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POGOs to overtake BPOs in office space demand by end-2019 —Leechiu

Philippine Offshore Gaming Operators (POGOs) will top the Information Technology-Business Process Management (IT-BPM) industry as the largest consumer of office spaces in Metro Manila by the end of 2019, Leechiu Property Consultants (LPC) said Wednesday.

“For the first time in 19 years, the IT-BPM sector will be taken over as the number one office tenant this year,” LPC CEO David Leechiu told reporters in a press briefing in Makati City.

As of the first half of 2019, the IT-BPM industry still leads the demand in Metro Manila at 244,000 square meters (sqm) as against the POGO take-up of 242,000 sqm.

“But we expect the POGO industry to be the biggest demand-driver by year-end due to its faster site selection process and the effect of the recent moratorium on PEZA (Philippine Economic Zone Authority) applications in Metro Manila,” Leechiu said.

PEZA Administrative Order No. 18 has informed IT-BPM companies that applications for office spaces in Metro Manila will no longer include tax incentives.

POGO office tenants “don’t mind” tax incentives as long as they can occupy space.

“Within Metro Manila, POGO is seen to take up 450,000 sqm. by the end of the year,” Leechiu said.

The offshore gaming industry has so far generated 354,000 jobs, most of which are filled by mainland Chinese, Leechiu noted.

The Philippine government’s move to tax Chinese workers in the country will be “just another expense” for POGOs, he said. “They have enough margins to cover for that.”

In a report, the property consultant said offshore gaming has become the fastest growing industry in the country’s office market since 2016 – taking up substantial space in Bay City, Makati City, and Alabang.

Outside of Metro Manila, POGOs have expanded to Laguna by taking up 46,000 sqm of office space, as well as 37,000 sqm in Cebu City, 34,000 sqm in Pampanga’s Clark. and 13,000 sqm in Cavite.

“It will continue to take up space in other cities with the completion of a range of infrastructure projects,” the LPC report noted.

Ongoing infrastructure developments under the Duterte administration’s flagship “Build, Build, Build” infrastructure program has already turned Clark into the most favorable district north of Metro Manila for both POGOs and IT-BPM firms, according to the report.

Clark has accounted for 23,000 sqm of office take up in the first half of 2019, second only to Cebu which absorbed 68,000 sqm.

In relation to the government’s move to encourage the expansion of IT-BPMs in the provinces, the report also noted the approval of PEZA spaces outside of Metro Manila has been slow.

From now up to 2023, the supply is estimated to reach 280,299 sqm.

Only 21% of that or 59,631 sqm have been approved by PEZA, while under process is 47% or 131,692 sqm.

According to LPC, 32% or 88,976 sqm has not applied for PEZA accreditation. —VDS, GMA News