MANILA, Philippines - Ongoing township development projects in Metro Manila and provinces are seen to boost the country's business process outsourcing (BPO) and retail sectors.
Real estate services firm JLL said that more than 20 township projects are underway, which will attract more BPO expansions as well as increase retail development across the Philippines.
Currently, the BPO sector remains as the main driver for office space demand, comprising 67 percent of transactions so far this year.
Lylah Fronda-Ledonio, JLL associate director, said this figure is expected to grow to 80 percent at the end of the year.
"BPO will continue to be the main driver for office demand. We have recorded it at 67 percent as of now but we predict that it will still increase at the end of the year, probably as high as 80 percent," she said in a press briefing on Tuesday.
JLL head for research, consulting and valuation Claro Cordero said these new township projects will play a big factor in BPO growth.
“The township projects will provide the space, real estate options, and will complement the preference of the expanding and new BPO companies to gain easy access to the source of labor,” Cordero told ABS-CBNNews.com.
He also said the expansion of existing BPO firms and the entry of new players in the Philippines will contribute to the growth.
“Our attractiveness as a BPO location is further reinforced by the availability of affordable yet high quality labor,” he said.
Most of the ongoing township developments are in Metro Manila, namely Vertis North, Uptown Bonifacio, Woodside City, McKinley West, ARCA South, South Park District and La Fuerza.
Local developers are also investing on township projects in provinces, particularly in Pampanga, Laguna, Cebu, and Davao.
These projects are expected to attract BPO firms because the location provides cost efficient options both in rent and talent.
“Aside from the growth in Metro Manila, we also see growth outside, this is because there is a lot of interest being tapped in the provinces. A lot of big developers and new developers are taking position and that explains the significant growth in real estate outside of Metro Manila,” said Ledonio.
According to JLL, 75 percent of IT-BPO jobs are in the National Capital Region, while 6 percent are in Central Visayas, mostly in Cebu.
Ledonio noted that aside from the Bonifacio Global City, Makati, and Ortigas, there is still a big interest in Quezon City for BPO locators because of its talent pool and availability of good located facilities.
Convenience store influx
The growth in the BPO sector has also influenced a surge in the number of convenience stores across the country.
“What we’re seeing is because of the influx of the BPO sector and how it’s been growing, the convenience store market is growing as well. It’s really in correlation with the 24/7 type of operations that we currently have, which is something that’s very important to a lot of tenants,” said Lizanne Tan, JLL head for tenant representation.
“If they can save on space for their pantry, for example, and not have their own cafeteria within their particular space, then they save more in terms of their real estate investment,” she added.
For 2014, 7-Eleven is expected to open 401 new stores while Mini Stop and Family Mart are expected to open 100 new stores each.
New convenience store chains Japan's Lawson and Indonesia's Alfamart will also open more branches in the country.
JLL said that while the Philippines remains to be one of the most competitive retail destinations in the Asia Pacific region, it still has a lot of potential to attract foreign brands.
As of the first half of the year, the existing retail space supply in the Philippines stands at 14.2 million square meters, 7.6 million of which is in Metro Manila while the remaining 6.6 million is provincial.
However, Tan said there will be a growth in retail space in the provinces in the second half of the year until 2015.
“This year, we’re seeing more developments in provincial areas compared to Metro Manila,” she said, noting that only 500,000 square meters will come from Metro Manila while a bigger share of 1.2 million square meters will come from the provinces.
The top three mall developers in the country are still SM, Robinsons and Ayala.
SM has a total of 48 malls in the country, 20 branches of which are in Metro Manila.
Robinsons, on the other hand, only has seven malls in Metro Manila, with 25 others located in provinces.
Ayala has nine malls in Metro Manila and eight others in provinces.