Property sector unaffected by slowdown in BPO investments

Data from the Philippine Statistics Authority (PSA) showed that investment pledges in the seven major investment promotion agencies in January to June 2017 period declined by 28 percent to PHP9.1 billion from PHP12.6 billion in the same period last year. (ShutterStock)

MANILA — The slowdown in investments in information technology and business process outsourcing (IT-BPO) industry is not dragging the demand for office spaces in the real estate business.

Leechiu Property Consultants (LPC) chief executive officer David Leechiu, in a media briefing Monday, said there have been contractions in the IT-BPO sector in the past months as clients of these companies perceive that the country risk profile of the Philippines is increasing.

He said among the concerns of their clients from the IT-BPO sector are security issues due to terrorism and killings, martial law in Mindanao, and the uncertainty of the tax reform program of the administration that might put drastic changes to the industry, making it more difficult for companies to expand here.

“Many of our clients have decided not to grow in 2017. And that’s primarily because many of their clients perceive that the country risk profile of the Philippines is climbing,” Leechiu said.

“And so, it is important for us to make the public known that these country risk issues are not new. They have always been relevant, meaningful country risk issues in the Philippines, maybe in the 1960s and companies have learned to adapt to that,” he added.

IT-BPO firms, he said, are now diverting to “more expensive geographies” like Malaysia and some provinces in India to rebalance their portfolio since they are heavily invested in the Philippines.

Data from the Philippine Statistics Authority (PSA) showed that investment pledges in the seven major investment promotion agencies in January to June 2017 period declined by 28 percent to PHP9.1 billion from PHP12.6 billion in the same period last year.

Investment pledges from foreign sources decreased by 30 percent to PHP8.5 billion this year from PHP12.1 billion in the previous year.

“But I remain confident that the BPO industry will continue to expand. This phase we’re going through with them would be temporary,” Leechiu said.

“These companies that are doing that now will make up for the lost time in the second quarter of next year. They would realize that now I set up operations in Malaysia, in this province in India, then we can afford to grow in the Philippines again,” the LPC chief added.

LPC reported that some 653,589 square meters of office spaces in Metro Manila were leased and under negotiation from January to August of this year.

The IT-BPO sector accounted for about 41 percent or some 268,000 sqm. of leased and under negotiation office spaces in the National Capital Region in the first eight months of the year.

A big chunk of IT-BPO firms are leasing office spaces in Fort Bonifacio in Taguig City that are accredited by the Philippine Economic Zone Authority.