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As Manila's online casinos flounder, their workers vacate homes, cooling property market
AN exodus of online casinos from Manila is slowly emptying the Philippine capital's residential towers, pulling rents lower, said property broker KMC Savills.
"We've seen entire residential towers empty out," Michael McCullough, managing director at KMC in Manila, said on Tuesday. While vacancies from online casinos are so far just a "rounding error" in a multimillion square metre home market, "we'll continue to see a lot more of that continuing to compound in the next six months", he said.
The third quarter also saw "massive losses" in the office market, as the pandemic shut many businesses, KMC said in a report, even as it sees demand from outsourcing companies absorbing the glut.
Metro Manila's occupancy deteriorated for the second consecutive quarter with nearly 47,800 square metres (sq m) of vacated work spaces and incoming pipeline will continue to add pressure, it said.
The Philippines' US$8-billion online gaming industry, which caters mostly to Chinese punters, is taking a beating from higher taxes and weaker demand due to the pandemic. The once burgeoning sector, which employs mostly mainland Chinese for customer support and marketing jobs, has boosted property prices and rents across metropolitan Manila in the past three years.
The industry's exposure to the Philippine residential market stood at 1.8 million sq m in 2019, said broker Leechiu Property Consultants. Office space vacancy in Metro Manila has risen to 7.3 per cent as at the third quarter, from 5.4 per cent in end-2019, KMC said in its report.
The Philippine property stock index closed 2 per cent lower on Wednesday, the steepest decline since Sept 9. SM Prime Holdings, the nation's largest builder, fell 3 per cent. Ayala Land declined 1.6 per cent.
Online casino operators are either giving up licences or operating at a lower capacity, adding to rent pressure in residences amid a dearth in expatriates and as employees leave business districts to work from home, Mr McCullough said.
KMC estimates that rents in the capital's residential condominiums would fall 10 per cent on average by year end. The drop will depend on a district's exposure to the online gambling market, with some areas possibly seeing as much as 25 per cent decline, said Fredrick Rara, the company's senior research manager. BLOOMBERG