The ban on Philippine Offshore Gaming Operations (POGOs) has dragged down Metro Manila's property sector, particularly the condominium and office markets, Colliers Philippines said.

Based on  Colliers' third-quarter  2024 report, the Metro Manila office market posted its first negative net take-up since 2021 due to vacated spaces by POGO companies.

By the end of 2024, Colliers projected that the vacancy rate to reach to 20.5 percent, driven by continued space surrenders from POGOs and the non-renewal of pre-pandemic leases. 

However, Colliers noted that the country’s financial hubs such as Makati Central Business District (CBD), Fort Bonifacio, and Ortigas CBD may recover more swiftly compared to secondary markets like the Bay Area, which face much severe effects due to higher POGO exposure.

The report also cited a decline in new office supply, with only 9,500 square meters completed in third quarter, a 52 percent year-on-year drop due to construction delays and muted pre-leasing activities. 

Despite this, demand from traditional firms and information technology and business process management (IT-BPM) sectors remains robust, particularly in provincial markets where expansion continues aggressively.

Rental rates in Metro Manila have also seen a marginal decrease of 0.6 percent quarter-on-quarter, with further declines expected in POGO-heavy areas.

However, rents in the primary CBDs are expected to remain stable or experience slight growth due to decreasing vacancy rates.

Likewise, the POGO exodus exacerbated existing challenges in an already sluggish Metro Manila condominium market.

As POGO employees vacate their units, particularly in the Bay Area, vacancy rates have climbed to 17.4 percent in the third quarter, Colliers reported.

This shift has intensified the surplus of unsold ready-for-occupancy (RFO) units, compelling developers to adopt a more cautious approach to new project launches.

Despite the central bank’s decision to cut interest rates, the immediate relief on mortgage rates has been limited, Colliers noted.

Developers are thus focusing on new strategies to stimulate demand, such as offering attractive payment terms, early move-in promotions, and emphasizing high-end amenities to draw potential buyers. 

The market remains under pressure due to elevated mortgage rates, high land values, and rising construction costs.

Moreover, developers are pivoting towards leisure-themed projects and golf communities outside Metro Manila, targeting regions like Ilocos, Palawan, and Cebu. 

These projects are designed to capitalize on the growing demand for resort-style living, appealing to both domestic and international buyers.

The substantial inventory backlog has also led to a reduction in the launch of new units, with a 61 percent year-over-year decline in pre-selling projects. The lower-to-upper mid-income segments remain particularly affected, accounting for 57 percent of the unsold inventory.