POGO crackdown efforts to raise office vacancies

CEBU, Philippines —  Cebu’s office supply is seen to face another glut challenge if the 175 offshore gambling firms will cease operations and deport about 40,000 Chinese workers.

According to Joey Roi Bondoc, Colliers Philippines associate director and head of research, Manila and Cebu specifically will likely suffer as these major cities are hosting these operations known as POGOs (Philippine offshore gaming operators).

“It will raise vacancies and lower rent definitely. We might see developers now paring down supply because of slower demand in the market,” said Bondoc.

A justice ministry official said on Monday that the Philippines will stop operations of 175 offshore gambling firms and deport about 40,000 Chinese workers as  part of a crackdown on the notoriously opaque online gaming industry.

The sector emerged in the Philippines in 2016 and grew exponentially, as operators capitalised on the country’s liberal gaming laws to target customers in China, where gambling is banned.

At its  peak, POGOs employed more than 300,000 Chinese workers, but the pandemic and higher taxes have forced many to operate elsewhere.

Record showed that the Philippine government generated P7.2 billion ($122.21 million) in 2020 and P3.9 billion last year in POGO fees alone.

Real estate consultancy Leechiu Property Consultants estimates that a complete exit of the POGO industry would leave vacant 1.05 million square meters (259 acres) of office space — a third of the size of New York’s Central Park — and P8.9 billion ($151 million) in foregone annual rent.

The sector employs 201,000 Chinese and 111,000 Filipinos, according to Leechiu’s data, which estimates POGOs deliver P190 billion ($3.22 billion) to the economy each year, a boon to the property and retail sectors. ($1 = 59.01 Philippine pesos.