In mid-2024, the Philippine government announced a complete ban on offshore gaming operators (POGOs), adamantly claiming that the impact on the real estate market would be limited. Finance Minister Ralph Recto even promised that the government would assist 40,000 POGO workers in transitioning to new jobs to mitigate the industry shock.
However, a year later, reality has proven to be far more severe than official forecasts—office vacancy rates have soared to 19.9%, apartment market inventory is backlogged, developers are forced to slash prices by 30% to sell off properties, and the entire industry is experiencing an unprecedented "cold winter."
From Official Optimism to Market Collapse: The Domino Effect of the POGO Ban
Initially, the government and some analysts believed that the POGO industry, having significantly contracted post-pandemic, only accounted for 5% of the Philippine office leasing market, so the ban would not pose a systemic risk. However, this assessment overlooked the "high rent premium" effect of POGOs—even though their share decreased, POGO businesses typically paid rents above the market average and were concentrated in prime locations like Manila Bay and Alabang. Their departure directly led to real estate trusts like DDMP REIT facing a 51% gap in rental income.
The collapse of the POGO industry triggered a chain reaction:
Office Market: By early 2025, Manila's office vacancy rate had skyrocketed to 19.9%, with 31% of the vacant space resulting from POGO withdrawals and 32% from IT-BPM companies scaling down.
Residential Market: After the departure of POGO employees, apartment rents in areas like Manila Bay and Alabang plummeted, with some landlords reducing prices by 30% yet still struggling to find tenants.
Commercial Ecosystem: Restaurants and retail stores reliant on POGO employees' consumption closed down, and some Chinese investors urgently sold off properties to exit the market.
Multiple Crises Overlap: High Interest Rates, Oversupply, and Developer Confidence Collapse
The POGO ban was just the "last straw" that broke the Philippine real estate market, but deeper issues had already been lurking:
High Interest Rates and Inflation: The Philippine central bank maintained a tight monetary policy, causing mortgage costs to soar and sharply reducing housing demand.
Oversupply: By the end of 2024, over 75,000 apartments were for sale in the Greater Manila area, with a digestion period of 5.8 years, far exceeding healthy levels.
Developer Standstill: In 2024, the volume of new apartments launched plummeted by 59% compared to the previous year, with giants like DMCI Homes announcing a halt to new projects in 2025.
The Future Path: Can BPO Save the Philippine Real Estate Market?
Some analysts hope that the business process outsourcing (BPO) industry can fill the void left by POGOs. The Philippine central bank predicts that the BPO industry's annual growth rate will still reach 5%-9%, potentially creating 200,000 square meters of new demand. However, BPO companies prefer low-cost office areas and are affected by global outsourcing market fluctuations, so whether they can fully absorb the space vacated by POGOs remains uncertain.
Conclusion: A Belated Market Clearing
The Philippine government may have underestimated the domino effect of the POGO ban. Today's real estate market is undergoing a slow and painful "de-bubbling" process—there's no loud crash, just a silent recession. Whether it can recover depends on macroeconomic improvements, foreign capital introduction, and whether developers can adjust their strategies. However, it is certain that this cold winter is far from over.
