Online stockbroker Colfinancial.com said the planned banning of Philippine offshore gaming operations (POGO) in the country will have a dragging effect on the real estate sector.
Citing Leechiu Property Consultants, Colfinancial.com in an investors note said the exit of the POGO in the Philippines will significantly impact the real estate as POGO firms occupy around 1 million square meters of current office space.
Its exit will cause vacancy to rise to 29 percent from 18 percent and drag rents by 20-50 percent in key POGO hubs like the Bay area, Makati, Alabang and Ortigas/Mandaluyong.
The POGO exit likewise will result in P18.9 billion in foregone annual rental revenues, P28.6 billion loss in annual housing rent, P5.8 billion estimated loss in annual taxes, P9.5 billion loss in annual electricity cost and P952 million daily spending loss.
“A complete and abrupt exit of all remaining POGO players will undoubtably have a negative effect on the whole office leasing industry but the impact, direct and indirect, varies among office landlords,” Colfinancial.com said.
At the same time, it said the government’s decision to allow work-from-home arrangement for the information technology and business process management (IT-BPM) will have a long-term impact on business process outsourcing (BPO) firms’ future office expansion plans.
The Fiscal Incentives Review Board (FIRB) last week extended the work-from-home arrangement of IT-BPM firms registered with the Philippine Economic Zone Authority (PEZA) until December.
The FIRB also allowed PEZA-registered firms to shift their registration to the Board of Investments (BOI) to enjoy similar tax benefits as being registered with PEZA with the added flexibility of 100 percent work-from-home arrangement.
“However, one of the major advantages for registering with PEZA is its ease of doing business. PEZA is a one-stop shop for registered companies, exempting investors from LGU (local government unit) and other agencies’ permits,” Colfinancial.com said.
With the new government arrangement, local hiring will also be easier as an increasing percentage of the workforce prefers to work from home or some type of hybrid setup, it added.
“While this development is good for the BPO industry as it promotes growth and competitiveness, it may be negative for the office leasing sector as future demand for offices will decrease as more BPO firms adopt work-from-home setups by shifting their registration from PEZA to BOI,”Colfinancial.com said.
“We do not think that there will be a big trend of moving to BOI and cutting down current office sizes, especially for backroom operations that have high security protocols, but demand from future expansions and new entrants may be reduced,” it added.
