A Dutch firm has bought into a newly formed subsidiary of boutique building developer Arthaland Corp. to develop a prime lot in Cebu aimed at the booming information technology and business process outsourcing (IT-BPO) sector.
In a disclosure to the Philippine Stock Exchange on Wednesday, Arthaland said Rock & Salt B.V. of Netherlands would get two seats in the five-seat board of its new subsidiary, Cebu Lavana Land Corp. (CLLC).
Rock & Salt subscribed to 214,351 common shares and 188,982 preferred shares, both valued at P100 per share, of CLLC’s authorized capital stock. The foreign subscription thus amounts to about P23.4 million and P18.9 million worth of common and preferred shares, respectively.
The disclosure described Rock & Salt B.V. as a private limited liability company with principal office in Amsterdam, The Netherlands, and managed by Arch Capital Management Company Limited.
Last December, Arthaland announced its intent to form a new subsidiary to develop two parcels of newly acquired prime land in Cebu City, setting its sights on the emerging IT-BPO sector in Visayas and Mindanao.
The property, measuring about 8,440 square meters, lies along Salinas Drive, at the Cebu IT Park area, where multinational IT-BPO offices currently operate.
Describing the location as strategic, Arthaland said it plans to develop a world-class green office building in the newly acquired Cebu property, initially with at least 51,000 square meters of high-grade space to the local market.
“We are bullish on the VisMin market given its fast-paced growth in the past few years,” said Arthaland President and Chief Executive Officer Angie de Villa-Lacson. “We believe that Cebu, being a global hub in this part of the country, plays a major role in further lifting Central and Southern Philippines’ economy.”
Lacson said further growth potential is there because of well educated Visayans and sound business environment.
The firm said its foray into the Cebu market is largely driven by the strong prospects in the city’s BPO sector.
“Cebu has progressed into an alternative BPO location and is currently ranked 8th as a global outsourcing destination according to Tholons, a global services and investment advisory firm,” said Michael McCullough, managing director for KMC MAG, the Philippine affiliate of global property advisor Savills. “The entry of BPO companies has transformed and paved way to the growth of the office sector in Cebu.”
According to McCullough, Cebu City hosts some of the largest business process outsourcing companies such as Accenture, Convergys, IBM, JP Morgan Chase, Teleperformance, and Teletech.
“Given that it is the educational hub for the Visayas and Mindanao regions, Cebu has a well-educated labor pool with high English-speaking proficiency, thus drawing BPO operators to locate here,” explains Julius Guevarra, director for Research and Advisory Services for another global property advisor Colliers International.
“Cebu has become the second largest BPO location in the country following Metro Manila, and some BPO locators have established operations here so that they have a redundant site to back-up their offices in the national capital region,” Guevarra said. “Costs are also lower in Cebu, thereby attracting these operators.”
“The drive that foreign companies have to improve profitability through the reduction of operating costs has resulted to the influx of BPO investments in Cebu, and this has direct impact on the rising demand of office spaces here,” Michael McCullough added.
“Based on the information released by PEZA [Philippine Economic Zone Authority], new and expanding BPO players in Cebu are still largely voice operations, but we see that there is a significant number of non-voice locators entering Cebu, specifically involved with data encoding, transcribing, engineering and architectural design services, creative services, software development, and other IT-enabled services,” he noted further.
“From what I have seen, Cebu is still dominated by voice services,” Guevarra, on the other hand, observed. “Higher value KPO [knowledge process outsourcing]services are also growing, such as those involved in accounting, engineering, health care, and web design.
Many operators that already have presence in Cebu are also expanding, highlighting the strength of this market as a BPO location.”
For Arthaland, the company aims to “be a strong partner in the growth of Visayas and Mindanao, by bringing in our experience in building world class, boutique, and sustainable projects in Cebu,” its lady CEO said.
ArthaLand’s flagship residential project is Arya Residences, a two-tower boutique condominium in McKinley Parkway, Bonifacio Global City (BGC), set for completion in the first quarter of 2016.
The company is currently constructing its second project, ArthaLand Century Pacific Tower at the corner of 5th Avenue and 30th Street in BGC, set to open by the third quarter of 2017.
The firm said both projects are on target to achieve dual green building certification from the United States’ Green Building Council’s Leadership in Energy and Environmental Design (LEED) program and the Philippine Green Building Council’s Buildings for Ecologically Responsive Design Excellence (BERDE) program.
ArthaLand is a publicly listed firm majority-owned by Century Pacific Group Holdings, Inc., (CGPHI) and a sister company of leading canned food manufacturer Century Pacific Food Inc.
It engages in residential, commercial, leisure, and industrial projects.