Offshore gaming overtakes BPOs as top office space demand driver: Leechiu

Jessica Fenol, ABS-CBN News

Posted at Sep 16 2019 02:48 PM | Updated as of Sep 16 2019 03:26 PM

MANILA – Office space demand for offshore gaming surpassed the business process outsourcing industry for the first time as take-up surged in the last 3 weeks following Cambodia’s directive banning online casinos. 
 
Demand from Philippine Offshore Gaming Operations (POGO) in Metro Manila reached 375,000 square meters for the first 9 months of the year, compared to BPO’s 294,000 sqm, Leechui Property Consultants co-founder CEO David Leechiu said in press briefing. 

Graph from Leechui Property Consultants

Nationwide demand from POGOs take up 386,000 sqm or 34 percent of the country’s total 1.1 million sqm for the first 9 months of the year, Leechiu said.

Commitment for office space in Metro Manila surged to 200,000 sqm in the last 3 weeks despite the suspension on the issuance of new permits imposed by the Philippine Amusement and Gaming Corp (Pagcor), Leechiu said.

Cambodia’s Prime Minister Hun Sen signed a directive last Aug. 18 to cease the issuance of online gambling licenses citing increased criminality as well as risks to security, public order and social order. 

Existing operators are also growing “aggressively” and are looking at locations outside the capital including Cebu and Clark, he said. 

“For the first time the POGO industry has overtaken the demand from the IT-BPM industry. The POGO sector has gone ballistic since 2 weeks ago when online gaming in Cambodia was exiting,” Leechiu said. 

Offshore gaming’s 470,000 workers are also generating higher salaries compared to the 1.4 million BPO workforce, data from Leechiu showed. Estimated yearly salary from the IT-BPM industry is at $7.5 billion (P400 billion), compared to $9 billion (P504 billion) from POGOs, Leechiu said, citing data from the Bureau of Immigration and the IBPAP.

Residential rental from offshore gaming is estimated to reach $680 million (P36 billion) a year, he said. 

The residential and office space market “will be ok” even if POGOs decide to leave the country as the BPO sector can “fill” the spaces left behind, he said. The Chinese government has earlier urged the Philippine government to ban POGOs and to punish companies involved in illegal recruitment of its nationals.

“I think China will do what it wants to do and needs to do regardless of other opinions. Can they shut this down anytime? Yes. Have they done it? No… If they disappear today, the BPO sector will just backfill that requirement,” he said. 

“Even if the POGO market disappears, the BPO market will absorb the excess capacity and that we should be ok. The BPO sector will grow and continue to grow because of the global need to do so,” he added.

However, POGOs pulling out of the country might affect the consumer sector with foreigners spending most of their salaries here, he said.

“They are contributing significantly to the consumer spending industry plus all the other things that benefit the local economy like cars. They’re the biggest owners of van fleets,” he added.

The Philippines, in the meantime, should “appreciate” the combined economic benefits from the BPOs, POGOs and the remittances from overseas Filipinos that keep the country one of the few nations with an “optimistic” outlook amid global risks, Leechiu said. -- with report from Reuters