Philippine offshore gaming operators (POGOs) began downsizing in the third quarter of 2024 after President Ferdinand Marcos Jr. imposed a ban on their operations, according to a property consultancy firm.
“The POGO sector has begun to downsize in Q3 2024 after not experiencing any contraction in Q2 2024,” Leechiu Property Consultants said in a report Tuesday.
Leechiu Property said leasing demand declined 16 percent year-on-year in the third quarter of 2024, but overall transactions still grew 11 percent in the first three quarters to 900,000 square meters, fueled by the IT-business process management and traditional sectors.
The consultancy firm said POGOs accounted for just 8 percent of the nine-month leasing activity this year, with their limited uptake over the past five years exerting minimal impact on overall demand.
It said that while the POGO sector comprised 45 percent of total leasing demand pre-COVID, it had not been a major contributor to demand since 2020.
Office rents, however, have yet to recover from the pre-pandemic levels, particularly in areas where POGOs once thrived.
Rents in Bay Area/Pasay went down by 44 percent in the third quarter of 2024 to about P954 per square meter from P1,707 in the first quarter of 2020.
“Looking ahead to 2025, the projected annual office supply is expected to decrease by up to 50 percent and can expect to see office vacancy levels begin to drop,” Leechiu Property said.
Meanwhile, the Metro Manila condominium market faces a slowdown amid high inventory levels, prevailing interest rates and external risks that led developers to adopt a cautious approach before launching new projects, according to Leechiu Property.
It said that while demand for residential condominiums in Metro Manila stabilized at 6,885 units sold in the third quarter of 2024, new project launches declined by 39 percent to 2,145 units, the lowest since the pandemic.
“Inventory levels hit 67,600 units, the highest since pandemic and now at 29-month supply,” it said.
“Changing buyer preferences and rising interest rates have slowed demand for residential condominiums in Metro Manila. However, the market is poised for a rebound as inflation eases and interest rates decline, driven by anticipated further BSP rate cuts,” said Roy Golez, director of research and consultancy at Leechiu Property.
The recent Bangko Sentral ng Pilipinas interest rate cut to 6.25 percent is expected to ease lending conditions for both buyers and developers, it said. Additional rate cuts anticipated in October and December may provide further support for new property launches and sales activity, it added.
“Despite localized challenges, our outlook remains positive. In the short term, the confluence of economic factors will prevent any significant weakening in capital values. Looking ahead to the mid to long term, these factors position our market for a potential uptrend in the next two to five years,” said Tam Angel, director of investment sales at Leechiu Property Consultants.
