Corporate News

Offshore gaming firms drive demand for PHL office space

Posted on May 29, 2017

OFFSHORE GAMING companies have emerged as one of the main growth drivers in the Philippine office market in the first quarter, but the government needs to provide “clear, consistent and reliable” support for this industry to continue to flourish, a property services firm said.

Visitors try online gaming at an e-Games station in Alphaland Southgate, Makati City in this photo dated April 2, 2013. -- BW FILE PHOTO
In a report, Pronove Tai said offshore gaming companies accounted for 20% or 56,000 square meters (sq.m.) of the pre-leased office space set to be completed in the second quarter of 2017.

“The offshore gaming industry, a beleaguered office demand driver, requires clear, consistent and reliable national and local government support to succeed in the same way that the IT-BPM (information technology-business process management) industry flourished during the past administrations,” it said.

“With the advent of offshore gaming, all countries generally allow their citizens to engage in betting and gaming activities online in the privacy of their homes. The Philippines, however, has taken the bold lead in legalizing and licensing offshore online gaming in the country,” the property consultant said.

In the Philippines, the Philippine Amusement and Gaming Corp.(PAGCOR) forecast an additional P10 billion in annual revenues from Philippine Offshore Gaming Operators (POGO) licenses. Companies with PAGCOR POGO licenses are allowed to operate anywhere in the Philippines, provided they are not inside Philippine Economic Zone Authority (PEZA)-accredited buildings.

These offshore gaming companies fall under three categories: 1) the licensee, 2) the gaming agent, and 3) service providers, one of which is the special class of BPOs which should not provide service to any POGO licensee, gaming agent or service provider. Their clients are gaming operators based abroad.

Pronove Tai noted gaming companies are attracted to the Philippines because of its competitive labor costs, availability of prime grade buildings, and “lower real estate acquisition and operational costs compared to other major Asian cities.”

While Makati City’s central business district remains the preferred location of offshore gaming firms, the property consultant said demand is quickly shifting to the Bay Area, which covers the cities of Parañaque, Pasay, and Manila.

“The local governments of these cities have also been supportive of this industry as compared to other cities in the National Capital Region,” Pronove Tai said.

The Bay Area is also the location of PAGCOR’s Entertainment City, which houses major integrated casino resort developments such as City of Dreams Manila, Solaire Casino & Resort, and Okada Manila.

Pronove Tai said these casinos may soon take cues from the offshore gaming industry and adopt online platforms to increase its revenues “sooner rather than later,” and to attract and retain players.

“As gaming interface and service delivery employ richer graphics and more sophisticated applications, demand for technical back office support and game software development will increase even more. Hence, demand for prime grade buildings with high speed telecommunications infrastructure and local government support will grow not only from offshore gaming companies but from the Special Class of Business Process Outsourcing companies as well,” the property consultant said.

With the Duterte administration pushing for the decentralization of PEZA-accredited buildings to suburban locations, Pronove Tai noted many developers are “taking a more serious look and opening their doors to offshore gaming companies as the next big office demand driver.” -- Arra B. Francia