MANILA – The Philippine office market is seen to grow by 40% in the next six years, driven by the continued expansion of information technology-business process management (IT-BPM) companies in the country, according to a real estate service firm.
Data released by Leechiu Property Consultants (LPC) showed that 4.5 million square meters (sq.m.) of office spaces are in the pipeline from 2018 to 2023. Of this, 71% or 3.2 million sq.m. are being built in Metro Manila, while 29% or 1.3 million sq.m. are in provincial areas.
This will be added to the current supply of 11.5 million sq.m. across the country, 86% of which are in Metro Manila and 14% in the provinces.
“BPM players already invested in the Philippines will continue to dominate the Metro Manila office sector… In the meantime, they are also expanding to provincial locations such as Clark in Pampanga, Cavite, Batangas, Laguna, and notably, Cebu City,” LPC Chief Executive Officer David Leechiu said.
The country’s largest property developers will be delivering the bulk of the office supply in the next five years, with Ayala Land, Inc. (ALI) contributing 21% of 667,000 sq.m. in the pipeline, followed by SM Development Corp. with 15% or 480,000 sq.m.
Filinvest Land, Inc. (FLI), Megaworld Corp., and Robinsons Land Corp. will account for 11%, 7%, and 5% of the upcoming office supply, respectively.
Other property developers set to expand during this period include DoubleDragon Properties, Corp., Century Properties Group, Aseana Holdings, Inc., and Eton Properties Corp.
Meanwhile, FLI will account for the biggest chunk of office supply in the provinces, with 204,000 sq.m. to be delivered from 2018 to 2023, while ALI will contribute 9% or 117,000 sq.m. to the supply.
Cebu remains to be the top option for IT-BPM firms expanding outside Metro Manila, cornering 451,000 sq.m. of the total supply in the provinces.
“The efforts of the national government to fund infrastructure projects positively impact cities in nearby Metro Manila such as Cavite, Laguna, and Pampanga as these cities become more accessible,” LPC said.
In Metro Manila alone, at least one million sq.m. of office spaces are expected to go online this year, versus a projected take-up of 937,000 sq.m. With 415,000 sq.m. already pre-committed since the start of January, Mr. Leechiu noted this projected take-up is achievable.
The 2018 projection tops the actual take-up of office spaces seen in 2017, which was recorded at 775,000 sq.m., according to LPC. Of this, the IT-BPM industry accounted for 46% of total space, while online gaming firms took up 30%.
Mr. Leechiu noted online gaming firms as stable tenants as long as the Philippine government maintains good relations with China.
Metro Manila’s office supply currently stands at 9.92 million square meters. The vacancy rate stands at 5.44% or 539,781 sq.m., which LPC noted is still healthy for the market.
Most of these vacancies are across the Quezon City, Ortigas, Pasig, and Mandaluyong districts. This translates to an average vacant space of 3,969 sq.m. per building in 136 buildings.
