The result of the upcoming elections and the relations between China and the Philippines may spell the difference in attracting the Chinese-backed Philippine offshore gaming operations (POGO), according to property consultant Colliers.
It noted two primary concerns for the return of the sector, taxation and ease of travel had been addressed by the government.
“What’s left is the level of comfort that China and the Philippines have with each other that can determine if POGOs can return to the country.
Their return will mean a significant drop in the office sector’s takeup until 2025,” said Dom Frederick Andaya, Colliers senior director for office services.
“Are they going to come back? There are three relevant issues with respect to that. The uncertainty of our tax system with respect to the POGOs.. has been resolved with the passage of the new law taxing the POGOs with 5 percent based on the gross gaming revenues. Number two, with improvement in the COVID-19 situation, we’re expecting travel to start to pick up. That’s going to help the industry,” Andaya said.
“Number three, and that’s the most important, is the level of tolerance of…China in terms of allowing their workers and their workers who work outside of China, say the Philippines, to operate online gaming or online gambling operations. The third one… the result of the Philippine election could tell us what’s going to happen,” he added.
Andaya said POGO firms have been a lynchpin of the surge in office space occupancy, cornering 1.3 million square meters (sq.m.) of space in three years of their entry into the Philippines. However, POGO now only occupies 680,000 sq.m. after the pandemic erupted.
“Over the course of two years, we saw them shedding almost 50 percent of their occupied space,” he said.
He added if POGO firms do come back, pegging the saturation point to its highest occupancy of 1.3 million sq.m, the office segment’s vacancy rate will drop to 12 percent from 17 percent by 2025.
Colliers projects this year’s vacancy rate at 18.9 percent sans POGO participation. The pre-pandemic vacancy, however, was less than 5 percent.
“A POGO comeback is good for the office market and the property market and economy in general,” he added.
