Not Looking too Good

Here are some developments in the RE sector that may affect my previous forecasts.

First, the Senate Ways and Means Committee (SWMC) has signed the committee report recommending the ban of POGOs. The recommendation, however, is still up for further deliberation. They will need to discuss whether it's an immediate ban or a slow (3-year) phase-out.

Based on estimates, POGO operators currently occupy roughly 400,000 sqm (or 3% to 5% of total office space in NCR). If the POGO ban pushes through, office vacancy rates will bounce back to >20% territory. Moreover, if this happens, what would happen to the condos in the Bay Area, which (I believe) rode on the presumption that POGO operations would remain?

Second, the upcoming risk of artificial intelligence (AI) replacing call center agents is real. Approximately 70% of our BPOs comprise "lower-value" voice segments–which AI can easily replace.

These two developments do not bode well for the office sector and, consequently, RE prices in general.

Nice to know:

The SWMC is a committee that tackles revenue generally, taxes and fees, tariffs, loans, and other sources of revenue. Senators who have signed the recommendation are:

1. Gatchalian

2. Legarda

3. Villanueva

4. Pimentel III

5. Dela Rosa

6. Ejercito

7. Poe

8. Tulfo

9. Cayetano

10. Hontiveros

Those who did not sign the recommendation are:

1. Angara

2. Binay

3. Escudero

4. Go

5. Lapid

6. Marcos

7. Tolentino

8. Villar