Credit crisis hits RP property sector

MANILA, Philippines — A glut of office space has hit the Philippines property sector as cash-hungry foreign companies cut back on their export of back-office operations, an international property consultant said Thursday.

“From a very conservative outlook, it could take a year for the market to absorb this excess space,” said Joey Radovan, vice chairman for the Philippine unit of CB Richard Ellis.

Office leasing, driven over the past three years by unprecedented demand by business process outsourcing (BPO) companies, plunged to 225,000 square meters (2.42 million square feet) last year as the credit crunch took hold, Radovan said in a company statement.

This was down sharply from 330,000 square meters leased in 2007, as economic growth slowed to 4.6 percent from a 30-year high 7.2 percent the previous year.

“The financial unraveling in the US has forced most companies to delay expansions or seek more cost-efficient locations, at least for the time being,” said Rick Santos, CB Richard Ellis Philippine chairman.

Property firms built 360,000 square meters of office building space that were mostly dedicated to BPO companies, leading to an excess of about 145,000 square meters, Radovan said.

Radovan said the resolution of the US crisis, or at least confirmation that it has bottomed out, would cause US multinationals to resume cost-cutting strategies including outsourcing.–Agence France-Presse