BPOs to remain growth drivers in 2016

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THE continued growth of the outsourcing industry in the Philippines will keep the outlook for real estate occupiers in Asia buoyant in 2016, according to property consultant Colliers International.

Colliers noted that the Business Process Outsourcing (BPO) and off-shoring industry would continue to be a major growth industry in countries, such as the Philippines and India.

“Those nations benefit from a low-cost base and a huge supply of educated, English-speaking employees,” said Colliers.

Aside from the outsourcing industry, Colliers said other growth drivers in the region are technology companies and e-commerce.


Colliers said technology companies would likely expand to new locations to attract quality talent, while still retaining a strong appetite for high-quality space in core locations.

This is likely to happen in Southeast Asia, especially in Singapore, Colliers said.

Meanwhile, e-commerce is seen to grow in countries, such as China and India.

“In China, e-commerce firms will continue to expand on the back of preferential policies designed to boost the sector and cross-border e-commerce (e.g. creating pilot cities for cross-border e-commerce), while India has been seeing rapid growth of e-commerce in recent years,” Colliers said.

Despite the growth of e-commerce, Colliers said it expects a slower economic growth in China, with vacancy levels of Grade A office space hitting around double-digit levels, due to the high amount of supply that would be entering the market.

Colliers said around 100 million square feet of Grade A space was due to be completed by the end of 2015, while an additional 110 million square feet is expected to enter the market in 2016.

“Around 70% of the total will be concentrated in India and China, pushing vacancy levels to double-digit levels in markets, such as Chengdu, Guangzhou, Shenzhen, Shanghai, Bengaluru, Delhi, Chennai, and Mumbai,” Colliers said.

But then, Colliers said some factors would restrain the overall impact of the new office space supply on the market.

One of the factors is the a construction-slippage ratio of around 40 to 50 percent due to project postponements, funding issues, and aggressive project timelines.

Colliers also said since most of the supply is located in decentralized areas, it might not be able to meet the requirements of multinational companies.

“A portion of the fresh supply will not be up to multinational standards, being of lower quality and/or having issues over facilities management or ownership (that is, strata-title),” Colliers said.

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