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An already strong Philippine real estate industry continues to get stronger. Perhaps it can be attributed to the current administration. Only time will tell however if this may truly be attributed to its influence.
There is a distinct segment in the Bay Area real estate market. They are the Philippine Offshore Gaming Operators, otherwise more popularly known as POGOs. This group has been responsible for the robust rise in demand for residential properties and office space in the area. Their entry has also created more jobs for Filipinos and has increased economic activity in Metro Manila. Real estate developers and other types of businesses have taken notice of the future opportunities the POGO could bring.
The arrival of new players
The real estate industry was already enjoying healthy support coming from a variety of sectors. For office space, this came from Knowledge Process Outsourcing (KPO) firms, Business Process Outsourcing (BPO) companies, and traditional businesses. On the other hand, Overseas Filipino Workers (OFW), affluent local investors and foreign buyers kept the residential market surging.
In August 2016, the real estate market would receive an added boost. This is when the Philippine Amusement and Gaming Corporation (PAGCOR) released its Rules and Regulations for Philippine Gaming Operations. It paved the way for POGOs to set up their businesses in the country.
There were, however, requirements before an applicant may be issued a POGO license to operate. One of these was the minimum of 10,000 square meters of office space that had to be leased. This was to house the main components of the business. Among them are the tables where the dealers of online games would conduct their live streaming activities from. Complementary to this is the necessary back office support.
POGO Bay Area real estate market
The preferred base of operations by POGOs is the white-hot Bay Area. It has been the site of many notable developments throughout the decades and has gone through multiple name changes. Some of these were Boulevard 2000, Manila Bay Freeport Zone and most recently Bay City.
It is a huge tract of land to the west of Roxas Boulevard roughly consisting of 750 hectares of prime property. The different districts are spread out across the three cities of Manila, Pasay, and Parañaque. Located to its northmost portion is the Cultural Center of the Philippines Complex. This is immediately followed by the Financial Center Area. The next are Central Business Park I-A, I-B & C. Its southernmost location is the 173-hectare Asiaworld property.
Located in Central Business Park I-B & C is PAGCOR’s flourishing 40-hectare Entertainment City. It is within its borders where some of the country’s leading integrated resort and leisure destinations are found. Among them are the following:
- Solaire Resort & Casino
- City of Dreams Manila
- Okada Manila
- Westside City Resorts World
- NayonLanding (opening 2022)
These have been beacons for the POGO industry to build around though there are other reasons for locating here. There is the proximity to the Ninoy Aquino International Airport and multiple residential options for its growing number of employees. They are a combination of local residents and foreigners, mostly hailing from mainland China. Bay Area’s accessibility combined with multiple residential, office, retail and leisure options make it an attractive option indeed.
Office space take up
There are 56 PAGCOR approved POGOs operating in the country as of December 2018. More than double the 25 licenses the gaming authority initially planned to issue in 2016. This totals to at least 560,000 square meters of office space leased. The actual number of course, is definitely higher than this rough estimate. There are POGOs who require more than twice or thrice the prescribed minimum.
Back in September 2018, managing director Michael McCollough of KMC Savills Inc. already disclosed a higher figure. He stated that POGOs have been responsible for an office take-up of about 800,000 square meters since two years prior.
There are some office spaces dedicated to POGO use in the Bay Area. Examples are the Parañaque Integrated Terminal Exchange (PITX) and the Double Dragon Plaza. There are however other POGO ready buildings in the Philippines not only in Metro Manila but in the provinces as well.
Colliers International reported in July 2018 that POGO office space take up accounted for 20 percent in Metro Manila after the second quarter of last year. Bay Area’s Gross Leasable Area (GLA) at the end of 2017 was already at 400,900 square meters. This is seen to further increase to 930,000 square meters by 2021. It will allow more space for POGOs to be leased. This could likely push the rental rates well beyond the Php700 to Php1,500 per square meter mark.
As a necessary aspect of these new businesses is housing for its employees both local and foreign alike. The SM Development Corporation (SMDC) currently represent the bulk of the Bay Area’s residential inventory through its projects. These are its Sea Residences, Shore Residences, Coast Residences, and S Residences developments.
There are other property developers however which have contributed or are contributing to supply the residential requirements of the Bay Area real estate market. To mention a few are:
- Anchor Land – Monarch Parksuites (2017)
- Robinsons Land – Radiance Manila Bay South (2018)
- Double Dragon – DD Meridian Tower (2020)
- Federal Land – Palm Beach West Baler Tower (2022)
POGO Chinese workers were pegged at about 300,000 by gaming analysts late last year. Housing these employees would be a challenging task, especially when other nationalities and local residents are included. Not all would be located in the Bay Area, however, there is a good chance that a significant number of them will be.
Colliers International noted that vacancy rates dropped to 12.9 percent during the second quarter of 2018 from 14.8 percent in the first quarter. This provides substantial evidence that there is healthy demand despite new units being supplied to the market. It further recommended that more units be completed by the close of the third quarter last year. Colliers also advises property developers to consider being flexible to the residential requirements of POGO companies.
As an additional incentive to live in the Bay Area, the SM Mall of Asia provides a large chunk of retail and restaurant options for potential residents and visitors. These selections will further be expanded by the projected completion of Ayala Land’s Ayala Mall Bay Area in 2019.
Guiding future decisions
PAGCOR reported an income of Php3.9 billion coming from POGO tax revenues back in 2017. Its present Chairwoman and CEO Andrea Domingo estimates this figure to double for 2018. When coupled with real estate sales and leased space, POGOs undeniably contribute to the economic growth of the country.
Despite this remarkable progress, it is admirable that the Philippine government is taking clear steps towards the Bay Area’s sustainable development and management. It signed a Memorandum of Understanding with the government of Netherlands last year, particularly for this purpose. The two bodies are to jointly create a Manila Bay Sustainable Development Master Plan to guide prospective strategies and projects in the Bay Area.
Just recently, over 5,000 people participated in the successful clean up of Manila Bay. Hopefully, the economic progress brought about by POGOs and other businesses along its expanse will also support its environmental preservation.
Sources: ABS-CBN News, Businessworld, NEDA, Colliers, Inside Asian Gaming, Businessmirror, Philippine Star, Philippine Primer, Philippine Reclamation Authority, PAGCOR