If there’s any doubt that a POGO (Philippines Offshore Gambling Operator) exodus is happening, we need only look to the real estate sector to find out the truth. The Lobien Realty Group (LRG) is warning Metro Manila vacancy rates could nearly double in 2021, at the rate operators are currently leaving the city.
In a media briefing, LRG chief executive officer Sheila Lobien noted the city closed 2020 with an 8% vacancy rate. “We feel that in the next few months, this can be double digit 12 percent to probably 14 percent vacancy rate… because many office buildings are being vacated. The exit of POGO affected the market’s vacancy rate,’’ Lobien said.
There will be a huge knock-on effect from this to landlords. Rental rates are expected to drop anywhere from 25 to 30%. Lobien explained that current rates have remained high thanks to some crafty budget management by property owners:
“[Rates] have not reflected the decrease due to the POGOs’ contractual agreements of about a year’s worth of security and advance deposits, which protected the landlords’ rent income during the lockdowns and despite the numerous lease pre-terminations.”
Overall demand from the POGO sector took a noted dip in the previous year, falling from 36% of available supply to just 16%. The Business Process Outsourcing (BPO) have filled in the gap, representing 41% of demand, and soon to be getting much better rent agreements, by the looks of it.
The dramatic falloff of POGOs in the real-estate sector has yet to show up in Philippine Amusement and Gaming Corporation’s (PAGCOR) documentation. The regulator recently updated their list of licensees to reflect 51 operators, just 2 fewer than the previous month. Judging by the halving POGOs have seen in office space, the real number of survivors is more likely to be closer to the 34 approved to resume operation as of early January.