Sunday, March 14, 2004

Real Estate Booms with Outsourcing in Developing Countries

Real estate companies are in for a heyday as service providers scramble for office space to meet the huge demand for outsourced services.

According to a Reuters report, the demand for office space in India will double this year as service providers continue to expand.

Multinational firms are also joining the mad dash for office space as more of them migrate offices in Bangalore, Bombay and New Delhi. Investment banks, for one, are moving their research offices to India and hiring Indian analysts.

India is not yet as modern and cosmopolitan like Singapore or Hongkong. But apparently it is the low rent that lures companies to go there. The annual rent in India is one-fifth of that in Singapore.

The property sector in Singapore, Hongkong and even Tokyo is already feeling the crunch. According to a study,building owners in these cities are forced to cut down on rent or be creative on how to make income out of vacant space.

The Philippines, too, is experiencing a boom in real estate.

According to a local report, the number of government-declared economic zones in the country are growing by an average of three a year since about four years ago when the Philippines was first hit by the outsourcing wave.

Economic zones offer incentives like tax cuts to foreign investors. The Philippine government is busy making sure that these ecozones carry the most modern communications infrastructure to attract would-be foreign investors.

The government is also looking at creating ecozones outside of the capital city of Manila, encouraged by investors themselves primarily call centers.

In next few years, expect more skyscrapers in Mumbai and Manila when the outsourcing trend continues.