More fun (and cheaper) to outsource in the Philippines, says Savills affiliate
by Darwin G. Alojemar, InterAksyon.com, 10-25-2013
MANILA - It's more fun to outsource business operations in the
Philippines, according to the local affiliate of London-listed real
estate services firm Savills.
In a briefing today, KMC MAG Group managing director Michael
McCullough said Metro Manila is the "cheapest" place to set up a
company anywhere in the world. McCullough said setting up a
company in the Philippines would cost $45,464 a year, including
$12,500 for a software developer, $10,800 for a graphic designer
and $9,984 for office space. In contrast, setting up shop in
Thailand is 1.5 times the cost in the Philippines, and in
Indonesia, twice the cost. McCullough said the most expensive
places for relocating business operation are London, San Francisco,
Mumbai, Paris, New York, Moscow, Shanghai, Tokyo, Singapore, Hong
Kong and Sydney.
The prime office rate in Metro Manila stood at $28 per square
meter. Compare this with Hanoi's $49.1, Taipei's $66, Seoul's
$89.1, Singapore's $113.2 and Hong Kong's $199.3. Given this,
McCullough sees a lot of business process outsourcing (BPO) and
knowledge process outsourcing (KPOs) firms setting up shop in the
Philippines. "We are also seeing financial and insurance companies
to come here and grow rapidly," he said.
A growing economy coupled with an affordable and highly-skilled
labor pool and a stable political environment would attract more
international firms to set up BPO or KPO operations in the
Philippines, McCullough said. He said 2013 has been a year of
opportunities for the real estate sector due to the consistently
strong economic growth in the first half of the year.
"The factors behind such growth are the active construction
industry and the business process outsourcing sector, as well as
the high rate of overseas Filipino workers' remittances. Credit
rating achievements have increased investment interests in the
Philippines and a stable political climate under the Aquino
administration has also contributed to growth," McCullough
Low interest rates likewise offer good debt financing
opportunities for real estate sector, he said. "We've seen
continuously low vacancy rates, as there is a strong take up within
central business districts (CBDs). Makati continues to attract more
institutional investors due to relatively high yields at eight to
10 percent and there has been an additional supply of 340,000
square meters of space introduced this year, mainly in Bonifacio
Global City," McCullough said.
The middle class' higher purchasing power also has sustained the
demand for subdivisions, townhouses and condominiums, he
said. Melo Porciuncula, head of capital markets and
investments at KMC MAG Group, said the Philippine market is now
prime for investment across all segments from development to
acquisition. "The office market offers institutional investors
the opportunities to increase cash flow and diversify portfolio.
The residential and commercial spaces, meanwhile, offer retail
investors alternatives for medium- to longer-term investing,"