Manila is witnessing an online gambling boom, courtesy of steady money pouring in from China. And among the positive consequences of the trend is the increasing price tag of local properties, specifically seen in condominium units and office spaces located in several prime real estate locations.
The incredible rise in Chinese-funded online gambling operations has triggered growth spurts in two key property sectors. Residential areas and commercial spaces have seen the influx of buyers and renters coming in from China, propelled in large part by a government policy that openly invites the entry of casino operators.
Since Philippine President Rodrigo Duterte took office in the middle part of 2016, the national government has granted more than 50 offshore gambling firms permit to operate, Bloomberg reported. Inevitably, migrant workers in tens of thousands deemed essential for the online gaming operations started flowing in.
In the same report, the publication estimated that up to 200,000 workers are employed in the burgeoning industry and a great majority of them are Chinese. In fact, around 100,000 migrants from mainland China have already secured local addresses, mainly in prized property spots in the National Capital Region (NCR).
So it came as no surprise that the migration activities have resulted to a huge jump in property prices in and around the nation’s capital.
“The resulting migration … is propelling home prices to record levels in neighbourhoods favoured by Chinese workers. It’s reinvigorating Manila’s commercial property market as owners convert offices and shops into gaming centres with card tables and webcams,” Bloomberg said.
The favourable trend is shoring up an industry that economists have previously predicted to be on a struggling state in recent years. According to the report, analysts have forecasted that the Philippine property market was flirting with a disastrous crash in 2017.
However, the offshore gaming operations saved the day for the industry. As proof of the growth, giant local developers like Ayala Land and SM Prime Holdings have been benefitting from boosted up bottom lines, revved up by surging prices in both residential and commercial units.
What’s happening, no doubt, will fire up the Philippine economy as a whole but analysts fear it will also create some form of vulnerabilities. The local property sector’s increasing reliance to Chinese buyers for growth could be upended anytime by abrupt changes in government policies.
A good example is that of Johor Bahru in Malaysia that is now dealing with an oversupply of new home units. The market used to be a favourite of Chinese buyers but China’s recent policy revisions on property acquisitions made it a bit harder for investors to come in.
The Johor Bahru case was a classic example that “concentration risk” remains a valid concern during episodes of property boom, the Bloomberg report said.