Cebu: Offshore gambling hot spot

By Jose Santino S. Bunachita |April 06,2018 - 10:00 PM

Gambling tables similar to the photo above are needed to be set up in offshore gambling operations. These firms have driven the demand for office spaces (right) in the country especially in Cebu as they need usually will need a whole floor of an office building. INQUIRER FILE PHOTOS

DEMAND FOR OFFICE SPACES UP

Next to Metro Manila, Cebu is becoming the alternative choice for offshore gambling companies to set up shop, according to property management and research firm Colliers International Philippines.

Offshore gambling is emerging as a critical segment of the Cebu office market where it accounted for a quarter of recorded transactions in 2017.

Based on data from Colliers’ latest report, offshore gambling space took up 25,700 square meters of office space in 2017.

At least two offshore gambling companies have been recorded by Colliers in Cebu. The first is occupying a 22,000-square meter space at the Tower 1 Plaza Magellan in Mactan Newtown in Lapu-Lapu City.

The other company opened nearly 3,700 square meters of office space at Momentum Building in the Cebu Business Park in Cebu City.

“With a more conducive local regulatory environment, we expect offshore gambling to become a major contributor to office take up in Cebu,” the report stated.

Colliers’ Research Manager Joey Bondoc said other offshore gambling companies are looking for more office spaces mostly in Mactan Island where there is still a lot of vacancies. Another prospect is also Mandaue City.

How it works

According to Inquirer Research, offshore gambling is a game of chance over the internet. Players are located outside the Philippines and are not Filipino citizens. They enter the game remotely by means of a communication device.

But while these companies do gambling remotely, they still need big spaces, similar to a real casino according to Bondoc.

“They need an entire floor. Sometimes three to five floors. The model is a typical casino with video cameras, and employees who man the tables. But the actual gambling is done by proxy betting through phones,” he explained.

These offices would have tables for each game, just like a real casino, with a dealer that manages the game.

Aside from these employees, offshore gambling companies, which are mostly Chinese firms, also have personnel in their back offices that manage the communications, call center and support services for the operation.

Bondoc added that these Chinese offshore gambling firms also tend to purchase residential properties near their offices in order to house their employees.

He said this is a phenomenon they noted in the Manila bay area where most offshore gambling firms are located.

It was only in September 2016 when the state-owned Philippine Amusement and Gaming Corp. (Pagcor) started issuing offshore gaming licenses through its newly formed office that deals with these operators.

But Bondoc said these companies have been operating for some time already but were mostly doing business at the Cagayan Economic Zone where they were allowed to do so back then

Office space

Aside from offshore gambling, Colliers also reported that Knowledge Process Outsourcing (KPO) firms that provide higher value services like medical coding, software engineering, and finance and accounting sustained demand, taking a fifth of total office leases.

Business Process Outsourcing (BPO)-Voice companies, on the other hand, continue to dominate as it covers more than half of office space transactions.

As of end of 2017, Cebu’s office stock reached 960,000 square meters of gross leasable area which is seven percent more than the 897,000 square meters in 2016.

Colliers sees Cebu’s total office supply breaching the 1 million mark in 2018.

Of the supply, Cebu Business Park accounted for more than half of the new office space with the delivery of Philamlife Center, BPI Corporate Center, and Buildcomm Centre.

The two other buildings completed last year were King Properties’ Avenir and Oakridge Realty’s Oakridge IT Center 2 in Mandaue City.

The Cebu Business Park and the Cebu IT Park remain as the most attractive locations in Cebu due to its proximity to public transportation terminals and presence of support facilities like hotels, residential condominium, and malls.

In the next 36 months months, Colliers projects the completion of around 132,000 square meters of new office space annually and more than half of the new supply will be built within these two business hubs.

“Colliers sees the current administration’s infrastructure implementation and decentralization thrust benefiting Cebu as it is the largest business destination outside Metro Manila. This should entice more offshore gambling, BPO, KPO and traditional firms to set up shop or expand operations,” the report stated.

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