OFFICE VACANCIES following the departure of online gaming firms could be filled by expanding IT-Business Processing Manufacturing (IT-BPM) companies, making the industry a key barometer for a real estate recovery, Leechiu Property Consultants said in a report.
At a virtual briefing Tuesday, Leechiu Property Chief Executive Officer David T. Leechiu said companies involved in IT-BPM, an umbrella term for an activity also known as business process outsourcing (BPO), are expected to take up as much as 56% of the office vacancies, making BPOs once more the main market driver.
The industry’s expansion is expected to be fueled by global businesses restructuring their office arrangements during the pandemic and assigning more work to the outsourcing industry.
“By the fourth quarter, vacated spaces registered at 540,000 square meters (sq.m.), with 51% or 277,000 sq.m. attributable to Philippine Offshore Gaming Operators (POGOs) and 33% or 179,000 sq.m. (to) other players struggling to recover from COVID losses,” the company said in its report.
“Pipeline demand for 2021 or total live requirements is estimated at 300,000 sq.m.,” it added.
Overall, it said Philippine prime office demand was 381,000 sq.m. in 2020, with 69% of the total demand in Metro Manila. The remainder was in Iloilo and Cebu.
Of this total Mr. Leechiu said the IT-BPM industry accounted for 182,000 sq.m., marking the industry as one of the few viable markets for property developers.
According to the report, POGO-related vacancies led to foregone revenue of about P1.4 billion in markets like Makati, Quezon City, Ortigas, and Mandaluyong.
He said 82% of the vacant space is in Metro Manila, the preferred location for BPO firms.
“Developments in the last two quarters have created compelling opportunities for IT-BPM players. We are thus confident that they will continue expanding in the country which remains a leading outsourcing arena for global businesses now seeking to cut costs and recover from COVID losses,” Mr. Leechiu said.
Mr. Leechiu said Iloilo City has been attracting many IT-BPM firms, adding that it accounted for the largest share of new office transactions outside of Metro Manila in 2020, at 50,000 sq.m.
Meanwhile, the study also found signs of a recovery in the retail market.
It said 76% of ground-floor retail space to be occupied in the food and services industry.
The firm found that condominium units in Metro Manila are still in demand despite the pandemic.
“In 2020, 42,500 units were sold and another 12,000 units launched. With the news of the vaccine and a sustainable low-interest rate environment, developers look forward to more launches and a more active residential market,” it said.
The study also found that prices of lots in Tali Beach, Kawayan Cove, and Peninsula de Punta Fuego, all in Batangas, have increased between 20% and 71% since the pandemic, while demand for Tagaytay homes has also risen.
It projected the tourism recovery to be gradual, starting in destinations that are accessible by road from major markets, followed by those reachable by domestic air travel, and then those heavily patronized by international tourists.
“We have every confidence that the rollout of the vaccine in 2021 will create unprecedented market euphoria that will dramatically benefit the real estate industry,” Mr. Leechiu said.
“A confluence of factors — from record-low, long-term interest rates, to the country’s fantastic fiscal fundamentals that have resulted in good credit ratings, to newfound mobility and tourism opportunities from a massive injection of infrastructure projects — will ensure that,” he added. — Revin Mikhael D. Ochave