that in particular, the demand for office space will continue to be fueled by expansion in the business process outsourcing (BPO) industry as companies in developed economies transfer their backroom operations to the Philippines.

"Multinational companies used to outsource their backroom operations for profit, but now, we're seeing more of outsourcing for survival. They need to cut down on costs, and the Philippines has provided them with a good, cheaper alternative for labor," noted Santos.

According to him, BPO companies are already branching out into emerging cities outside Metro Manila like Cebu, Clark in Pampanga and Davao.

CBRE is projecting roughly about 501,925 square meters of leasable office space, mainly for BPO companies in 2008. This is significantly higher compared to last year's monitored take-up of 330,000 square meters.

"It should be noted that most BPO office projects are scalable, that any slowdown in demand can be remedied by deferment of actual construction," Santos said.

"The primary difference between massive traditional office buildings and BPO office buildings is the speed of completion. BPO projects have the flexibility to respond to surges in demand for additional office space within 16 to 18 months," he added.

Santos pointed out that hard lessons learned from the regional financial crisis a decade ago have kept the Philippine economy and property sector afloat amid another similar storm.

Apart from the BPO industry, CBRE expects remittances from overseas Filipinos as well as investments in the tourism sector to  propel property development, moving forward.

"At this point, we still see demand going into the next year, and companies, although they will be sloiwing down on their new plans, will continue to develop projects to cater to this demand. The market has matured. There will of course be caution as the companies go into 2009. They'll be developing smartly... prudently," Santos said.

CBRE is the world's largest real estate advisory firm, with operations in 350 countries across the globe.