THE Indian business process outsourcing (BPO) industry is expected to expand its presence in the Philippines due to the affordable office space, according to global real estate services firm Santos Knight Frank.
“What you’re seeing now in India, not just Bangalore, but in Delhi, Mumbai, Pune, Madras, etc., is record levels of demand, take-up, absorption, need for outsourcing,” Rick Santos, chairman and chief executive officer of Santos Knight Frank, said at a briefing on Thursday.
In the third quarter, Metro Manila emerged as the third-cheapest city for prime office rents in the Asia-Pacific, according to a report by Knight Frank Asia.
The average prime office in Metro Manila cost $29.64 per square foot (sq.ft.) in the three months to September.
Metro Manila office rents make it competitive against tier-1 and tier-2 Indian cities like Bangalore, Mumbai, and New Delhi, according to Morgan McGilvray, senior director of occupier strategy and solutions at Santos Knight Frank.
“When you wonder why these Indian BPOs are looking at the Philippines rather than continuing to expand in India, you could point to the cost of office space as one of the main drivers,” he said at the briefing.
Metro Manila occupancies stood at 20% in the third quarter, with around 260,000 square meters (sq.m.) of new office space due to be completed in the second half, bringing supply to 8.6 million sq.m. this year, up from 8.3 million sq.m. in 2023.
In 2014 office stock was only 3.3 million sq.m., Mr. McGilvray said.
“This market has more than doubled in size over the last 10 years. That’s quite a bit of growth. You’re not going to see that in other places in the world.”
It also expects new office builds to increase to 275,000 sq.m. in 2025, before falling to 37,600 in 2026, 46,000 in 2027, and 62,000 in 2028.
Makati City had the highest asking prices for rent at P1,227, with a vacancy rate of 18.3% and a supply of 1.5 million sq.m. in the third quarter. This was followed by Taguig with average rent of P1,280 and a 12.4% vacancy rate, 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 refurbishment of old POGO spaces affected by the government’s ban will take around one to two months, he said. — Beatriz Marie D. Cruz
