ArthaLand enters Vis-Min market with purchase of Cebu property

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Metro Manila (CNN Philippines) — Real estate firm ArthaLand has entered the Visayas-Mindanao market with the purchase of a property at the Cebu IT Park in Cebu City.

The company is looking to develop an environmentally-friendly office building which will provide at least 51,000 square meters of space to the local market on the first phase.

“We are bullish on the Vis-Min market given its fast paced growth in the past few years. We believe that Cebu, being a global hub in this part of the country, plays a major role in further lifting central and southern Philippines’ economy,” shared Angie de Villa–Lacson, ArthaLand’s president and CEO.

According to Lacson, “further growth potential is there because of well-educated Visayans and sound business environment.”

The Cebu property was acquired through its subsidiary, Cebu Lavana Land Corporation.

ArthaLand is known for it flagship residential project Arya Residences, a two-tower boutique condominium in Bonifacio Global City (BGC), Taguig which will be completed by the first quarter of 2016.

It is currently constructing its second project, ArthaLand Century Pacific Tower, also located  in BGC and is set to be delivered by the third quarter of 2017.

According to the firm, both projects are on target to achieve dual green building certification from the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program and the Philippine Green Building Council’s Buildings for Ecologically Responsive Design Excellence (BERDE) program.

ArthaLand is a publicly listed company whose major shareholder is Century Pacific Group Holdings, Inc., (CGPHI) the parent company of Century Pacific Food, Inc., (CPFI).

Emerging BPO destination

ArthaLand’s foray into the Cebu market is largely driven by what it believes to be strong prospects in the city’s BPO sector.

“Cebu has progressed into an alternative BPO location and is currently ranked 8th as a global outsourcing destination according to Tholons, a global services and investment advisory firm. The entry of BPO companies has transformed and paved way to the growth of the office sector in Cebu,” shared Michael McCullough, managing director for KMC MAG, an international affiliate of Savills.

According to McCullough, Cebu City hosts some of the largest business process outsourcing companies.

“Given that it is the educational hub for the Visayas and Mindanao regions, Cebu has a well-educated labor pool with high English-speaking proficiency, thus drawing BPO operators to locate here,” explained Julius Guevarra, director for Research and Advisory Services for Colliers International.

“Cebu has become the second largest BPO location in the country following Metro Manila, and some BPO locators have established operations here so that they have a redundant site to back-up their offices in the national capital region. Costs are also lower in Cebu, thereby attracting these operators,” Guevarra added.

Analysts bullish on Cebu's growth

“The drive that foreign companies have to improve profitability through the reduction of operating costs has resulted to the influx of BPO investments in Cebu and this has direct impact to the rising demand of office spaces here,” McCullough explained.

“Based on the information released by PEZA, new and expanding BPO players in Cebu are still largely voice operations but we see that there are significant number of non-voice locators entering Cebu, specifically involved with data encoding, transcribing, engineering and architectural design services, creative services, software development, and other IT-enabled services,” he added.

For his part, Colliers’ Julius Guevarra is also optimistic of the market. “From what I have seen, Cebu is still dominated by voice services. Higher value KPO services are also growing such as those involved in accounting, engineering, health care, and web design. Many operators that already have presence in Cebu are also expanding, highlighting the strength of this market as a BPO location.

He added: “Cebu’s economy has done very well in the past few years since it is quite diverse. Apart from the BPO industry which has exploded recently, Cebu has always had a large manufacturing base and is also driven by the local tourism industry with its many natural attractions."

"Because of this, the regional GDP of Central Visayas usually outperforms the national average. With this kind of economic activity coupled with a growing population, demand for traditional office occupiers has grown over the years, driving occupancy rates up in the central business districts of Cebu.”

Yves Luethi, vice president for KMC MAG projects more investments for Cebu: “Taking all things in consideration, as the local economy of Cebu continues to grow over time, it is expected that more foreign investors will be drawn in to extend their business operations in the metropolitan area, sustaining current positive sentiment."