The Philippine office market has continued to grow during the pandemic “making it unique in the world,” according to real estate firm Leechiu Property Consultants (LPC) in a recent study on the performance of the office, residential, and tourism sectors in the first half of 2020.
From the first to the second quarter of 2020, new leases increased by about 50 percent or 77,000 square meters (sqm) with 42,000 sqm. absorbed by BPO firms, also known as information technology-business process manufacturing (IT-BPM) sector.
Cebu was the single biggest recipient of demand at 40 percent.
Meanwhile, Philippine Online Gaming Operators (POGOs) and other companies have cut back resulting in a higher 8-percent vacancy rate. A total of 89,000 sqm. were vacated, with POGOs accounting for 54 percent and IT-BPM at 12 percent.
“Tax regulations and movement restrictions curtailed POGO growth and, in some instances, led to contraction,” LPC said. LPC reported a total of 234,000 sqm. of new leases, and 89,000 sqm of vacated spaces, resulting in a net absorption of 145,000 sqm.
LPC chief executive officer David Leechiu said “the Philippine office segment has not yet entered a point of contraction” and observed that the IT-BPM and POGO sectors will continue to be two major pillars of growth.
Of the 482,000 sqm. live requirements covering the second half of the year, 68 percent are from the IT-BPM and POGO sectors. Compared to the first half 2019, take up decreased by 74 percent, prompting LPC to recalibrate its total office demand forecast to hover at 600,000 to 800,000 sqm. by year end.
Leechiu recommended more support for IT-BPM and POGO sectors as these are the fastest-growing job generators. “The sustained growth of these sectors will allow us to bounce back from this pandemic swiftly. We need as many employers as possible to help our economy,” he said.
In the residential sector, the Metro Manila condominium market remained active despite the pandemic. The upscale P7-million to P12-million segment registered sales, partially making up for declining revenues from the middle-income bracket P1.4 million to P12 million, which had been affected by OFW displacements and local job losses.
Domestic tourism is expected to facilitate the recovery of the industry in the coming months, as various surveys showing top destinations will be in Luzon, those accessible by land travel. — PNA