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‘Decentralized’ Governance Seen Boosting Philippine Real Estate Sector

Real Estate Philippines

The plan of incoming President Rodrigo R. Duterte of a decentralized system of governance would encourage real-estate developers to increase investments in areas outside of Metro Manila, consultancy-firm CBRE Philippines said.

In a briefing, Rick M. Santos, CBRE Philippines chairman welcomed yesterday the incoming administration’s goal to promote inclusive growth by way of a decentralized system of governance.

Santos, however, said this process of decentralization has already begun with the business process outsourcing (BPO) sector as well as the real estate market in general.

Metro Manila has always been the country’s center of development but it is now spreading out, he said.

Areas outside Metro Manila such as Laguna, Cavite, Bulacan, Pampanga, Cebu, Bacolod, Iloilo, Davao, Cagayan De Oro and Zamboanga are gaining investments for their economic potential.

Real estate development is beginning to grow at a faster rate in these secondary sites as returns on investment have been becoming quite favorable.

“Developments in these secondary sites were initially limited to the local developers. Over the past several years, the national developers started to enter these sites on a growing scale,” Santo said.

“This can be seen as a positive situation as this encourages local developers to step up in terms of putting up better quality buildings and structures. This in general will promote growth in terms of employment and other opportunities as well as providing better facilities for the local populace,” he added.

Last year, BPO revenues grew 17 percent annually and accounted for 7.5 percent gross domestic product (GDP), which is also expected to increase with expansion of BPO companies and entry of new players who are becoming more familiar with the Philippine landscape.

Santos said BPOs are becoming more aware of the advantages expanding outside Metro Manila, noting seven out of the top 100 outsourcing destinations of Tholons are located outside Metro Manila which indicates the readiness of these secondary cities for BPO development.

“BPO companies are moving to where captive labor is. Instinctively, Metro Manila would be the top priority. But while more than 70% of BPO jobs today are located in Metro Manila, about 62% has already been absorbed,” CBRE said.

“These companies are locating outside Metro Manila where there is more untapped labor and where they have less competition and limited poaching,” the company added.

Meanwhile, telecommunications and interconnectivity has bridged the distance between the Philippines, Metro Manila in particular, and the different cities across the globe.

“This has been one of the primary reasons for the growth of the BPO sector. In the same manner, these two factors have also made it possible to bring these outsourced jobs to the cities outside of Metro Manila,” CBRE said.
by Chino Leyco | Manila Bulletin | June 3, 2016

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