The big gamble for the new kid in town | Inquirer Business

The big gamble for the new kid in town

/ 05:04 AM July 21, 2017

Barely a year since the government gave the go signal for offshore gaming firms to operate, pundits are already betting they would make a killing in the country. That is, if their demand for office space is any indication.

The Information Technology-Business Process Management (IT-BPM) industry, which includes call centers, has always gobbled up prime office space, according to Colliers International Philippines. But much has changed under the Duterte administration.


The changes could be a matter of timing or policy. These days, however, the office space market has not been getting the much needed gain as it would want to get from the ballyhooed pillar of the modern economy.

“For 2017, we expect some 350,000 square meters of space [would be] occupied by online gaming firms, covering half of projected office space absorption for the entire year. Meanwhile, we expect IT-BPM companies to account for 25 percent of office space take up for 2017,” Dom Fredrick Andaya, Colliers International Philippines director for office services, told the Inquirer.


Colliers Philippines said for the first quarter alone, online gaming already accounted for 30 percent of total office space, larger than the 21-percent share of IT-BPM firms. The latter usually leases an average 60 to 70 percent, Colliers said.

State-owned Philippine Amusement and Gaming Corp. (Pagcor) started issuing off-shore gaming licenses in September last year, opening the country to companies engaged in online gaming that caters exclusively to overseas players.

As it took off, the online gaming firms already accounted for nearly half of office space demand by the fourth quarter last year. Based on Collier’s figures, it cornered 70,000 sqm of the 154,000 sqm on offer.

Reluctant welcome

Offshore gaming firms did not necessarily receive a warm welcome. Last December, there was a petition filed at the Supreme Court to stop Pagcor from issuing licenses.

The Philippine Economic Zone Authority (Peza) was also reluctant in allowing the companies to locate in any of its accredited IT buildings, noting the reputation of online gambling. It only agreed after some prodding from the Office of the President.

Besides the Peza-accredited buildings, Colliers’ Andaya said online gaming firms are opening facilities in the Manila Bay, Alabang and Fort Bonifacio areas.


He said “they prefer buildings with large floor plates.” One online gaming firm requires an average 10,000-sqm office space. Some require a bigger 30,000-sqm space.

From first to second

The tepid office space demand from the IT-BPM industry also says a lot of things.

According to Colliers, the drop in IT-BPM take up in the first quarter was because of “geopolitical concerns forcing tenants to take a wait-and-see position on new expansions and the delay in Peza proclamations.”

The Philippine Statistics Authority (PSA) said total IT-BPM pledges fell 34 percent to P4.18 billion in the first quarter from P6.34 billion in the same period last year.

“[The first quarter decline can be attributed] not to what’s happening now, but to what’s happening before,” said Rey Untal, president and CEO of the IT and Business Process Association of the Philippines (IBPAP), citing President Duterte’s anti-Western rhetoric.

President Duterte had earlier called for a “separation” from its long-term ally, the United States, after being criticized for his war on drugs. The call sent ripple effects all the way to the business community.

There is also a growing backlog of pending economic zone approvals. According to the Peza, there are still 46 applications awaiting the green light from Malacañang.

Other factors may still suggest growth for the industry. It issued a six-year roadmap, targeting $38.9-billion revenues by 2022.

But offshore gaming firms are here to stay, aiming even to rival traditional casinos. They are expected to eventually account for up to half of the gross gaming revenues of the local industry.

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TAGS: Colliers International Philippines, Information Technology-Business Process Management (IT-BPM), office space
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