Outsourcing and the boom of the property market in the Philippines

How did outsourcing fuel the boom in the Philippine property market?

Outsourcing powered the Philippine property market by filling offices with BPO jobs and lifting household incomes, which raised demand for both commercial and residential space.

• BPO firms became some of the biggest office tenants in the country.
• Overseas remittances gave families more money to buy and rent homes.
• The sector stayed resilient through past crises, which steadied the market.

The Philippine outsourcing industry has long helped drive the country’s growth. It expanded businesses worldwide and created millions of jobs for Filipinos each year. In addition, it helped power the Philippine property market. For years, the country has seen a boom in the commercial property market, thanks to outsourcing and overseas remittances.

Leechiu Property Consultants (LPC) is a leading real estate consultancy firm. In fact, it has sat at the center of the property market since 2015. CEO and founder David Leechiu shared the sector’s timeline and progress in the 349th episode of the Outsource Accelerator podcast.

The Philippine property market and its growth

The real estate market in the Philippines has come a long way over the last three decades. For example, reclaimed estates, military bases, and prime lands have turned into gleaming business districts. Today, they are premier spots for work, rest, and entertainment.

David has 26 years of experience in real estate. So he has watched this growth unfold firsthand. According to him, fixing past economic problems over 20 years led to clear gains:

• GDP per capita rose from around $1,500 to about $3,300
• Ongoing development of infrastructure across the country

Much of that demand traces back to jobs. As more firms chose outsourcing to the Philippines, offices filled up fast. As a result, developers kept building to keep pace.

Game changes in the Philippine property market

An article by the Philippine Daily Inquirer titled “Turning points in PH real estate” listed the milestones that shaped today’s market. Here are the main ones.

Liberalization of select industries

During the Ramos era, several industries went through economic liberalization. As a result, demand for office space grew. In addition, this came from the rise of fields like telecommunications and banking.

Overseas remittances

Demand for real estate also climbed from the early 2000s. In fact, this came from higher household income tied to overseas remittances. Still, the sector stayed on an upswing, with a brief dip during the 2009 global financial crisis.

Past regional and global crises

The central bank learned hard lessons from the Asian Financial Crisis (1997) and the Global Financial Crisis (2009). Both exposed how much banks leaned on real estate. As a result, they adopted real estate stress testing. In short, this method checks whether a borrower can still pay at a rate higher than they actually pay.

Other notable points

Besides those, a few more shifts changed the market:

• The rising demand for condominium living
• Added certifications for building a property
• The era of technology and digitalization
• The rise of the business process outsourcing (BPO) industry

The last point proved the most powerful. In fact, the growth of the Philippines BPO industry reshaped whole districts. For many landlords, real estate outsourcing also became a smart way to manage growing portfolios.

How the property market fared before and during COVID

David called the pandemic “probably the biggest crisis” the country had faced in decades. However, before it hit, the property market posted strong gains in both homes and offices. In addition, this growth paired with the “Build, Build, Build” program, which aimed to improve roads, transport, and other infrastructure.

LPC recorded 1.7 million square meters of leased office space in 2019, the third-highest demand in the world. However, this growth slowed when lockdowns began in early 2020. Meanwhile, demand for offices dipped as firms moved staff into flexible work arrangements. Still, as David noted, the commercial property sector stayed resilient.

How outsourcing drove the property market resiliency

In fact, David credits outsourcing as a key driver of economic continuity. According to him, BPOs “made the Philippines an anti-crisis platform for the West,” since demand often spikes during downturns.

So crises reveal the industry’s countercyclical nature. It helps global firms stay afloat. In addition, it creates jobs for Filipinos who need them most during hard times. BPOs also kept paying office rent through the lockdowns while running skeletal teams on site.

The commercial property market post-pandemic

David stayed positive about the future of commercial property in the Philippines. In addition, he noted that about 12 to 15 projects under Build, Build, Build were nearing completion over the following years. As a result, these projects would improve roads and transport, especially in and around the National Capital Region.

Meanwhile, going back to the office was always likely in most fields, including outsourcing. Many firms reported higher output during remote work. However, David linked some of that to lighter workloads at the time.

Firms also raised concerns about data security and privacy in remote setups. So many planned clear measures to bring staff back as full workloads returned. These factors helped the market recover lost ground. In the first half of 2021, for example, LPC met about 80% (280,000 sq. m.) of the prior year’s demand (380,000 sq. m.). The firm expected demand to return to its 2019 peak within a few years.

That rebound was not limited to Metro Manila. In addition, growth spread to hubs like Cebu outsourcing centers. So demand widened across the country.

About Leechiu Property Consultants (LPC)

Founded in 2015, LPC helps people and companies navigate the Philippine real estate market. In addition, it advises clients on how to invest and how to manage their lease portfolios.

The firm serves a wide client base, including JPMorgan, HSBC, and Citibank. In fact, it has counted “nine out of 11 largest BPOs in the country” as clients. So it handles every real estate need on their behalf.

Check out their website for inquiries and details on how LPC can help. You can also listen to David Leechiu’s podcast episode here.

Frequently asked questions about outsourcing and the Philippine property market

How does outsourcing affect the Philippine property market?

Outsourcing firms rent large offices and hire thousands of workers. So they lift demand for both commercial and residential space. In addition, the steady jobs they create give families more money to spend on housing.

Why is the Philippine property market seen as resilient?

The market leans on outsourcing, which tends to grow during downturns. As a result, office demand holds up even in hard times. Overseas remittances add another steady source of income.

What role did overseas remittances play?

Remittances raised household income from the early 2000s. This gave more families the means to buy or rent homes. So demand for residential property rose alongside the office boom.

Which cities drive property demand in the Philippines?

Metro Manila leads, but growth has spread well beyond it. Hubs like Cebu, Clark, and Davao now draw strong BPO and real estate activity. This spreads demand across more regions.

Is the Philippine property market still growing?

Demand has recovered as workers returned to offices and infrastructure improved. Outsourcing remains a core driver of that growth. So the long-term outlook stays positive.