growing needs of the bpo industry - subdivision and...

Growing Needs of the BPO Industry Subdivision and Housing Developers Association (SHDA) September 2015

BPO industry surges to phenomenal

growth

100,500

1,000,000

2,600,000

1.5

18.1

48.0

0

10

20

30

40

50

60

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

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In U

SD

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f F

TE

s

IBPAP: FTEs to reach 1M (+11%), with revenues of US$18.1B (+17%) in FY2014

Source: IBPAP, Colliers International Research

• The BPO sector has grown by 30% annually over the past decade.

• IBPAP projects 1.3 BPO workers by 2016 generating USD 25 billion

• Tholons - It is attainable for the industry to achieve USD 48 billion in revenues by 2020.

• The BPO sector currently occupies close to 3 million sq.m. in the Philippines – equivalent to the entire Makati CBD office inventory.

IT-BPO Services

4

Philippines Leads in Contact Centers

Source: IBPAP, Tholons, CCAP

• In 2010, the Philippines surpassed India in terms of voice services

• Growth in non-voice services such as Finance & Accounting

• Substantial growth in Healthcare Information Management

74%

21%

4% 1%

70%

22%

7% 1%

Voice BPM

Non-VoiceBPM

HealthcareInformationMgt

AnimationServices

2012 2014E

Next Wave Cities

5

Philippine BPO Industry

Baguio

12,000

Clark

20,000

Bacolod

22,000

Cebu

100,000

Davao

15,000

Iloilo

13,000

Dumaguete

9,600

• Cities ranked based on availability of Talent,

Infrastructure, Cost and Business Environment

Number of

BPO – FTEs

per City

Source: IBPAP, Wall Street Journal

FTE Figures as of 2014

NCR

700,000

300K FTEs employed

outside NCR

IBPAP Next Wave Cities (2012)

Centers of Excellence Metro Manila, Metro Cebu,

Clark/Angeles City, Bacolod

Next Wave Cities Baguio City, Davao City, Dumaguete

City, Iloilo City, Lipa City, Metro

Bulacan (Baliuag, Calumpit, Malolos,

Marilao, Meycauayan), Metro Cavite,

(Bacoor, Dasmarinas, Imus), Metro

Laguna (Calamba, Los Banos, Sta.

Rosa), Metro Naga, Metro Rizal

(Antipolo, Cainta, Taytay)

Everest Group / SSO Philippines

Established

Locations

Metro Manila, Metro Cebu, Clark/Angeles

City, Bacolod

Emerging

Locations

Malolos, San Fernando,

Dasmarinas, Dumaguete, Iloilo, Baguio and

Santa Rosa

Newly

Emerging

Locations

Cagayan De Oro, Laoag, and Davao

Tholons Top 100 Outsourcing Destinations (2015)

(2) Metro Manila; (8) Metro Cebu; (69) Davao;

(82) Santa Rosa;(86) Bacolod, (91) Iloilo; (98) Metro Clark

•BPO companies take up around 80% of the new supply of office space each year in

Metro Manila. Traditional offices now account for only 20% of the total take-up each

year for new/vacated space.

•Most BPO activities are still concentrated in Metro Manila

Impact of BPO on Office Property

Metro Manila (2014)

Voice KPO Non-BPO

Non-

BPO –

22%

BPO – 78%

Voice – 45%

KPO – 55%

89% 87% 88%

4% 7% 7% 7% 7% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014 2015e

% of Office Space Taken up per Location

Metro Manila Metro Cebu Other Provinces

Source: Colliers International Research

Metro Manila Office Stock (2Q15)

7

Growth in the emerging business districts

284K

177K

282K

378K

368K

300K

1.30M

2.85M

1.03M

QUEZON CITY

CITY OF MANILA

MANDALUYONG

PASAY/PARANAQUE

EASTWOOD CITY

ORTIGAS CENTER

MAKATI CBD

FORT BONIFACIO

ALABANG

Total of 7.17M* NUA sq m.(2Q15)

to reach 9.08M sq m by end-2017


* Includes other locations, revised figures

Office Supply Forecast*

8

Metro Manila: 2014 to 2018F


* Revised figures

** Manila, Pasay, Mandaluyong, Quezon City and other fringe locations

Location End of 2014* 2015F 2016F 2017F 2018F Total

Makati CBD 2,852,613 - - - 60,200 2,912,813

Ortigas 1,298,773 81,509 47,683 14,393 32,752 1,475,109

Fort Bonifacio 975,157 214,604 299,748 330,385 163,173 1,983,067

Eastwood 300,264 - - 28,220 - 328,484

Alabang 378,271 - 53,330 70,563 21,975 524,138

Mandaluyong 284,550 - - 142,276 -- 426,825

North EDSA-

Triangle 318,933 33,132 115,760

-

35,618 503,443

Pasay-Manila

Bay 186,203 74,517 72,680 72,160 42,566 448,126

Other

Locations** 400,030 149,533 105,775 181,641 86,057 923,036

TOTAL 6,994,794 553,295 694,975 839,638 442,341 9,525,043

Historical New Office Supply

9

Metro Manila

553,295

694,975

839,638

442,341

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

199

0

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201

8F

NU

A s

qm


Driven by the BPO industry, staggering growth in office space

will introduce all-time highs annually from 2015-2017.

Major CBDs Supply and Demand

10

From 2005 to 2016F

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

-

100,000

200,000

300,000

400,000

500,000

600,000

200

5

200

6

200

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200

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201

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NU

A s

q m

New Supply During Year (LHS) Take-Up During Year (LHS) Vacancy at Year-End (RHS)

Despite the amount of new stock, vacancies still

seen to be in manageable levels.

Metro Cebu Total Office Stock

11

From 2009 to 2015F


648.4 K

802.5 K

915.3 K 935.1 K

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2017

NU

A S

qm

.

Historical Projected

• As of the end of 2014, total office stock grew by 11.3% annually for the past 5 years.

• In 2015, the stock is anticipated to grow by 23.8% as 154,000 sqm will be introduced.

• Office stock to jump by 44% between 2014 and 2017.

• Vacancy has increased to 9% as of the second quarter of 2015.

BPO Impact on Retail

12

Source: University of the Philippines Population Institute

•Boom in convenience stores, coffee shops and fast food due to BPO locators’ requirements for 24/7 retail services

•Many new convenience store entrants (FamilyMart, AlfaMart, All Day) due to increased demand

•Top items among BPO consumers – breakfast products, alcoholic drinks, and the latest mobile phones (Neilsen study)

•BPO workers spend more freely on lifestyle products

67%

27%

54%

61%

19%

51%

0%

10%

20%

30%

40%

50%

60%

70%

% who drink coffee per day % who drink tea per day % who regularly eat fast food

BPO Worker Non-BPO Worker

Can BPO Workers Afford Housing?

13

Housing Affordability in Various Cities

Source: Colliers International

Notes: Assumes 80% balance payable in 25 years with 9.05% interest (Pag-Ibig Fund). Maximum 30% of income for housing.

Area

Typical BPO Salaries Economic Housing

(P450K-1.25M)

Affordable Housing

(P1.25 – 3M)

Entry Level

Customer

Service Rep.

Supervisory Managerial Average

Price

Monthly

Amortization

on Balance

Required

Monthly

Income

Average

Price

Monthly

Amortization

on Balance

Required

Monthly

Income

Metro Manila Condo

22,500 32,500 75,000

1.2M 7,773 25,910 2.2M 14,707 49,023

Metro Manila H&L n.a. n.a. n.a. 1.8M 11,999 39,997

Angeles/Clark 19,000 27,500 60,000 1.1M 7,337 24,456 2.3M 15,237 50,790

Metro Cebu Condo

17,500 33,500 85,000

1.1M 7,506 25,019 2.4M 15,843 52,810

Metro Cebu H&L 1.1M 7,347 24,490 2.3M 15,175 50,583

Davao Condo

14,000 24,000 60,000

n.a. n.a. n.a. 2.4M 16,197 53,991

Davao H&L 1.2M 8,178 27,261 2.1M 14,420 48,068

Iloilo H&L 11,500 22,000 55,000 1.0M 6,659 22,196 2.4M 16,200 53,999

Bacolod H&L 12,500 24,000 60,000 .9M 5,890 19,632 2.4M 16,200 53,999


14

Remaining Inventory in Various Cities as of 2Q15


Notes: Assumes 80% balance payable in 25 years with 9.05% interest (Pag-Ibig Fund). Maximum 30% of income for housing.

Area

Overall Economic Housing Affordable Housing

Ave. Price Rem.

Inventory Ave. Price

Rem.

Inventory Ave. Price

Rem.

Inventory

Metro Manila

Condo 5.1M 81,949 1.2M 1,237 2.2M 36,516

Metro Manila H&L 9.0M 256 n.a. n.a. 1.8M 2

Angeles 2.9M 3,659 1.1M 1,509 2.3M 1,727

Metro Cebu

Condo 4.4M 7,866 1.1M 89 2.4M 4,196

Metro Cebu H&L 4.1M 2,673 1.1M 515 2.3M 1,036

Davao Condo 3.6M 1,434 n.a. n.a. 2.4M 458

Davao H&L 3.1M 1,291 1.2M 88 2.1M 712

Iloilo H&L 1.9M 8,025 1.0M 3,807 2.4M 492

Bacolod H&L 1.8M 1,871 .9M 1,183 2.4M 492


15

New Housing to Be More Affordable


*Housing and Urban Development Coordinating Council

• The HUDCC* recently increased the price ceiling of the Economic Housing segment to Php 1.7 million from Php 1.25 million.

• Opens up the economic bracket to a wider market.

• Government financing agencies offer special borrowing rates for the socialized and economic housing segments that are lower than the open market interest rates.

• Segment comprised the largest group with an unserved demand for around 1.9 million in 2011 (UA&P-SHDA).

17%

31%

0%

5%

10%

15%

20%

25%

30%

35%

Unsold Economic Housing Units

Old Price Ceiling New Price Ceiling


16

Around a quarter presumably either rent or buy

Source: University of the Philippines Population Institute

39%

49% 52%

17% 15% 21% 18%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

People BPO Workers Typically Live With

•Majority of BPO workers financially support and still live with parents or with family members

Condo Supply Forecast

17

Major CBDs in Metro Manila from 2014 to 2019F

• Over 7,440 units are expected to be completed annually in the next five

years in the major CBDs alone.

• Around 170,000 units will be completed in the entire Metro Manila area.

Location end

2014 2015F 2016F 2017F 2018F 2019F Total

Makati CBD 18,834 1,768 4,857 1,485 1,072 598 28,614

Rockwell 4,159 346 492 269 5,266

Fort Bonifacio 19,427 3,729 6,599 3,507 2,831 2,482 38,575

Ortigas Center 13,820 2,756 1,227 573 422 570 19,368

Eastwood 7,548 988 632 9,168

Total 63,788 8,253 13,671 5,911 5,449 3,919 100,991



18

Metro Manila Condo Rental Rates vs. BPO Salaries


Typical BPO Salaries

Entry Level

Representative Supervisory Managerial

Monthly Salary 22,500 32,500 75,000

30% for Housing 6,750 9,750 22,500

Average Condo Rentals in Major CBDs

Unit Type Makati CBD Fort Bonifacio Rockwell Ortigas

Center Eastwood City

Studio 28,000 29,000 45,000 31,000 20,000

1-BR 50,000 43,000 64,000 32,000 24,000

2-BR 92,000 90,000 108,000 50,000 37,000

3-BR 133,000 156,000 184,000 80,000 45,000


19

Opportunities for BPO Workforce Housing

•Occupancy levels of apartments outside the CBDs is

high at over 90%

•Rents for a room average at P9,000/month and

bedspaces at P3,500/month.

•Quality would widely range

•Megaworld built Woodridge in McKinley Hill to provide

accommodations for BPO employees, with their BPO

company tenants contracting directly.

•Enterprising businessmen and small developers now

building apartments and dormitories at the fringes of the

CBDs, offering better accommodations compared to the

typical bedspace/dormitory/extra room in a house by

providing retail and amenities

Photos: Euroflats

Challenges moving forward

•Number of graduates – limits growth of the industry especially in the

countryside

•Lack of skilled labor in growth areas

•New technologies making voice services obsolete

Phone applications/online transactions

Artificial intelligence

•Some LGUs not receptive to/unsupportive of BPOs

•Rising costs – although the recent peso weakening bodes well

•Increasing competitiveness of other countries

2

0

Requirements by BPO Locators

21

General location • Should have a deep, skilled labor pool

• Low costs – labor, electricity, real estate

• Availability of Telcos – 3 providers

• Reliability of power

• Infrastructure, transportation, air/seaports, number of flights, etc.

• Good business environment

• Safety and security

Site specific • Availability of 24/7 support services (fast food, convenience stores,

transportation)

• Floor plate of 2,000 to 2,500 square

• Column free floor plate

• High Floor to ceiling height of at least 2.7 meters

• VRF airconditioning preferred

• One elevator for every two floors

Thank You

22

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24

Colliers International | Philippines

11/F Frabelle Business Center

111 Rada Street Legaspi Village

Makati City | Philippines

TEL +63 2 888 9988

Julius Guevara

Director | Research & Advisory Services

+632 888 9988

[email protected]

25

growing needs of the bpo industry - subdivision and...

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