Online gaming to take up demand for office space
As the slowdown of inflow of Business Process Outsourcing (BPO) investments in the country becomes more apparent, online gaming is now seen as a potential saving grace for the real estate sector as it is projected to take up the demand for office spaces.
Real estate expert David Leechiu said in a briefing on Monday that the surging demand from online gaming is now expected to boost annual office take-up by 19 percent.
"Shored up by the robustly growing online gaming segment, demand for office space for this entire year is expected to grow by 19 percent to 750,000 square meters (sqm) from the 2016 figures despite weakening takeup from BPOs," Leechiu, who owns the Leechiu Property Consultants, Inc., told reporters.
A data from the Philippine Statistics Authority (PSA) showed that new investment pledges in the information technology and business process management (IT-BPM) sector reportedly went down by 34 percent year-on-year in the second quarter, while investment commitments in BPO sector particularly went down from R6.27 billion to R4.9 billion from April to June period.
All of these things, while BPO began bracing for the possible impact of artificial intelligence (AI), automation, and robotics to the sector.
Nevertheless, Leechiu is keeping his hopes high that the slowdown in the BPO sector is just temporary and that it will likely bounce back in the first quarter of next year.
"I remain confident that BPO will expand (in the country). This phase we have with them is temporary. AI has an impact but it's happening now in the small scale. Somehow, the slowdown in the industry is caused primarily by perception," Leechiu said.
Meanwhile, the current demand for office space created by online gaming stood at 125,000 sqm as of the third quarter of this year, quickly catching up with the demand from the BPO industry, which registered at 268,000 sqm. over the same period.
In 2016, online gaming transactions registered at 56,700 sqm. It had since more than double with firms in this space preferring to be in the Manila Bay area and collectively accounting for 65,000 sqm., followed by Makati City, Bonifacio Global City, and Alabang.
The office landscape, according to Leechiu, is also being redefined by flexible work spaces offering short-term lease agreements and significant savings in capital expenditures for lessors including multinational.
"The constant quest to increase the bottomline by controlling capital expenditure is reshaping the office industry. It is pushing BPOs to seek alternate locations outside Metro Manila, encouraging online gaming firms to try Manila, and driving corporates seeking less stringent lease terms towards flexible work spaces," Leechiu said.
Moving forward, the outlook for the Philippine retail segment is likewise still positive. This, even if online commerce is expected to grow by 34 percent annually over the next decade.
Leechiu said the situation in the country's retail market is in stark contrast with what's happening in the United States where an oversupply of retail space has triggered a slowdown in the shopping mall sector of the world's biggest economy.