Offshore gaming expected to continue growing
Offshore gaming is expected to continue growing in the Philippines and further push demand for office space.
Industry sources said the Philippine Amusement and Gaming Corp. (Pagcor) has issued 45 Philippine Offshore Gaming Operation (POGO) licenses and is expected to issue more because of strong demand.
Megaworld senior vice president Jericho Go said demand for POGO office space has indeed been growing.
Property and real estate expert David Leechiu, CEO and president of Leechiu Property Consultants said the growth of this segment is making up for the softening demand from the business process outsourcing (BPO) industry.
Current demand for office space created by online gaming is pegged at 125,000 square meters as of the third quarter and is quickly catching up with BPO industry demand which registered at 268,000 sqm. over the same period. Growth will continue, Leechiu said. He said robust growth of the online gaming segment would push demand for office space for the year to 750,000 sqm, up 19 percent from the 2016 figure despite weakening takeup from BPOs.
In 2016, online gaming transactions registered at 56,700 sqm. It has since more than doubled with firms in this space preferring to be in the Manila Bay area and collectively accounting for 65,000 sqm., followed by Makati City at 27,000 sqm., Bonifacio Global City at 21,000 sqm. and Alabang-Las Pinas, 14,000 sqm.
“Metro Manila CBD transaction rates are at an all time high,” Leechiu said.
He said 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,” he said.
As for other segments of the market, Leechiu said the industrial market is experiencing a fresh surge of activity with local and foreign investors looking for industrial space and standard factory building sites mostly in the Calabarzon area.
This is due to its accessibility to international ports and infrastructure. Sustained demand for new warehouse space and the high occupancy rate of existing warehouses are also pushing up lease rates for warehouses.
Similarly, the outlook for the Philippine retail segment is positive with store-based retail sales still heavily responsible for double digit growth up to the end of the decade.
Malling will also remain strong despite the growth of e-commerce in the Philippines, which is expected to experience a 34 percent annual growth over the next 10 years.
“This is in stark contrast to the US where an oversupply of retail space has prodded the demise in the next five years of over 20 percent of shopping malls,” Leechiu said.
He said the Philippines is far from being in an oversupply situation.
The retail gross leasable area per capita of the US is almost 15 times bigger than that of the Philippines,” he said.