POGOs boost office spaces demand in PH in ’19

MANILA — Demand for office spaces in the Philippines posted a record-high of 1.7 million square meters this year, driven mainly by higher demand from Philippine Offshore Gaming Operator (POGO) industry especially in the second quarter of the year.

In a briefing on Monday, Leechiu Property Consultants Chief Executive Officer (CEO) David Leechiu said demand from the POGO industry surpassed that of the information technology-business process management (IT-BPM) sector.

He said demand for office spaces from POGOs increased to 738,000 square meters (sq.m.) to date from 443,000 sq.m. in 2018.

On the other hand, those from the IT-BPM sector declined to 573,000 sq.m. from year-ago’s 652,000 sq.m.

Leechiu attributed the drop in the IT-BPM sector’s demand for office spaces to lack of readily-available office supply and a “wait-and-see attitude”.

This, after Administrative Order 18 issued last June directed the Philippine Economic Zone Authority (PEZA) to stop the processing of new economic zones in Metro Manila.

Leechiu said the expected annual demand for office spaces by the IT-BPM industry is about 600,000 sq.m. all over the country, but he sees availability to be low in the next five years.

For 2020 alone, he said there will only be 138,000 sq.m. spread over seven buildings in Metro Manila and 79,000 sq.m. in six provincial areas, which would result in an unserved demand of 383,000 sq.m.

The supply will only increase by 2021 to 277,000 sq.m. with five of the buildings in Metro Manila accounting for 120,000 sq.m. and nine buildings from provincial areas accounting for 157,000 sq.m.

“Lack of PEZA supply is likely to make the Philippines a less attractive hub for IT-BPM firms on expansion mode. We need more PEZA-accredited buildings in the pipeline if we want the country to continue being an ideal location for these companies,” he said.

Leechiu thus lamented this situation since he expects strong growth for the business process outsourcing (BPO) sector next year due to the economic uncertainties of several major economies, which, in turn, will increase demand for outsourcing jobs.

He said the situation will be beneficial both to the Philippines and India.

Leechiu said Metro Manila will continue to be the main area in terms of demand because of the availability of talents, with 50 percent of graduates coming from mega Manila –from Pampanga to Cavite or Laguna; availability of proper sidewalks and lighted streets, and five-star hotels.

He said Metro Manila also has a 60-year advantage in terms of development compared to other areas

“Only with these will they will be able to grow their provincial sites,” he added.

In terms of the demand from the POGO sector, Leechiu said that while China accounts for the bulk of the demand, there is also rising demand from online gaming operators from South Korea, Japan, Australia, and the US.

He said demand from Chinese POGOs alone is expected to remain strong unless China pulls the plug since these activities allegedly result in the illegal transfer of yuan overseas.

Meanwhile, Leechiu said Filipinos should not consider the influx of foreign workers in the country as a “threat” to local workers’ opportunities since foreign residents account for about 0.2 percent of the total population.

He said the country needs to attract more foreign investments and tourists to help boost domestic growth.

“We are just about to be in a start of a massive tourism boom if we know how to welcome them. And make them safe here,” he said.

Leechiu further said, “the key message here is that we are far from being overrun by anybody by any measure and proportion, and absolute number”.

“If we want to be a wealthy country, we have to ask foreigners to visit the Philippines and invest meaningfully in the Philippines,” he added.