MANILA, Philippines - The Philippines still offers the lowest rental rate in Asia despite the high demand for office spaces here, property services firm CBRE Philippines said.
In a briefing held yesterday, CBRE Philippines chairman and founder Rick Santos said that as of the second quarter, the Makati Central Business District (CBD) remains to have the lowest prime rental rate for office spaces across Asia at $26 per square foot per annum.
Makati’s rate is below those seen in other business districts such as Bangkok ($32), Bangalore ($36), New Delhi-Gurgaon ($41), Kuala Lumpur ($46), Hanoi ($47), Ho Chi Minh ($49), Taipei ($60), Jakarta ($65), Guangzhou ($65), Seoul CBD ($68), Mumbai-Nariman Point ($74), Singapore ($99), Shanghai-Puxi ($101), New Delhi CBD ($122), Tokyo ($134), Beijing CBD ($182) and Hong Kong Core Central ($207).
Makati City had the lowest rental rate despite the strong demand for office spaces here.
Santos said that by the end of the second-half, overall occupancy rating across the business districts of Metro Manila is at 97.49 percent.
In Makati City, the occupancy rate is at 95.73 percent.
Most of the demand for office spaces, Santos said, is coming from the business process outsourcing (BPO) sector.
He said the Philippines is still one of the most cost-effective and attractive destinations for BPOs in Asia.
“If you are a US, European company looking to reduce cost, outsource and improve earning, the Philippines is the place for call centers and BPO,†he said.
“The resilient office market is expected to continue its strong performance for the rest of the year, and increasing office space demand from multinational and BPO companies shall sustain growth in the sector,†he said further.
CBRE Philippines senior director for research and consultancy Jan Paul Custodio added that rental rates in the Philippines remain to be the lowest in Asia as the price of land in other business districts in the region are more expensive.
He noted though that while rental rates remain low and sustained strong demand for office spaces is expected here, developers may have to think twice about hiking their prices.
“Even if we see high demand, developers should be cautious in raising prices since BPOs are cost-sensitive,†he said.
While the talent pool is the primary consideration of BPO firms in picking a location, the rent is also an important factor in deciding where to set-up operations.
“If rents come too high we can see some of them (BPOs) moving to other locations,†Custodio said.