Megaworld sees improving prospects for office leasing

Megaworld Corporation is expecting stronger demand for office space next year despite concerns over the impact of artificial intelligence on the local outsourcing industry because of the easing of regulatory uncertainties that loomed over the sector.

In an interview, Megaworld Senior Vice President for Business Development and Leasing Jericho Go said he expects growth in leasing demand to come from both Philippine Offshore Gaming Operators (POGO) and the business process outsourcing (BPO) sector.

While demand the BPO sector eased, growth in the POGO sector has been faster in the last six months and Go noted that POGO may have accounted for about 50 percent of demand in the last semester.

He explained that POGO does not require tax incentives from the government and only needs office space to operate while the BPO sector has been hesitant in expanding due to uncertainty over the approval of incentives for new office buildings.

However, Go noted that the government has finally started releasing the papers of some office building projects that have been registered with the Philippine Economic Zone Authority.

“I think about nine projects has received their papers out of the reported 53 projects that were pending,” said Go. He explained that some BPO companies have held back orders for office space for their expansion because the incentives may not yet be in place when they plan to start operating.

Go said that, another concern of BPO firms was the plan of Congress to reduce incentives enjoyed by the sector under the tax reform package that is currently being hammered out.

“I think there is a general agreement now to support the BPO sector and the incentives will not be touched,” said Go.

With these uncertainties getting cleared up, Go said the BPO sector is poised for more growth adding that, despite the emergence of the POGO sector, office leasing industry “is still very much skewed towards BPOs.”