Megaworld Office Business Bucks Pandemic Effects, Reports 135,000 Sqm in New Leases in 2020
Property giant Megaworld said its office leasing business is seeing growth despite the effects of the pandemic last year. This aligns with the latest market report from Leechiu Property Consultants, which said that demand for office space is on the rise, mostly thanks to the recovering IT-BPM (Information Technology and Business Process Management) sector.
In a filing with the Philippine Stock Exchange on Wednesday (April 14), Megaworld said it leased out around 135,000 square meters of fresh office space in the company’s townships in Iloilo, Quezon City, and Fort Bonifacio. Around 78 percent of these new leases are part of the expansion programs of existing office partners while the rest were taken by new client companies.
“These are mostly companies operating BPOs, e-commerce, logistics, and finance. And we are very happy to see the strong interest on our office developments in Iloilo Business Park,” Megaworld chief strategy officer Kevin Tan said. “Approximately 20 percent of new leases have been booked there and we even cemented our dominance in terms of market share in the Iloilo office market.”
Megaworld said its Premier Offices business booked P10.4 billion in revenues in 2020, which is around the same level compared to 2019.
Despite fears that stay-at-home orders would significantly impact office rentals, Megaworld said it is reporting the opposite.
“At this point, we can say that our office business is the most stable income generator in our company’s revenue stream with or without this health crisis, and we continue to focus on the expansion of this business in the years to come and further strengthen our leadership in the country’s office property sector,” Tan said.
The listed property company’s net income declined 45 percent to P9.9 billion while consolidated revenues also fell 45 percent in 2020 compared to 2019. Rental income also slid 23 percent to P12.9-billion last year compared to the year before, while real estate sales declined by 42 percent to P24.9 billion year-on-year.
But there are encouraging signs of recovery in the company’s other business units. Real estate sales grew 22 percent in the fourth quarter of 2020 compared to the third quarter last year with reservation sales up 85 percent quarter on quarter. Megaworld Lifestyle Malls and Megaworld Hotels also grew 24 perent and 25 percent quarter on quarter, respectively.
Megaworld’s residential business also launched P7.8 billion worth of new projects last year, particularly in The Upper East Bacolod, IloIlo Business Park, Capital Town Pampanga, and Hamptons Caliraya in Laguna.
"Through continuous innovation and strengthened relationships with our customers and retail partners, we were able preserve Megaworld’s profitability,” Tan said. “The adjustments made by our various business segments amidst the challenging environment allowed us to benefit from the gradual reopening of the economy. Nonetheless, the main priority of Megaworld during this time was to preserve the jobs of our workers and to continue to provide the much-needed services to the communities that we serve.”