POGO comeback to drive up office space occupancy

CEBU, Philippines —  The expected comeback of Chinese online gamers through the Philippine offshore gaming operator (POGO) is seen to drive office space occupancy from a two-year slump.

According to David Leechiu, president of Leechiu Property Consultants, despite headwinds in higher taxes issues and pandemic related concerns, POGO companies are starting to reopen in the Philippines.

This development, Leechiu said would push the faster recovery of office leasing sector, coupled by the companies’ decision to return to office policy.

There is quite a bit of office space in the market today that tenants are willing to see but we are on a wait and see stance for this excess capacity to be absorbed... but definitely we are on the way back to the pre-Covid level,” said Leechiu in his recent visit to Cebu.

He said the office leasing industry is now seeing an early stage of recovery particularly in POGO sector. In Manila for instance, there are companies that have already reopened.

“The tax disputes of the government plus the immigration policies that prevented the labor market of the Pogo sector to come back to the Philippines were very controlled but now they are coming back,” Leechiu said citing that the same trend is also happening in Cebu.

Those buildings or office spaces left vacant at the onset of COVID-19 are now slowly filled up.

He said Philippines has always been a favorite offshore hub for online gaming operators, especially the Chinese nationals.

The Duterte administration paved the way for the entry of POGO investors to the Philippines.

However, many Pogo operators, which employ mostly Chinese nationals, closed up operations in the Philippines due to higher taxes and pandemic-related travel restrictions.

Prior to the pandemic, the industry occupied 1.3 million square meters (sq.m.) in office spaces. Since 2020, POGO left about 500,000 square meters of office spaces vacant.

Leechiu, a renowned real estate industry authority, said the POGO market may have been restrained for now, but from what he observed “it is going to improve.”

He admitted that there are still a few issues that need to be addressed in terms of bringing back the POGO operators to the Philippines, but because operators’ like to locate here compared to other locations, “I think they will find a solution to come back.”

In 2021, the Bureau of Internal Revenue (BIR) collected a total of P3.91 billion in taxes from Pogo last year.

Prior to the pandemic in 2019, the Philippines collected P14.28 billion in taxes from POGO operations.