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POGOs to remain demand driver of Metro Manila offices

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VIEW of the City of Manila skyline on May 20, 2010

By Vincent Mariel P. Galang, Reporter

METRO MANILA’S office space is expected to grow by 5% this year, with Makati City accounting for most of the supply, a property consultant said, while pointing to demand as continuing to be driven by offshore gaming operators.

“(A) high supply at 1.14 million square meters (sq.m.) from 49 buildings is expected to be completed in 2020. It is also projected to grow by 5% compared to 1.08 million sq.m. in 2019. Makati City is expected to account for the highest supply next year at 353,000 sq.m. supply completions or 31% share of total 2020 supply,” Monique Cornelio-Pronove, chief executive officer of Pronove Tai International Property Consultants, said in an e-mail.

Of the total supply, about 900,000 sq.m. to 1 million sq.m. will be taken up next year, with vacancy rate expected to be around 5-6%.

Ms. Pronove said offshore gaming companies would continue to drive demand, but at a slower pace compared with 2019 due to limited available supply, particularly in the Bay Area where most operators locate.

“Despite limited office supply next year accepting POGOs (Philippine Offshore Gaming Operators), the offshore gaming sector is still expected to drive office demand but on a slower phase compared to 2019,” she said.




“The main factor of POGOs growth in the office market will always be grounded in the ‘office supply.’ POGO sector is expected to slow down next year because of the limited available supply in the Bay Area,” she added.

She said other factors that could affect POGOs’ demand include the crackdown of the Chinese government on gambling activities; the Philippines’ taxation policies on these operators on franchise and income taxes; and the suspended issuance by local government units, specifically Makati City, of business licenses over rising prices of residential buildings, and increasing prostitution activities involving Chinese nationals.

China signaled a crackdown on cross-border gambling, claiming that most of its nationals working in POGOs were illegally recruited. Gambling is illegal in China, pushing Chinese gamblers to travel to another country or go to special economic zones.

Operators are attracted to locate in the Philippines, particularly its business districts as these offer easier access to transportation and other leisure activities. The country has been trying to regulate the growing industry through proper income tax collection, which is also a way to shut down those that are operating illegally.

Ms. Pronove said the information technology and business process management (IT-BPM) industry is expected to recover this year with the implementation of Administrative Order no. 18, or the moratorium on the approval of new economic zones in Metro Manila. The regulation is aimed at encouraging development in other areas.

She said the sector has been growing at an average of 460,000 sq.m. in the past five years.

“The IT-BPM firms is expected to account for around 41%-43% share on demand or estimated 400,000 sq.m. to 450,000 sq.m. However, this is still slower than its previous average in the last five years,” she said.









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