Multinationals target Asia Pacific for expansion

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PH shines as BPO hub due to low-cost operations, available talent

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More multinational companies are inclined to expand operations in Asia-Pacific, especially in emerging countries like the Philippines, which shines as an attractive hub for business outsourcing due to affordable real estate and English-speaking workers, CBRE reported.

The global property advisor conducted an online survey among executives across industries between September and December 2015 to understand multinationals’ corporate real estate (CRE) priorities and the factors shaping their decisions. The survey also sought to gain an insight into how multinationals are planning, allocating, and optimizing CRE resources.

In its Asia Pacific Occupier Survey for 2015/16, CBRE found strong growth prospects in Asia, with 42 percent of the respondents expressing plans to increase their headcount, setting their sights on Southeast Asia, and India.

The CBRE report said Asia Pacific remains the key growth region this year, amid anticipated global economic headwinds.

“Emerging markets providing low cost solutions, such as India, the Philippines, and Vietnam will outperform the rest of the region in 2016, while China and mature markets, such as Japan and New Zealand, will see slower economic growth,” CBRE said.

It also noted that the region’s growth is seen to outpace Europe, Middle East, and Africa (EMEA) and the Americas.

“Growth in Asia Pacific will continue to outpace EMEA and the Americas and the long-term picture remains upbeat, thanks to strong macro trends, such as urbanization, demographic transition, the rise of the middle class, and the growth of private consumption,” the report said.

The survey found that the key factors driving the multinational firms’ office leasing decisions are: cost of real estate, 69 percent; quality of infrastructure, 51 percent; and availability of talent, 41 percent.

CBRE noted that one factor driving multinational companies to expand in Asia Pacific is the cost saving advantage the region presents.

It said a lot of these companies are “downsizing” operations in high-cost locations, while they expand their back offices in Asia Pacific.

“Markets benefiting from this trend include popular business process outsourcing (BPO) hubs, such as India and the Philippines, where operating costs are low and the availability of well-educated, English-speaking staff is high,” CBRE said.

CBRE pointed out that Southeast Asia and India are seen to be target of the multinational companies’ expansionary appetite, as nearly 50 percent of the respondents said they expect their CRE portfolio to expand in Southeast Asia in the next three years.

“Much of this activity will take place in Singapore, which remains the preferred location
for high value-added jobs and managerial positions serving the wider region,” CBRE said.

“BPO in the Philippines, manufacturing in Vietnam, and general business expansion in Indonesia will be the other key areas of growth.”

Real estate services firm Colliers International affirmed CBRE’s findings, as it noted in a separate report that the offshoring/BPO sector would continue to be a major growth industry in the region this year.

Colliers said this would be observed mainly 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.

As for India, CBRE said multinationals are being lured by its solid economic growth, regulatory reforms, improved infrastructure and the young, English-speaking and educated worknig population.

CBRE’s Asia Pacific Occupier Survey asked 53 executive level respondents from 30 large multinational companies from various industries—banking and finance, 32 percent; technology and telecommunications, 19 percent; and, manufacturing, 17 percent.

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