Demand from outsourcing firms lifts property sector as POGOs flee

THE property sector has seen increasing interest from the outsourcing sector since the fourth quarter last year, helping cushion the impact of the exodus of Philippine Offshore Gaming Operators (POGOs).

Leechiu Property Consultants (LPC) said the information technology and business process management (IT-BPM) sector led office property demand in the fourth quarter, posting 35,000 square meters (sq.m.) or 38% of demand.

The company said that it received a number of inquiries, as well as requests for site inspections and meetings from the IT-BPM sector, with most negotiations approaching finalization in the next few months.

LPC expected at least 23,000 sq.m. in transactions at least for office space in February, bringing the projected total of 77,000 sq.m. for the first quarter.

“The announcement of forthcoming vaccines has given everyone a fresh boost of hope. We’re seeing faster decision making among IT-BPM firms as they lay out plans for expansion not only in Metro Manila but also in the provinces,” LPC Associate Director Mikko Barranda said.

“We project that many of these negotiations are being finalized now or will be closed in the coming months.”

Locators are interested in spaces in Iloilo, along with renewed interest in Cebu and Pampanga, he said.

POGOs, which accounted for a significant demand in office space in 2019, posted no transactions since the start of the second quarter last year due to new tax regulations and the travel ban declared to contain the coronavirus pandemic. POGOs vacated 330,000 sq.m. of space from then until January this year.

But a Supreme Court decision in January on the tax guidelines may have stopped the POGO exodus.

“POGOs still maintain a significant presence in the Philippines. Perhaps by next quarter, we will know if they will start expanding again and contributing to the recovery of the property market in 2021,” Mr. Barranda said.

Almost half of those vacated spaces, LPC said, are those registered with the Philippine Economic Zone Authority (PEZA), which are “keenly desired by the IT-BPMs.”

“We foresee that those PEZA spaces will be back-filled by BPOs,” Mr. Barranda said. — Jenina P. Ibañez