Philippines lures Indian BPOs with low-cost office space: Santos Knight Frank
MANILA, PHILIPPINES — Indian business process outsourcing (BPO) firms are increasingly setting their sights on the Philippines, drawn by the country’s affordable office rental rates, according to global real estate consultancy Santos Knight Frank.
Metro Manila has been identified as the third-cheapest city for prime office rents in the Asia-Pacific region during the third quarter of 2024. The average rent for prime office spaces in Metro Manila was $29.64 per square foot, making it a cost-effective alternative to tier-1 and tier-2 Indian cities like Bangalore, Mumbai, and New Delhi.
“When you wonder why these Indian BPOs are looking at the Philippines rather than continuing to expand in India, you could point to the cost of office space as one of the main drivers,” said Morgan McGilvray, senior director of occupier strategy and solutions at Santos Knight Frank.
Metro Manila’s office market shows rapid growth
The office market in Metro Manila has experienced remarkable growth over the last decade. From an office stock of just 3.3 million square meters (sq.m.) in 2014, supply has more than doubled to 8.6 million sq.m. in 2024.
This year alone, approximately 260,000 sq.m. of new office space is expected to be completed, with an additional 275,000 sq.m. projected for 2025.
“This market has more than doubled in size over the last 10 years. That’s quite a bit of growth. You’re not going to see that in other places in the world,” McGilvray emphasized.
Repurposing POGO spaces for BPO expansion
The Philippine government’s restrictions on Philippine offshore gaming operators (POGOs) have created opportunities for developers to convert vacated spaces into facilities suitable for BPO operations.
McGilvray noted that refurbishing these spaces could take as little as one to two months, providing a quick solution for incoming tenants seeking ready-to-use offices.
Prime business districts offer varied options
While Metro Manila is generally affordable compared to Indian cities, rental prices vary across its business districts.
Makati City has the highest average asking price at PHP 1,227 (US$21.22) per square meter with an 18.3% vacancy rate, followed by Taguig at PHP 1,280 (US$22.02) per square meter and a 12.4% vacancy rate. Alabang offers lower rents at PHP 787 (US$13.54) per square meter but has a higher vacancy rate of 22.7%.
With its competitive rental rates and rapidly growing office market, the Philippines is positioning itself as a key destination for Indian BPO firms seeking cost-effective expansion opportunities outside their home country.
