News release

POGOs to overtake IT-BPM as a major real estate driver in 2020 – JLL

Premier real estate services firm JLL Philippines shares 2020 market outlook

February 07, 2020

2020 will continue to be a positive year for the Philippine real estate market despite headwinds, with the Philippine offshore gaming operators (POGO) industry overtaking the IT and business process management (IT-BPM) industry as the main real estate driver.

JLL Philippines—the country’s premier real estate services firm—shared its 2019 market overview and 2020 outlook during its first Know the P.O.I.N.T. (Predictions, Opportunities, Insights, News and Trends) for the year, with Janlo de los Reyes, JLL’s Head of Research and Consultancy, spearheading the discussion. The event was held in partnership with the IT and Business Process Association of the Philippines (IBPAP).

Contributing to the exchange were Michelle Perlas, Common Ground’s Head of Real Estate; Sam Peterson, Loc&Stor 24/7’s founder; and JR Yujuico, Point Blue’s CEO. They shared their insights on the conception and evolution “World of COs” or co-working, co-storage, and co-living sectors, respectively.

Aside from the continued momentum of the online gaming industry and its effects to related sectors, the real estate market will also be defined by other prominent factors such as the demand for sustainability, government policies, and emerging lifestyle trends and technology.

Online gaming to maintain momentum, demands shift to emerging markets

Office take-up of POGOs has been increasing since 2017, growing at a faster pace than the IT-BPM sector. POGO growth rate was at an annual average growth rate of 61% from 2017 to 2019 while IT-BPM grew at a slower 36% for the Metro Manila real estate market, which demonstrates the slowdown of IT-BPM occupiers in terms of expansion plans or entry to the Philippines.

However, IT-BPM demand is still stable and will remain the leading real estate demand driver in Metro Manila, mainly due to developments in the POGO industry in 2019, including government restriction of new applications, crackdown on illegal Chinese online gaming activities, and rise in tax collections.

Landlords in Metro Manila have taken prudent measures against any adverse effects of this crackdown by limiting its office space offering to POGOs.

This year, these supply constraints and policies will shift POGO office space demand to periphery areas of the metro and other key cities in the country. In fact, giant POGO hubs are already in place in Cavite City and Angeles City, Pampanga to accommodate the industry movement.

“With the office space demand shifting outside of Metro Manila come other real estate opportunities, including residential, hospitality and retail,” said Janlo de los Reyes, JLL Philippines’ Head of Research and Consultancy. “POGO employees take up hotels as an alternative to housing, driving up hotel occupancy. Similarly, housing requirements drive up sales take up, selling prices, and rents of mid-segment developments.”

Residential prices to grow at a slower pace

While 2019 saw the residential sector reach historical highs, JLL projects uneven performance for 2020. Residential prices will grow at a slower pace with an annual average growth of 3.1% in Makati and Bonifacio Global City Markets.

“Upscale and low-end segments will maintain their stable performance while the middle-market becomes more competitive,” said de los Reyes.

He said that the sale and lease demand from high-net worth individuals and expatriate employees in the middle and upscale market are expected to remain solid and is likely to continue propping up residential values.

“However, the peaking prices and rental rates mainly in the middle segment may temper local appetite and push local demand towards the periphery of key business hubs where price points are more competitive,” he continued. “Affordability is key to sustainable growth.”

Demand for resiliency and sustainability

Sustainable or “green” buildings have gained prominence in 2019 and will continue to be so in 2020, JLL forecasts, citing an increasing importance of sustainability and resiliency in real estate decisions.

“A lot of developers are including sustainability as part of their core values, and they are incorporating sustainable features in their upcoming projects,” said de los Reyes.

Average vacancy rate of green buildings in Makati central business district is 3.99% while non-green buildings is at 6.27%, showing a preference and higher demand for green buildings. Because of this, monthly rent per square meter in green buildings in the city has gone up, ranging from PhP 950-PhP1,900, while non-green buildings ranging from P850 to P1,650.

Laws to re-shape the narrative of real estate

De los Reyes also cited several government policies that will shape the real estate market in 2020.

In 2019, uncertainties in policies have impacted the industry. The crack down on POGOs affected the movement of real estate industry, and the Corporate Income Tax and Incentives Act (CITIRA) and the Philippine Economic Zone Authority (PEZA) moratorium weighed down the IT-BPM sector, citing a 16% dip in the investment pledges from PEZA.

But for 2020, de los Reyes said that the recent developments in CITIRA, along with policies concerning real estate investment trust (REIT) and retail trade, will positively affect the real estate industry.

“CITIRA, which used to be one of the hurdles of investors in the Philippines, has now been refined. It can better address the concerns and needs of investors, including the elimination of risks of massive unemployment and/or exit of foreign manufacturers and IT services,” he said.

He also mentioned REIT companies and amendments in the retail trade liberalization act to bring opportunities for investors who want to invest in the Philippines.

“REIT vehicles are expected to have robust performance in capital raising, supported by the expected low levels in interest rates,” he said. “Meanwhile, the government is currently drafting changes to the retail trade liberalization act to ease entry of foreign brands and investments.”

Lifestyle trends redefining real estate

JLL’s Know the P.O.I.N.T. event touched on co-living, co-working, and co-storage, hot sectors which are experiencing an upswing in the country and redefining the real estate market.

Lizanne Tan, JLL Philippines’ Head of Commercial Leasing, and Paul Ryan Isip, JLL Philippines’ Head of Capital Markets, talked about co-working and co-living, respectively, to complement the insights of Perlas, Yujuico, and Peterson.

Tan said co-working is gaining momentum in the Philippines as more organizations are seeing the benefits of this setup, and co-working space players are continuously expanding to match the demand. More than 80% of co-working spaces are located primarily in central business districts such as in Makati and Taguig.

“Co-working will continue to be sustainable because it cuts through all segments, from freelancers and start-up enterprises, all the way up to big organizations,” she said.

Isip, on the other hand, said that co-living has become a brought about by the rising prices of condominium units and transportation conditions around business districts. “Filipinos are starting to appreciate the convenience, cost, sense of community of co-living setups. In fact, vacancy rates are usually below 10% due to demand of young professionals for co-living spaces.”

“Overall, the Philippines will be a good investment destination for 2020 as investment appetite from both local and foreign players continue to grow,” said Isip. “JLL, as a premier real estate services firm, will remain steadfast in providing end-to-end real estate needs of companies to help them adapt to the fast-evolving market for 2020 and beyond.”

JLL Philippines regularly holds its knowledge-sharing event, Know the P.O.I.N.T., to discuss the trends and opportunities presented by the previous quarter. To know more, follow JLL’s social media pages on Facebook and LinkedIn.


About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of more than 93,000 as of September 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit