Outsourcing companies have been among the most keen to take advantage of competitive prices on offices in the Philippines and the market is expected to perform strongly throughout 2012.
Prices on offices in central Manila, the capital of the Philippines, have been increasing in recent quarters but renting remains cheaper there than in all but one of the 15 Asian central business districts analysed by CBRE.
Jakarta’s average office rental price came in below that of Manila but costs are dramatically higher in cities like Singapore, Tokyo, Mumbai, Shanghai and Beijing.
“The Philippines is one of the most cost-effective real estate markets in Asia,” said Rick Santos, chairman and chief executive of CBRE Philippines.
“For instance, it is significantly less expensive than Hong Kong and Singapore which is around 12 times more expensive. This is also why the demand in the office services sector in terms of BPO (business process outsourcing) and KPO (knowledge process outsourcing) expansion has been growing in the country,” he said.
Santos added that current projections suggest Manila will see a take-up of between 3.5 million and 3.875 million sqft of office space in 2011, more than double the figures expected in Singapore.
“We see continued expansionary demand from multinational companies as there is good value in the Philippine real estate market,” he said.
Hong Kong is currently the most expensive city in the world in which to rent Grade A office space, ahead of London’s West End, Paris and Tokyo, where prices are also well above average.
Editor’s notes: According to JLL’s 2022 Premium Office Rent Tracker which tracks office rental values across 134 major global cities and evaluates gross rental values i.e. the net effective rent plus other occupational costs, Manila was the 16th cheapest city to rent office space in the Asia Pacific region in 2022 at USD 41 per square foot per year.
In Q1 2024, the office vacancy rate in Manila was 20.9 per cent, this represented a 1.3 per cent increase over the previous quarter and a 4.3 per cent increase over Q4 2019. The rising occupancy figure indicated that the office
leasing market was recovering post-pandemic.
In the same period, the average office rent in Metro Manila (which includes Makati, Taguig, Alabang, Quezon City, Ortigas and Bay Area) was PHP 1,035 per square metre per month or PHP 1,154 per square foot per year / USD 19.91 per square foot per year.
Multinational companies continue to utilise office space in Manila in which to outsource business processes including Regus office space provider’s parent company, IWG.