Office rent in RP lowest in Asia

Office rents in Manila and Cebu are the lowest among Asian countries, including China. This was based on the results of the 13th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia conducted by JETRO in November 2002. The investment costs surveyed include wages, land prices, office rents, telecom expenses, public utilities, transportation, automobiles, and taxation.

Office rent for Manila is $7.49 per square meter per month while Cebu ranges from $3.785 to $7.02 per sq.m. per month. For cities in China, comparative rates are: Beijing $37, Shanghai $45, Dalian $30, Chongqingh $13.05, Shenzen $14.50, and Hong Kong $17.93-$38.63. Rates for other Asian countries rates are also much higher than Manila and Cebu, except for Dhaka where rates range from $3.66 to $7.33.

In general, there has been no substantial change in land prices and office rents compared to previous surveys, but Manila, Cebu, and Hong Kong showed a significant decline in these items.

The JETRO survey further revealed no major movements in public utilities rates such as electricity, water and gas. Electricity rates for business use, on the other hand, showed that the Philippines still has one of the most expensive power rates in the Asian region, after Japan and Hong Kong, and along with Shenzen, China.

As to communication charges (telephones and mobile phones), the previous surveys showed that there was a decrease in telephone charges due to the prevalence of mobile phones. For the 2002 survey, no such trends were observed and rates were generally stable. Noticeable however were the increasing telephone and mobile phone basic charges in Manila and Cebu compared to that of China and other Asian countries. Manila and Cebu registered rates ranging from $22 to $23 per month compared to China’s $3 to $4 per month.

Meanwhile, wage growth exceeded ten percent in each city in China with the exception of Hong Kong, according to the JETRO report. Manila and Cebu showed an increase of five to 10 percent. The countries with the lowest wage growth are Hong Kong, Taiwan, Singapore and Thailand, which stagnated at zero to one percent.

Though low wages are one of the advan-tages of China, investors have to consider the rate of wage increase each year, as well as other costs such as the social security burden on employers. There is an exceedingly high social security burden ratio (employers’ contribu-tion) in various cities in China, except Shenzen, compared with other countries and areas. China recorded 20 percent to 40 percent ratio while Manila and Cebu noted a low of 6.21 percent employer share. Ratio in other Asian countries ranges from 2.5 percent (Yangon) to 17 percent (Vietnam), still lower than that of China. — Philexport News and Features