SEGMENTS of the property market are bound to maintain their uptrend as long as Philippine Offshore Gaming Operators (POGOs) are allowed to continue, Leechiu Property Consultants, Inc. said.

It also expects the demand for commercial properties to remain as jobs could be shifted to the country if a downturn happens globally, as what happened in the past.

“If the POGOs are allowed to continue, then we will establish a floor in the stock market, residential market, and office market,” Leechiu Chief Executive Officer David Leechiu said during a media briefing on Monday.

Mr. Leechiu said that despite the US saying that interest rates will keep climbing for the next 12 months, the rise will be offset by the improvement in logistics, which in turn can ease costs.

“Yes, interest rates are going to climb but that will be partly offset by the drop in construction costs, drop in distribution costs, and by the drop in food prices,” Mr. Leechiu added.

“Late next year, you’re gonna see a lot of these stabilizing, and then it’s gonna produce improved sentiment and that’s when the stock market will go up. It’s [also] gonna improve sentiment in the Philippines and that’s when foreigners will start investing in Philippine property again,” he said about rising interest rates and the depreciating peso.

Leechiu Director for Investment Sales Alvin Magat similarly said that POGOs are important to the commercial segment to keep its uptrend next year.

“Yes, it will be positive for commercial properties considering that POGO will stay because if that will be gone right now, we will need to come up with a demand that will fill up all the supply that will be left out by the POGO industry,” Mr. Magat said.

He added that demand for commercial properties will be maintained even if a recession happens in the US or globally because jobs will again shift to the Philippines, which he said happened during the global financial crisis of 2008.

“We should not forget the fact that the Philippines has its own competitive advantage compared to other BPO (business process outsourcing) countries like India and Vietnam, and that is the average age that we have for our BPO industry and the ability and fluency of [our] BPO employees,” Mr. Magat said.

Meanwhile, Leechiu Director for Commercial Leasing Mikko Barranda said that the occupancy rate in the BPO sector is on an uptrend despite the work-from-home arrangement extending to next year and industry projects of hiring full-time employees (FTE).

“The uptick is seen; we see the uptrend. [And we give] a lot of emphasis to the BPO sector [by] them taking space despite the current working arrangements,” Mr. Barranda said.

He added that projections from the IT and Business Process Association of the Philippines (IBPAP) about the number of FTEs who will be hired in the next few years “gives us the confidence in terms of properties or real estate that the BPO sector will take.”

The IBPAP roadmap shows that the information technology and business process management (IT-BPM) industry is projected to hire 1.1 million FTEs in the next six years, which translates to 476,000 square meters (sq.m.) of annual office space requirement until 2028.

“There is optimism if you look at the charts from 2020 at 380,000 sq.m., 540,000 sq.m. in 2021, and in the first nine months of 2022 at 694,000 sq.m.,” Mr. Barranda said.

He said the BPO industry has a “multiplier effect” in which the hiring of a single FTE has the potential to indirectly hire three or four FTEs.

“So, what a one million FTE count through six years [could mean] is actually three or four million added FTEs to the economy,” Mr. Barranda added.

For the residential segment, Leechiu Director for Research and Consultancy Roy Amado Golez, Jr. said that the government’s call to build a million houses per year could help the movement of the low-cost and affordable housing segments.

“With the government’s call to build more houses, in all likelihood next year we will be seeing the low-cost and affordable segments to start moving and hopefully the compliance requirements of the developers will start to be released from escrow,” Mr. Golez said.

He said that funds stuck in the escrow arrangement with the Department of Human Settlements and Urban Development can instead be used for low-cost housing.

However, he said that movement in middle to upper-middle housing sectors is likely to be flat next year until developers start to have more confidence in the costs of their developments.

“Right now, the interest rates [and] the logistics problems make it very unpredictable for the costs of construction. If that can be solved next year, then in all likelihood the middle to the upper-middle segment will also start moving significantly upwards,” Mr. Golez said.

“The BPO sector will start to absorb more and more office spaces, the corporates are gonna start expanding again as well as the real estate,” Mr. Leechiu said.

Mr. Leechiu said: “I’m quite hopeful about 2023 despite all the things that are happening in the world because again the crisis in the world is gonna produce more jobs in India and Philippines. And remember that this is all predicated on us keeping POGOs alive today, if you take that away then I don’t know.” — Justine Irish D. Tabile