The Indian Business process outsourcing (BPO) industry is expected to expand its presence in the Philippines due to the high cost office space, according to global real estate services firm Santos Knight Frank.
“What you’re seeing now in India, not just in Bangalore, but in Delhi, Mumbai, Pune, Madras, etc., is the level of demand recording, uptake, absorption, outsourcing demand,” said Rick Santos, chairman and chief executive. The CEO of Santos Knight Frank said in a press conference on Thursday.
In the third category, Metro Manila emerged as the third cheapest city for prime office rent in Asia-Pacific, according to a report by Knight Frank Asia.
The average prime office in Metro Manila cost $29.64 per square foot (sq.ft.) in the three months to September.
Metro Manila’s office space makes it competitive with India’s tier-1 and tier-2 cities like Bangalore, Mumbai, and New Delhi, according to Morgan McGilvray, senior director of residential strategy and solutions at Santos Knight Frank.
“If you’re wondering why these Indian BPOs are looking to the Philippines rather than expanding further into India, you can point to office costs as one of the main drivers,” he said at the forum.
Metro Manila occupancy stood at 20% in the third quarter, with about 260,000 square meters (sq.m.) of new office space to be completed in the second quarter, bringing supply to 8.6 million sq.m. this year, from 8.3 million sq.m. in 2023.
In 2014 the office stock was 3.3 million sq.m., said Mr McGilvray.
“This market has doubled in size in the last 10 years. That’s a bit of growth. You won’t see that anywhere else in the world.”
It also expects new office construction to increase to 275,000 sq.m. in 2025, before falling to 37,600 in 2026, 46,000 in 2027, and 62,000 in 2028.
Makati City had the highest rental prices at P1,227, with a vacancy rate of 18.3% and a supply of 1.5 million sq.m. in the third part. This was followed by Taguig with an average rent of P1,280 and a vacancy rate of 12.4%, and Alabang P787 and a vacancy rate of 22.7%.
Mr. McGilvray also noted that developers are expected to reuse the old POGO (Philippine Offshore Gaming Operators) space for BPO use. The renovation of the POGO posts affected due to the government ban will take one to two months, he said. – Beatriz Marie D. Cruz
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