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Tuesday, February 27, 2024

POGOs pullout seen to shake real estate

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A business group is worried that a sudden exit of Chinese-owned Philippine online gaming operators may shake the local property sector.

The Philippine Chamber of Commerce and Industry said a mass exodus of POGOs would not only depress the growth of the real estate sector but also strip the Philippine economy of additional revenues.

“The amount of money leaving China is worth 100 billion renminbi a day.  This is about P700 billion in Philippine money. This money goes to Southeast Asian countries were POGO is a legal activity. The Philippines could easily account by as much as P7 billion from among ten countries in Southeast Asia hosting POGO operations,” said PCCI chairman emeritus and former Philippine Stock Exchange president Francis Chua.

POGO operators and Chinese businessmen emerged as the single biggest lessee/buyer of space especially in the Bay Area where entertainment resorts and casinos have risen.

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Office supply data from KMC Savills show that Chinese POGO operators took up 76,000 square meters of office space or half of the new supply in the Bay Area last year. However, the take-up was slower compared to 166,000 sqm in 2017.

Rental rates for the Bay Area, where most POGO companies operate, continued to outperform other property submarkets with another double-digit growth of 11.6 percent to P833.7 per square meter a month this year.

Expectations for the sustained real estate growth in the Bay Area are now uncertain after China made known its stance against POGO operators.

“In the Philippines, POGO is legal, but in China it is not. The only thing the Chinese government can do is to clamp down on those engaged in this business. Those who won’t stop [operating] will be put in a blacklist. If they go back to China, they will be barred from leaving their country. Right now, real estate is booming because of these POGO people. The good side is that, when they leave, our real estate will be reasonably priced again. Filipinos can afford to buy property spaces once prices stabilize. The bad [thing] is that growth of the real estate sector will slow down. Growth may still be there but not as fast as right now,” Chua said.

There are about 200 POGOs in the Philippines employing close to 200,000 people, most of them Chinese. About 61 of the POGO entities are operating at Philippine Economic Zone Authority-accredited buildings.

The PCCI believes that aside from the real estate sector, the tourism sector will also feel the pressure as restaurants and malls frequented by the Chinese nationals will miss out on opportunities.

“Anything that is related will be affected. What I’m saying is that a certain percentage of our economy which could be minimal will be hit due to this. As far as our service export is concerned, the major money comes OFWs. Then, the second used to be contact centers or the BPO industry. But with the rising popularity of POGOs, it seems possible that BPO and POGO could share in the second slot,” Chua said.

Before POGO turned up in the Philippines, the BPO sector had dominated the office space take-up, accounting for about 70 percent of the new stock.

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