SMDC mulls development of BPO buildings

MANILA, Philippines - SM Development Corp. (SMDC) is studying the possibility of venturing into the development of office buildings catering to business process outsourcing (BPO) companies amid shortage in the industry, a top company official said.

“We are seriously considering it moving forward in terms of our business operations to further strengthen and broaden our revenue base,” SMDC vice-president Jose Gabionza said.

Gabionza, however, said everything is still under evaluation and that no decision has been made yet on the matter. “We have not yet crossed the line in actually deciding to do so,” he said.

SMDC is the residential development arm of the Sy family’s listed holding firm SM Investments Corp. with a total of 16 projects in the market.

The local BPO industry is seen to continue to grow this year as it is seen benefiting from the Western countries’ economic woes.

According to property consultancy firm CB Richard Ellis Philippines, Manila has the third lowest lease rates for office space among central business districts in Asia at an average of $19.1 per square foot per year, next to Jakarta’s $16.3 and New Delhi’s $12.7.

This makes the Philippines one of the most cost-effective outsourcing destinations in Asia and also a very attractive target for multinational companies and BPOs to expand. About 90 to 95 percent of office take-up last year came from BPOs.

For this year, SMDC plans to launch four to five residential projects to further augment its revenue. These projects will be located in Quezon City, Makati, Mandaluyong, Bicutan and Roxas Boulevard.

In the first nine months of 2011, SMDC sold 7,900 residential units worth around P17.6 billion. During the same period, net profit rose 51 percent to P3.1 billion while revenues from real estate operations jumped 86 percent to P11.3 billion.