MEGAWORLD Corp., the property arm of tycoon Andrew Tan, remains bullish on expanding its office space portfolio over the next three years despite reports that the business process outsourcing (BPO) industry is holding off expansion plans due to security risks.
“We would like to reiterate to our stakeholders that Megaworld remains bullish in expanding our office portfolio across all our townships in the next three years,” Megaworld Senior Vice President Jericho Go said at a news conference in Taguig City.
“Our country is in the midst of a strong and sustained economic growth. We want to tap every opportunity out there so there is no reason to slow down our office developments,” he added.
Earlier, Leechiu Property Consultants President and Chief Executive Officer David Leechiu said BPO firms have delayed expansion plans due to security risks such as the crisis in Marawi, the threat of an expanded martial law, recent earthquakes, and the likelihood of higher taxes.
BPOs were said to have accounted for 41 percent of office take-up as of the third quarter of 2017, a 24-percentage point drop from the 65 percent level recorded a year ago.
“Aside from BPOs, we also see growth in traditional offices as well as back office and support offices, and facilities providers for online gaming operators,” Go said.
He added Megaworld remains optimistic that it will be the first real estate developer in the country to reach 1 million square meters (sqm) of office space inventory by year-end.
The company currently has a total of 888,500 sqm office space and another 111,500 units fresh offices targeted to be completed before the end of the year, located in McKinley Hill in Taguig, Southwoods City in Laguna, Davao Park District in the province of Davao, and Iloilo Business Park in Iloilo Province.
POGOs a bright spot for growth
Megaworld said Philippine online gaming operators (POGOs) are taking up 80,000 sqm of office space for their back office and support operations such as information technology and technical support, customer service and financial services. The sector also leases office space, allowing them to sub-lease ready offices equipped with the required workspace set-up, supplies, furniture, and fixtures for these operators.
“We are the first, if not among the first, to see the potential of this segment in office rental,” Go said, referring to POGOs. “While only 8 percent of our total inventory caters to POGOs, we continue to see a bright spot for growth in this segment.”
“When we reach one million sqm, it will be driven by BPOs still, while only 10 percent of it [will be]POGOs,” Go said.
Megaworld said 99 percent of its office projects are currently occupied and rental rate growth is at 5 percent minimum escalation. It said the development of more mixed-use projects is under way which means more opportunities to build more offices.