By Arra B. Francia, Reporter
AS BUSINESS process outsourcing (BPO) firms put expansion plans on the back burner in 2017 due to perceived country risks, online gaming companies picked up the pace as they trailed BPOs for office space demand by the third quarter of 2017.
This is according to real estate firm Leechiu Property Consultants (LPC), which projected office take-up could grow by 19% this year, driven by demand from online gaming firms, also known as Philippine Offshore Gaming Operators (POGOs).
The demand for online gaming firms stood at 125,000 square meters (sq.m.) by the end of August. This is almost half of the total office space demand for BPO firms, which came in at 268,000 sq.m. during the same period.
By the end of the year, office space demand could grow to 750,000 sq.m., up from the current 650,000 sq.m., according to LPC data that monitored negotiations for projects set to come online in the next three to four months.
“The online gaming industry, which came literally out of nowhere, is now the largest consumer of office space. And they’ve taken up about 135,000 sq.m. of office space, which is 50% to 60% of BPO firms,” LPC President and Chief Executive Officer David Leechiu said in a press briefing in Makati last week.
Mr. Leechiu noted the warming of Philippine relations with China, Malaysia, South Korea and Japan have factored into the decision of online gaming firms to expand here.
The entry of more online gaming companies into the Philippines also comes amid the slowdown of the expansion of BPO firms this year.
“Many clients have decided not to grow in 2017. That’s primarily because many of their clients see that country risk profile is climbing. And it’s important for us to make the public know that these country risk issues are not new. There have always been many important country risk issues since maybe the 1960s, and companies have learned to adapt to that,” Mr. Leechiu said.
These country risks include “concerns about terrorism, shootout in Batangas City, concerns about Bohol, Palawan, issues in Mindanao, blanket martial law.”
Real estate giant Megaworld Corp. noted that while current BPO tenants continue to expand, 40% of their properties are being occupied by POGO firms.
“(Expansion of) new players, because of some sentiments in the US and somewhat locally, it may have slowed down. But POGO came into the picture, and that took up the vacuum that was left behind,” Megaworld Senior Vice-President for Business Development and Leasing Jericho P. Go told reporters in an earlier interview.
On the other hand, Gotianun-led Cyberzone Properties, Inc. (CPI) said POGO tenants have taken up 30,000 sq.m of space from their properties since last year.
“So far the major area where we have POGO is probably in the Bay area, we have two buildings there that was taken up by POGOs. There’s some in Makati, in our PBCom Tower… In our case, 30,000 sq.m. starting last year. My understanding is because of the Entertainment City, they like to be there,” CPI President Joseph Yap told BusinessWorld at the sidelines of the launch of its project with a French energy firm last week.
Philippine Amusement and Gaming Corp.’s Entertainment City, located in Parañaque, is home to Bloomberry Resorts Corp.’s Solaire Resorts and Casino, Melco Crown and Belle Corp.’s City of Dreams Manila and Tiger Resorts’ Okada Manila. Alliance Global Group, Inc. — the group behind Resorts World Manila — is working on the blueprint of the last casino-resort to open in Entertainment City.
With strong growth seen so far, Mr. Yap expects the POGO market to sustain its momentum. “Quite big, I think. My sense from listening to the market, it can be a large number, but it can be concentrated to some areas,” he added.