BPO text in wooden cubeThe fast-growing online gaming industry and the business process outsourcing (BPO) sector comprise two of the reasons behind property developers’ confidence in the Philippine real estate market.

A real estate bubble normally occurs when market prices increase rapidly due to a larger demand in a short-term period, only to fall as quickly when there is a glut in supply and prices reach an unsustainable level.

Bubble Burst

Philippine Offshore Gaming Operators (Pogo) have picked up the slack of BPO firms’ leasing activity in office buildings. Pogo firms have accounted for an estimated 50% of leasing demand in the last six months from December 2017, according to Jericho Go, Megaworld senior vice president for business development and leasing.

Pogo companies’ leasing requirements consist of three types with one for live-streaming of female dealers in online games. The remaining two serve as back-office support for them. Go expects demand to remain strong in 2018, as the Philippine Amusement and Gaming Corp. have issued 35 offshore gaming licenses. While prospects for the leasing market are positive, the opposite could happen to the affordable housing segment.

Housing Shortfall

Christopher Ryan Tan, Organization of Socialized Housing Developers of the Philippines former president, said that there would be a deficit of 7.67 million homes by 2022. Tan said that the government should increase financing for low-cost homes, especially since population growth has exceeded the available supply

He partly attributed the problem to a weak construction activity. In the past five years, home builders only constructed between 168,000 and 190,000 houses. Homebuyers have found it more difficult to find good properties, so an online real estate review may be useful for narrowing your search for affordable houses.

A property bubble may seem unlikely for now, but the government should address the looming problem of a housing shortfall in the future.