POGOs lead drop in property rentals from April-June

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Metro Manila (CNN Philippines, August 3) – Office space rentals managed to grow by half despite COVID-19 lockdowns from April-June, against some discontinued leases largely due to offshore gaming firms closing shop, Leechiu Property Consultants said in its latest report.

The local property scene saw sustained expansion during the first semester, with the Information Technology and Business Process Management or IT-BPM segment leading the take-up of commercial space at 42,000 square meters. This is more than half the 77,000 sqm of new leases signed between April-June. 

Cebu accounted for 40 percent of the demand, followed by Bonifacio Global City in Taguig, the Ortigas area between Mandaluyong and Pasig cities, and Iloilo. However, new lease agreements finalized so far are just one-fourth of what was signed during the same period in 2019.

Leechiu said there was no demand from Philippine offshore gaming operators (POGOs) the past few months, a reversal from leading leases in 2019.

RELATED: 30-day grace period for rental fees kicks in early for businesses that reopened during lockdown – DTI

Overall, 8 percent or 89,000 sqm of commercial spaces have been vacated as of June, with POGOs accounting for 54 percent. By location, nearly half were in Quezon City while 21 percent involved offices in Makati.

The consulting firm attributed the pullouts to tax regulations and movement restrictions which "curtailed POGO growth."

The Bureau of Internal Revenue required POGOs to pay all of their unpaid taxes from April and earlier before they are allowed to resume operations amid the COVID-19 pandemic, on top of practicing minimum health standards.

RELATED: Villanueva says most POGOs operate despite not paying taxes

The property firm batted for more support to the IT-BPM and POGO sectors, saying they continue to provide more jobs.

"The sustained growth of these sectors will allow us to bounce back from this pandemic swiftly. We need as many employers as possible to help our economy," the report read.

Leechiu said it expects an additional demand for 482,000 sqm of commercial space, still led by these industries. It added that POGOs should be back in the scene by September.

Meanwhile, the real estate consulting firm recorded a decline in revenues from middle-income residential sales, against an increase in the upscale segment for homes worth ₱7 million to ₱12 million. All other properties saw declines, with lower middle-income homes hurt the most by unemployment and job displacements of overseas Filipino workers.