The exodus Philippine Offshore Gaming Operator (Pogo) companies that characterized the woes of the Metro Manila office sector in 2020 has ended and demand for new space is returning, property veteran David Leechiu said on Tuesday.
This reversal was partly due to new legislation addressing tax compliance by Pogos, whose operations mainly target gamblers in China, and the potential easing of international travel restrictions as COVID-19 vaccinations ramp up. The sector also received a powerful boost after President Duterte said last week he was banking on the offshore gaming sector to raise funds to support the country’s pandemic response.
“We are starting to see a number of our Pogo clients coming back,” Leechiu, who is CEO of Leechiu Property Consultants, told reporters during on online briefing on Tuesday.
The latest data from Leechiu Property showed that Pogos were in talks to lease about 17,000 square meters (sqm) of new office space within the second half of 2021. This was just 5 percent of the expected 330,000 sqm that would be leased out in the second semester of the year, the bulk or 58 percent still coming from IT and business process outsourcing.
But this compares to a major contraction led by the Pogo sector since the start of 2020 up to the first semester of 2021. During the period, Pogos vacated 454,000 sqm of office space—50 percent of the total decline— while IT and BPOs dropped 131,000 sqm and other businesses accounted for 333,000 sqm.
According to the company, the exit of Pogos slowed sharply since then due to Senate Bill 2232, which clarified taxation on offshore gaming operations.
“Classified as urgent and now on final reading, the Senate Bill is due to be signed into law soon,” Leechiu Property said.
Leechiu had another explanation: locations such as Dubai, Romania, Malaysia, Thailand, Vietnam and Cambodia could not absorb their capacity.
Meanwhile, overall office demand in the first half of the year ended at 291,000 sqm. Combined with ongoing negotiations, the full-year 2021 demand would hit close to 600,000 sqm or 54 percent larger than 2020.
Another demand driver was the eventual winding down of work-from-home arrangements as the economy recovers.
“Work from home works because your workload has been cut by half by this crisis,” Leechiu said.
“The moment we normalize our workload to 100 percent, there will be an element of insanity and psychological well-being that will be comprised by trying to juggle your workload with your home workload,” he added.
Meanwhile, the overall property sector remained strong during the pandemic and prices saw a minimal decline despite the economic recession. Data from the company show that property prices in key business districts have also retuned to pre pandemic levels although rental rates in areas such as Alabang, Manila Bay and Pasig remain significantly lower due to the slowdown of the Pogo sector.