A strong peso may deter foreign investments from coming into the country as this makes the cost of doing business here more expensive.
International real estate provider CB Richard Ellis warned that the continued strengthening of the peso against the dollar may be a threat to business process outsourcing (BPO) firms in the country.
“If the exchange rate continues to climb, it can potentially be a threat because it makes it expensive to do business here,” CB Richard Ellis general manager Trent M. Frankum said.
In an interview at the sidelines of Friday’s press conference, Frankum said the current exchange rate is not enough to cause panic from investors yet. “I think it just makes for good conversation but there is no reason to be alarmed,” Frankum said.
Frankum assured that the Philippines remains to be a low cost option for BPOs. “The labor cost here is cheaper than in India.”
In fact, there have been moves to create new business districts aside from Makati as the vacancy rate for the country’s premiere business district continues to drop.
This is because after the build-to-suit office buildings had been built by Ayala Land for Convergys and People Support, there has not been any new office building in Makati.
In fact, there is no new office building for completion in Makati CBD for 2007. To compensate, buildings have been mushrooming in emerging business districts such as Bonifacio Global City in Taguig, the Bay Area, Pasay City, and Cebu Business Park & Asiatown IT Park in Cebu City.
In Bonifacio Global City in Taguig, Mar-Nol Realty is completing its newest office project — “Fort 26th” — with gross leaseable area of 16,000 square meters ready for occupancy by the first half of 2008. As of 2006, the total leasable office space in Fort Bonifacio stood at 75,000 square meters, with an additional 63,500 coming on-stream by end of 2007.
Meanwhile, Megaworld is developing McKinley Hills IT Park. The One McKinley Square, its first IT building catering to BPO locators with an estimated gross leasable area of 25,000 square meters is nearly finished.
The Bay Area in Manila is the location of Henry Sy’s SM Bay City and George Ty’s Metropolitan Park.
Beside the SM Mall of Asia, SM Investments is introducing complementary developments in the SM Bay City complex, which include a convention center, a hotel, and a facility catering to BPO companies. The SM eCOMCenter, estimated with a total of 94,000-square meter area to cost P1.5 billion, will have a total leasable area of 67,900 square meters, with seven floors earmarked for office space, two-and-a-half floors for parking, and the ground floor for commercial purposes.
Outside Luzon, Cebu City is also getting its share of BPO demand for office space. Aside from the emerging business districts of Metro Manila, the BPO companies have expanded and are continuing exploring expansion options to the south to take advantage of the pool of qualified labor in the Visayas-Mindanao area.