October is real estate month in the Philippines. And the real estate industry plays a significant role in pump-priming the Philippine economy and stimulating sectoral growth. Its businesses and operations are generating a multiplier of economic benefits, such as provision of employment, promotion of entrepreneurial activities, and generation of investments.
Information technology (IT) is one of the major driving force that is necessitating changes in the way the industry does business today. IT plays a vital role in connecting together people and information. New trends and alliances are bringing about continual change in the business climate. And among those changes are the rise in business outsourcing and global marketing.
The IT and real estate sectors have been enjoying quite a rapid growth in recent years. The latter is being directly correlated with the expansion of call center and business process outsourcing (BPO) activities. The Philippines is now fast-becoming a major IT hub in Asia as many IT-enabled services (ITES) companies are establishing their headquarters in the country. Call centers, BPO firms, transcription service providers, data processors, and software development companies comprise the ITES industry.
In the present evolution of the real estate industry, cutting-edge technological tools, such as the geographic information system (GIS), land adjustment system, digital land database, etc., are gradually finding their place in the business. Their entry steps up the pace of the industry's work-arounds and strengthens the integrity of land transactions in the country. The Internet, on the other hand, becomes an important marketing channel, especially in tapping the overseas market. With “web marketing”, productivity ratio increases as sales opportunities are getting better.
Clearly, globalization is another main driving force that has prompted the industry to adopt novel reforms and innovations. Globalization is the process by which firms operate on a worldwide basis, organizing their structure, functions, resources and manpower in such a way as to address the world as a single market.
It is this phenomenon that paved the way for the advent of call centers and BPO firms in the country. Likewise, it is also due to globalization that professional and skilled Filipino workers are becoming more in demand abroad.
This proliferation of “global Filipinos” works wonder to the economy. With more than 10-million Filipinos working overseas, the country now is more dependent on overseas Filipino workers' (OFWs) remittances than foreign investments or official development aid. The Philippines receives about US$ 1-billion in foreign direct investments annually, whereas OFW remittances hit a record of US$ 12.8-billion for 2006. As per the Bangko Sentral ng Pilipinas (BSP), actual remittances could be much higher if money sent through informal channel had also been accounted for.
These OFW remittances are not just going to support families, but into the stock market and property investments as well. Based from studies, most of the OFWs' funds are invested in real estates. Major realty firms estimated that about 25% to 40% of their revenues came from Filipinos abroad buying land and condominium.
Meanwhile, the strong demand for office spaces is being driven by the continuing expansion of call center and BPO activities. Their robust demand had driven prime office vacancy rates to record lows; but rental prices, poised to breach the Php 1,000 per square-meter level, are still around four to five times cheaper than in neighboring Asian countries. Its continued expansion has stimulated activities in the local property market nationwide. As a result, the property sector's total output shoot up by an average of about five percent for the past three years mainly due to higher sales from condominium projects and higher income from rental and leasing operations.
In keeping up with the changing times, more and more real estate firms are now employing IT-savvy approaches, adopting global marketing techniques, and introducing new financing schemes in meeting today's challenges as the industry forge ahead in this exhilarating climate of phenomenal growth and big market opportunities.
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