Over the past two years, BPE Asia Real Estate, the property arm of Hong Kong-based private equity firm Baring Private Equity Asia, has made multiple bets in the Philippines through its debut fund. This included its biggest capital outlay, a $75 million investment in a large office development in Clark in November.
Early indicators suggest that BPE Asia Real Estate’s wager on the country is paying off. The firm has sold its first property acquisition in the country, the 25-story AccraLaw Tower in Manila, also for around $75 million. It is understood the sale delivered an internal rate of return of more than 30 percent for the firm and close to a two times return on invested capital.
“The Philippines has been one of the strongest performing economies in Asia in recent years
and we believe that the outlook for the future growth of the country is very favorable, driven by a trend of offshoring and outsourcing back office functions, particularly by multinational corporations seeking to reduce costs,” Mark Fogle, the head of BPE Asia Real Estate, said at the time of investment.
Manila is ranked as the world’s second largest business process outsourcing destination, beaten only by Bangalore, according to a recent paper from outsourcing consultancy Tholons. Demand from both existing occupiers with expansion requirements as well as new corporations looking to relocate to the country has outstripped supply of new office space in Manila, driving up rents and fueling competition for vacant space.