MANILA, Philippines — A real estate firm found that despite the ban on Philippine Offshore Gaming Operators (POGOs), the office leasing market still expanded to 4% in 2024.
This translates to 1.1 million square meters (sqm) in transacted deals for 2024.
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“This expansion comes despite challenges such as the POGO ban, high interest rates, and inflationary pressures,” Leechiu Property Consultants said in a release on Monday, December 16.
The growth was primarily driven by government expansions, with a total of 122,000 sqm of recorded transactions.
Meanwhile, traditional offices lead the market, acquiring 492,000 square meters.
“Traditional office demand grew by 13% in 2024 compared to 2023. Following the POGO ban in July, no POGO-related office space demand was recorded in the year’s second half, highlighting a market shift toward more sustainable tenants,” the firm said.
However, the consultancy firm admitted that there were still contractions in the market due to the POGO ban.
The POGO ban caused a 65% contraction, but the firm said that IT and business process management (IT-BPM) either relocated or consolidated.
“Although vacancies remain elevated at 18%, supply and demand trends indicate that the market is shifting toward equilibrium, with clearer signs of recovery expected by 2027,” Director of Commercial Leasing Mikko Barranda said in a statement.
Before the ban, real estate investors were concerned about the impact of a complete prohibition on the industry, especially as legal POGO operators began pulling out of office spaces even earlier than the government's mandated deadline.
According to Leechiu Property Consultants, 80% of all realty transactions came from the traditional sector, which are typical, brick and mortar entities. Their deals primarily involved spaces under 500 sqm.
Meanwhile, the IT-BPM sector leased larger areas that range from 1,000 to 5,000 sqm.
“Metro Manila recorded 881,000 sqm of total leasing demand, with the Bay Area as the top-performing district due to government relocations. Outside Metro Manila, Cebu led with 113,000 sqm, representing nearly half of provincial demand,” the firm said.
The consulting firm said it expects the market to stabilize, with vacancy rates returning to pre-pandemic levels by 2030.
President Ferdinand Marcos Jr. announced the ban on POGOs during his third State of the Nation Address in July, giving authorities until the end of 2024 to ensure that all offshore gaming ceased operations.