OFFICE SPACE demand has recently surged to its highest since the start of the pandemic, backed by growing interest from outsourcing firms, Leechiu Property Consultants (LPC) said.
Demand for office space went up 38% in the second quarter of 2021 to 169,000 square meters (sq.m.) compared to the preceding three months, the real estate services firm said.
Total office space demand in the first half reached 291,000 sq.m.
“This is already 75% of demand for the entire 2020. There is no doubt that the Philippines is back on the radar of global occupiers,” LPC Chief Executive Officer David T. Leechiu said in a press release on Friday.
The business process outsourcing (BPO) industry accounted for 92,000 sq.m., or more than half of second quarter demand. The 160% growth since the first quarter is driven by more economic stability in Western countries, LPC said.
“Even if they were relatively quiet in 2020, BPOs are back,” Mr. Leechiu said. “The same fundamentals that attracted BPOs to the Philippines during the financial crisis of 2008 are once again working for us.”
LPC said that investor sentiment has improved amid the rollout of coronavirus disease 2019 (COVID-19) vaccines.
Philippine Offshore Gaming Operators (POGOs) could also renew interest in the country’s office market as international borders reopen and after tax issues were clarified, the company added, noting that stronger demand in the country’s office market in the second quarter strongly indicates recovery.
Senate Bill No. 2232 approved on third and final reading last month set the taxes on POGOs and their foreign employees. Offshore gaming licensees that are considered to be doing business in the Philippines will be subject to 5% gaming tax on gross gaming revenues or receipts from their gaming operations.
Various real estate services analysts in April said that growing demand in office spaces from outsourcing companies is unlikely to offset losses from the exodus of POGOs, projecting recovery by the fourth quarter of 2021 or early 2022. — Jenina P. Ibañez