Online gaming now main renters of office space

Online gaming from offshore is booming in the Philippines. So much so that it now outpaces call centers in grabbing office space. Faster growth of such online casinos is expected. No wonder Metro Manilans keep asking if you know of entire buildings for sale or lease. Real estate developers and brokers are smiling. The trend may spread to other big cities.

Online gaming basically consists of card tables on which bettors overseas play through assigned local reps. Dealers from a separate firm, to ensure no collusion, deal out cards, monitored through 18 or so CCTVs. Bets are accepted and wins or losses reported via Internet real time by the independent reps. By strict computer screening, including of Wi-Fi connection and credit card, only overseas players are allowed. Avoided are protests from host communities about locals and minors able to bet. So unlike in those bingo parlors on every other street corner in some cities.

It used to be unheard of and unseen. Only in recent months did the Pagcor (Philippine Amusement and Gaming Corp.) start licensing legit operators. Since then online gaming surged from offshore, with over 50 local and foreign licensees forming a Philippine Online Gaming Operators.

More than government income from license fees and revenue shares, labor, food, and utilities sectors benefit. Biggest winner is real estate, at a time when business process outsourcing appears to have peaked.

From being the hottest renter of office space, info-tech-based BPOs slackened last year. Investment pledges declined 34 percent in midyear and to single digit by yearend. While call centers took up 350,000 square meters in new office space, it was 30 percent slower than 2016. The fall was due to “Artificial Intelligence” replacing some jobs, uncertainties in taxation, and US protectionist policies.

Offshore/online gaming was the unexpected savior. Operators gobbled up almost every inch of leasable space available. A report last month by Leechiu Property Consultants had it that office take-up by offshore/online gaming firms reached 230,000 square meters in 2017 – a 306-percent jump from just 56,000 square meters the previous year. Imagine 550 full-size basketball courts – that’s the 230,000 square meters. Would gaming overtake BPOs in space leasing this year?

Leechiu noted that the most preferred locations of offshore/online gaming firms are in Bay City. That reclamation between Manila and Pasay accounted for nearly 70 percent of their total office space leased in 2017. Next was Bonifacio Global City in Taguig, 16 percent, then Makati, 12.

Bay City’s attraction is likely its proximity to Pagcor’s Entertainment City and a favorably relaxed local business climate. Though BGC came in second, a proliferation there of unlicensed illegal gaming impostors is spooking building owners and lessors. Makati, once the location of choice, is losing luster. Not only online gaming but also BPOs are shunning it. Last year Makati got only a measly three percent of new BPO space take-ups, compared to Quezon City’s 23 percent, and Bay City and BGC’s 21 each. Could it be local taxes, red tape/corruption, congestion, poor urban planning? Whatever, Makati needs to get its act together, as the country’s premiere financial district, against the more aggressive cities.

Online gaming firms gravitate around brick-and-mortar casinos. Other cities that host casinos and with good Internet connection may attract real estate booms.

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Reacting to my column last Monday on the latest sea tragedy, ship industry men add one more question for transport regulators. I had asked the Maritime Industry Authority to disclose who certified as seaworthy the Mercraft-3 and crew. Naming MARINA officers who cleared the vessel design, passenger capacity, and crew aptitude would remind all of their accountability.

Shipping execs say that MARINA should also identify whoever approved Mercraft-3’s construction to begin with. There’s talk in Quezon province where the vessel sank that it was made of wood clad in fiberglass. Was the builder duly certified? MARINA has no guidelines for wood construction of fast craft. As far back as 1975 it already was supposed to phase out unsafe wooden hulls.

Five persons died and 11 seriously were injured when Mercraft-3 sank four days before last Christmas. Sailing to Polillo Island, its hull broke on hitting a metal buoy; the crew couldn’t contain the onrush of seawater. Sea tragedies strike too often, mostly due to MARINA negligence and corruption. How many more have to die or be maimed for life before it shapes up?

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