The Indian business process outsourcing (BPO) industry is expected to expand its presence in the Philippines due to its affordable costsfice space, according to Global Real Estate Services firm Santos Knight Frank.
“What you are seeing now in India, not just in Bangalore, but also in Delhi, Mumbai, Pune, Madras, etc., is record levels of demand, adoption, absorption and need for outsourcing,” said Rick Santos, chairman and head of the company. Santos director Knight Frank, said during a briefing on Thursday.
According to a report by Knight Frank Asia, Metro Manila emerged as the third cheapest city for prime office rental in the Asia-Pacific in the third quarter.
The average prime office in Metro Manila cost $29.64 per square foot (sq.ft.) in the three months through September.
Office rents in Metro Manila make it competitive with Indian cities such as Bangalore, Mumbai and New Delhi, said Morgan McGilvray, senior director of occupancy strategy and solutions at Santos Knight Frank.
“If you’re wondering why these Indian BPOs are looking to the Philippines instead of continuing to expand in India, you can point to the cost of office space as one of the key drivers,” he said at the briefing.
Metro Manila’s occupancy rate reached 20% in the third quarter, while about 260,000 square meters of new office space is due for delivery in the second half, bringing supply to 8.6 million square meters. this year, compared to 8.3 million m². in 2023.
In 2014, office stock was just 3.3 million sq ft, Mr McGilvray said.
“This market has more than doubled in size over the past ten years. That’s quite a bit of growth. You won’t see that in other places in the world.”
It also expects the number of new office buildings to increase to 275,000 m². in 2025, before falling to 37,600 in 2026, 46,000 in 2027 and 62,000 in 2028.
Makati City had the highest rental asking prices at P1,227, with a vacancy rate of 18.3% and a supply of 1.5 million sqm. in the third quarter. This was followed by Taguig with an average rent of P1,280 and a vacancy rate of 12.4%, and Alabang P787 and a vacancy rate of 22.7%.
Mr. McGilvray also noted that developers are expected to repurpose old POGO (Philippine Offshore Gaming Operators) space for BPO use. The renovation of old POGO spaces affected by the government’s ban will take about one to two months, he said. — Beatriz Marie D. Cruz