After a temporary blip caused by China’s crackdown in the third quarter, the online gaming industry has bounced as the biggest driver of the Philippine office property market, which is on track to end at record levels this year.
Domestic office take-up this year hit a record high of 1.7 million square meters (sq m), inclusive of pre-commitments, with the Philippine offshore gaming operator (POGO) industry accounting for the highest demand not only in Metro Manila but also in Clark in Pampanga and Cebu, David Leechiu, chief executive of Leechiu Property Consultants, said in a property briefing on Monday.
Demand from POGOs alone surged to 738,000 sq m or about 44 percent of 1.37 million sq m transacted so far (excluding pre-commitments). Last year, POGOs accounted for 443,000 sqm or 28 percent of total office property take-up.
Asked whether Makati’s decision not to host more POGOs could impact on the sector, Leechiu said this would not likely curb the sector’s growth as there was ample space in other local government units to accommodate spillover demand.
The Bay Area continued to account for the lion’s share of new POGO occupiers this year at 38 percent, followed by Makati at 17 percent. Other growing POGO hosts are Alabang, Cavite and Quezon City, which each accounted for 8 percent of total space take-up this year.
Pampanga, Ortigas, Cebu, Laguna and Taguig also bagged some of the office property deals this year.
To date, POGO occupiers account for about 12 percent of about 14 million sqm of total office space in the country. Metro Manila accounts for 86 percent of the supply.
On the other hand, demand from the business process outsourcing (BPO) decreased by 14 percent year-on-year to 573,000 sqm “due to the lack of readily available office supply and a wait-and-see attitude.”
In Metro Manila alone, demand from POGOs doubled from 296,000 sqm in 2018 to 608,000 sqm this year. BPO take-up was flat at abound 428,000 sqm “owing to the scarcity of offices spaces with tax incentives.”
He noted that BPO transactions were brisk during the first half of the year but significantly dampened after the Philippine Economic Zone Authority stopped processing new economic zones in Metro Manila.
Meanwhile, POGO transactions peaked in the second quarter and dipped in the third quarter.
This was after China– the main market of most POGOs that have sprouted in the metropolis and likewise the main source of Mandarin-speaking migrant labor that runs these entities– called on the Philippines to ban these entities. Apart from all forms of gambling being illegal in the mainland, China has raised concerns on money laundering, the working condition of its citizens in proposed POGO hubs as well as predicate crimes associated with the POGO network such as human trafficking, kidnapping and even killings.
President Duterte has since then ruled out China’s call to ban POGOs but his administration has been going after illegal POGO operators as well as those which do not pay proper taxes.
Owing to the growth of BPOs, local industries likewise exhibited increased demand for office space with flexible work spaces, real estate developers and banking institutions accounting for 25 percent of demand or 336,000 sqm in Metro Manila and 22 percent for the entire country.