Property Developers Still See Office Demand Amid POGO Crackdown
Philippine property development companies said China’s plan to crack down on the Philippine offshore gaming operators (POGOs) will not affect the demand for office space, as POGOs only constitute a limited percentage of their overall client portfolio. Ayala Land, Inc. said POGOs account for less than 10% of their leasable office space. Commercial business group head Jose Emmanuel H. Jalandoni said there is still demand from BPO companies and traditional offices despite the high demand from POGOs, and they expect these sectors to continue to bolster their business.
Meanwhile, DoubleDragon Properties Corp. said POGOs constitute only 12% of the firm’s total leasable space this year. However, chairman and chief executive officer Edgar J. Sia II expressed worries that if BPO firms replace POGO tenants, the company may obtain only 14% yield on cost instead of the 29% it gets from POGOs, but explained that it is still more than double the company’s cost of fund, which currently stands at 6.2%. Experts said China’s move is expected to affect the office sector as POGOs have fueled the demand in recent years.
