POGOs now occupy a tenth of office spaces in Metro Manila

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Offshore gaming operators will continue to lead the take-up of office spaces in the next three years as they now occupy a total of over one million square meters, a property consulting firm says.

Metro Manila (CNN Philippines, November 28) — Offshore gaming companies based in the country now occupy roughly a tenth of available office space in Metro Manila, property consulting firm Colliers said.

In a report, Colliers International Philippines said POGOs (Philippine offshore gaming operators) occupy 1.14 million square meters of commercial space, leading the growth in leases acquired so far this year. Offshore gaming firms and their service providers have accounted for 37 percent of closed deals as of September, and will likely continue to expand.

"We remain optimistic that POGOs will continue to lead office space take-up over the next two to three years especially with continued efforts from lawmakers to legitimize their operations," said Joey Roi Bondoc, senior research manager at Colliers.

READ: POGO salaries outstrip call center wages in PH

A bill recently approved by a House of Representatives panel seeks to tax POGOs at five percent of their gross receipts, plus personal income taxes for foreign employees. This comes after a series of closure orders served by the Bureau of Internal Revenue to POGO service providers which have not paid the right taxes.

Colliers suggested landlords to help POGOs and outsourcing firms to "identify viable alternative sites outside Manila" amid worsening congestion in the capital, saying they should consider second and third-tier cities as sites for expansions.

The rest of the office space market remains driven by legal, engineering and construction, government agencies and flexible workspace operators — dubbed as "traditional" occupants. Still, the real estate management firm said POGOs outpaced these sectors to claim leases.

READ: POGOs seen to edge out BPOs as top PH office space takers by yearend – property consultant

The third-quarter rebound in economic growth, which improved to 6.2 percent versus April-June's 5.5 percent, should sustain the property market over the next three years. However, the expansion of other sectors could be upset by other factors.

"A slower domestic economy is likely to slow down the expansion of traditional and non-outsourcing tenants; and outsourcing firms (call centers and shared service firms) taking a wait-and-see stance due to uncertainty over the tax reform proposal of the government which intends to reduce tax perks that these firms currently enjoy," Colliers said.

It added that the sustained surge in private construction seen from July-September shows "strong appetite" for office towers, residential units, malls, hotels, and industrial parks nationwide.

The Department of Finance estimates ₱2 billion in monthly withholding taxes due from foreigners working in the POGO industry, on top of dues from company profits.