Fueled by the expanding business process management (BPM) industry, the demand for office spaces in metropolitan cities are increasing, especially in metro city, Manila. Estimates reveals that demand for BPM office space in Manila will reach its peak in the next two years.
The office space dedicated for BPM is about 396,000 square meters this year. By 2013, it is estimated to increase by 27.78%, i.e. 506,000 square-meters. Also, by 2014, the supply for new office space is projected to grow by 2.57% (to 519,000).
These figures for office space demand show good signs for the growth of BPM industry in Philippines. Office estate market in the country hit a 20-year high in June, revealing the need for both office spaces as well as domestic property demands. Anyway, in central business districts, a greater demand for office spaces is noted, especially for BPM companies. Low rental rates for office spaces may be one of the reasons to select Philippine cities like Manila for setting BPM offices. Philippines often reports low annual office rental rates when compared to other Asian countries. Also economic slowdown in western nations, have prompted Europeans to invest more in countries like Philippines.
Philippine capital city, Manila, experienced a record-high for the last time in 2009. This was about 420,000 square meters in for office space. However, the growth declined over the next few years and recession in U.S was one of the main reasons for such declining trend. 75% of the BPM office space demand is still distributed in metro Manila.
Philippines also witnessed an increase in pre leasing commitments in the recent years. Pre leasing in office sector is gaining strength with an average occupancy rate at 96%, especially due to the demand cited by BPM companies. These demands will continue in the coming years, since Philippine cities acts as fertile ground for the growth of BPM industry.
Apart from Tier I cities, BPM companies are now looking for Tier 2 cities or cities in the provinces for their expansion. Increased demand for new office spaces would prompt them to explore new areas as well.
The Business Process Association of the Philippines (BPA/P), the apex organization of Philippine BPO firms, is expecting a high revenue growth of $25 billion from this industry by 2016. Obviously they are also expecting a hike in employment rate. BPA/P is expecting revenue of $13.4 billion this year, which is about 19% more compared to last year. When coming to the number of employees, Philippines BPM sector reports a figure of 772,000, this year. This is expected to become 926,000 by 2013, and 1.3 million by 2016. Hence everything looks up when it comes to BPM and office estate market too is expected to cash in this growth of BPM industry in Philippines in a big way.