Despite POGO crackdown, office rents rose as high as 12.5%/year in Q3
The ongoing crackdown on Chinese offshore gambling operators has so far failed to dent the robust demand for office space in Metro Manila.
According to the New York-listed Cushman and Wakefield commercial real estate services company, steady demand kept vacancy rate for office space in Metro Manila’s commercial business districts at 4.2 percent in the third quarter.
“Average rents of Grade ‘A’ and prime office developments grew strongly by 12.5 percent year-on-year in Q3 2019 and are expected to remain on a growth path through 2019,” C&W Research said in a note sent to clients over the weekend.
According to an earlier, more detailed research by C&W, the average asking rent for prime office space in Taguig in the first half of 2019 already reached P1,227/square meter a month, still eclipsing Makati’s asking of P1,221.
Parañaque, around the casino area, was the third highest at P1,050/sqm monthly rent.
Quezon City, in a shift of the real estate fulcrum, now commands a higher rate than the Ortigas/Pasig area, at P849 versus P746.
Despite the POGOs’ less-than-stellar reputation and the racial backlash that they have generated, what is not generally known is that the country’s blue-chip landlords have been wholeheartedly embracing the wave of foreign money and foreign labor into their buildings.
According to C&W Research, no less than Ayala’s new Convergys tower along the country’s Wall Street has jumped into the business and leased out 1.4-hectare of prime space to an undisclosed offshore gaming tenant.
The chart below, from property consultant Pronove Tai, lists where the POGOs are concentrated, with Makati and the Manila Bay area neck and neck.
The foreign influx has quickly spilled over to Greenbelt 4’s luxury lane, reviving the fortunes of the Tantocos’ Store Specialists even with the rise of online shopping.
It is no surprise then that the mid-market Landmark department store in Makati across the street has gotten into the groove, playing Chinese songs in between early Christmas carols.
Gong Xi Fa Cai!
Fort hotel runs rings around BIR
Hotel builder Fort 1 Global has thwarted even BIR Commissioner Caesar Dulay in the agency’s continuing efforts to collect P1.7 billion in alleged deficiency taxes from the condotel builder. How did this relatively unknown developer did it? Simple. Fort 1 not only gave three office addresses to the Bureau of Internal Revenue, but also instructed its security guards and receptionists not to allow BIR examiners within their buildings to personally serve the notice of assessments to the Fort 1 corporate officers.
The strategy worked, since the Court of Tax Appeals last week dismissed the P1.7-billion tax case against the first business hotel in the Bonifacio Global City “for violation of due process.”
In fairness to Dulay, the case against Fort 1 was started since the PNoy administration, with then BIR regional director Nestor Valeroso overseeing the operations.
It was not explained in the judicial records why Valeroso had opted for the personal service, instead of serving the letter-demands by registered mail to Fort 1’s declared office addresses.
What also complicated the tax dispute was that Fort 1 had earlier obtained a favorable opinion from the BIR that Fort 1, as trustee under the then-novel concept of build-your-own condo from trustors/unit buyers, was not subject to capital gains, income, value-added, withholding, and documentary stamp taxes.
Ironically, Valeroso’s office and Fort 1 had been communicating back and forth about the tax issue even before the actual court case, except in the catand-mouse interlude when BIR personnel tried to personally serve the required formal assessment of notice.
“The fact that petitioner was able to protest the FAN is of no moment as the same does not cure respondent’s violation of petitioner’s right to due process... and...to contest the assessment before it was issued,” said Associate Justice Cielito Mindaro-Grulla, citing a 2018 CTA en banc ruling on Commissioner of Internal Revenue vs Ithiel Corp.
Fort 1’s filing a belated protest to the BIR assessment “does not denigrate the fact that it was deprived of statutory and procedural due process to contest the assessment before it was issued,” she added.
Fellow Associate Justices Juanito Castaneda Jr. and Jean Marie Bacorro-Villena concurred, voting also to cancel the final decision on disputed assessment issued by Dulay himself. E-mail: moneygoround.manila@yahoo.com