Philippines draws real estate investors

The Philippines is emerging as a magnet for international real estate investors and tenants, buoyed by its positive economic outlook, according to real estate firm Cushman & Wakefield.

"Southeast Asia's relatively strong GDP forecast makes it a bright spot in the global economy," said Cameron Ahrens, Cushman & Wakefield's head of global occupier services for Asia-Pacific, in a statement last week.

The firm said the growing acceptance of flexible work arrangements, coupled with cost constraints due to higher interest rates, bodes well for lower-cost and emerging markets in the region.

"Manila boasts a thriving office sector thanks to its significant share of shared service centers, or business process outsourcing offices," Ahrens said.

Moody's Analytics projects the Philippine economy to expand by 5.8% this year, driven by robust demand for electronics that could fuel export growth across the Asia-Pacific region. The country is also forecast to be the third-fastest-growing economy in the region for the year.

Ahrens noted that the higher interest rate environment and broader macroeconomic climate are prompting global occupiers, including multinationals, to be more cautious with costs.

"Companies are taking a more considered approach to spending, including expanding headcount. They're being very strategic about where they want to grow their workforce and business," he said.

Globally, shared service offices and global capability centers are expected to see continued growth as multinationals increasingly embrace remote work as a viable and sustainable option, according to Ahrens.

"The Great Resignation and subsequent War for Talent during and after the pandemic accelerated the growth of this practice as employers looked to new, often lower-cost markets to fill vacancies and expand headcount," he said.

"Manila's deep pool of English-speaking talent and its established reputation as a business process outsourcing hub position it to be a key beneficiary," he added.

While the region shows promise, Cushman & Wakefield highlighted some lingering downside risks, including reduced demand from China, a key export market for Southeast Asia; ongoing geopolitical tensions between China and the United States; and persistent, though gradually improving, inflation across the region.