MANILA, Philippines – More foreign companies are expected to locate in the Philippines next year as foreign investors remain confident that the Aquino administration will work hard for the development of local infrastructure, an international real estate firm said yesterday.
In a press conference, CB Richard Ellis (CBRE) chairman Rick M. Santos said that the demand for office space in the country will go up by 10 percent next year. This year, the demand is expected to be flat when compared to a year ago. The take up of new office space in Metro Manila for the first 11 months of the year was at 250,000 square meters.
“The good days are back. We have not seen economic fundamentals this strong since 1996. It feels like we are back in (President Fidel V.) Ramos’ time,” Santos said. He said that the growth is no longer centered in Makati but in other key areas like Ortigas and The Fort.
Santos said the election of President Aquino into office has been positive for the investor confidence. “Aquino was the number one choice of foreign investors.” Likewise, the program of the administration to spur investments in infrastructure through the recently launched Public-Private Partnership (PPP) projects has been a good sign for foreign businessmen.
Santos said the growth in the Philippine market is impressive given that other markets, specifically the United States have contracted. He noted that the decline in office space in the US will directly benefit the Philippines because this means a growth in the business process outsourcing (BPO) sector.
He explained that the growth in the BPO sector will remain despite of the strengthening of the peso against the dollar. A stronger peso translates to higher costs for BPO firms. Santos noted that a stronger local currency will not be a deterrent for new BPO firms to come in.
“The BPO growth will accelerate especially given the downturn in the US. While the US is down, the Philippines can benefit,” Santos said.
However, because of the strong demand, Santos said that rent specifically in Makati may go up next year. For 2011, only one new building is expected to open in Makati. Santos said that the vacancy rate for office spaces in Makati will go down to single digit.
For the new office space, Santos said they may be little supply next year and their projection showed that it may even be lower in 2012. The average rent is P700 per square meter every month.