Demand for local office and residential property continued to rebound from the bottom levels seen in 2020 despite the lull seen within the Philippine offshore gaming operator (Pogo) industry that used to invigorate the sector.
This is according to Leechiu Property Consultants (LPC), which estimated that Pogos vacated a total of 396,000 square meters from the second quarter of 2020 to the first quarter of 2021. The exodus had been attributed to the confluence of the lockdown measures arising from the COVID-19 pandemic, the crackdown by regulators in mainland China and the changes in the Pogo tax regime.
This year, LPC expects total demand for office space in the country to exceed 400,000 square meters—around the same amount of space given up by Pogos last year. In 2020, total office demand stood at 390,000 square meters.
New demand for office space stood at 109,000 square meters in the first quarter of 2021, up by 68 percent from 65,000 square meters seen in the third quarter of last year, which marked last year’s bottom. The first quarter 2021 demand also marked a 22-percent improvement from the level seen in the fourth quarter of 2020.
LPC sees these as good indicators that companies are “thinking long term and are preparing to go back to the office.”
In the first quarter of 2021, the business process outsourcing (BPO) industry accounted for the single largest takeup at 33,000 square meters, followed by e-commerce at 19,000 square meters, which more than tripled its takeup from the fourth quarter of 2020. “E-commerce is proving to be a sunshine industry,” David Leechiu, chief executive officer of LPC, said.
Meanwhile, Mikko Barranda, associate director of LPC, reported that the BPO industry had grown consistently in the last 12 months as global firms tried to tighten their belts during the pandemic.
To date, there are office tenants in the market for 266,000 square meters of office space, 33 percent of which was coming from BPOs while 12 percent was coming from Pogos, after the absence of any deal in the last few quarters. Retail firms accounted for 7 percent of live demand.
“Despite the hardships the retail industry has experienced we are seeing companies adapt, innovate and commit to space in anticipation of a recovery,” Barranda said.
On rental rates, Leechiu said the impact on landlords had been big, “but not as big as it could have been.”
Landlords to Pogos have taken a hit of about 30 percent while those catering to non-Pogos must have taken a smaller hit of about 12 percent, Leechiu said.
“I think the Pogo situation will be resolved in that [recovery] should just be around the corner,” he said.
In terms of rental, the most resilient office property segment so far was Bonifacio Global City, where leasing deals have remained at a price of P1,200 to P1,400 per square meter per month, he noted.