The Manila residential real estate market is experiencing a boom. It is driven in large part by employment growth in the fast-growing offshore gaming industry. While housing supply is growing, rental rates are also rising, so this boom does not look like a bubble.
 
At IQI Caliver, we expect a substantial new supply of commercial and residential properties to come onto the market to help meet this demand in 2020. 
 
The retail and commercial property sectors are also benefitting, with one market expert telling reporters that the offshore gaming industry “saved the office market” from “double-digit vacancy rates.”
 
Offshore gaming has delivered the government a significant revenue boost. The Philippines Bureau of Internal Revenue is collecting some P2 billion (US$40 million) a month in payroll withholding taxes.

That comes in addition to P11.9 billion (US$235 million) in gaming revenues already taken.
 
The supply increase reveals itself in the number of construction building permits issued. In the second quarter, more than 32,000 residential building permits were issued, up 10 per cent from the same quarter in 2018. The National Capital Region accounted for 34 per cent of the total of the construction value of all permit types at PHP41.7 billion (US$823 million).
 
Our data shows that 90 per cent of the residential property transactions in the Bay Area, Bonifacio Global City, and Makati City this year have been related to the gaming industry. We have seen Chinese investors bulk-buying pre-sales or off-plan projects and also premium ready-for-occupancy condominium properties.
 
Because of the high numbers of POGO employees from China, Malaysia and other Southeast Asian countries, there is a demand for staff housing. The market value of properties in the Bay Area has shot up as high as the other major CBDs of Bonifacio Global City and Makati City over the past two years. Gaming has been a boon for landlords of ageing properties in Makati, who have been able to obtain nearly full occupancy at favourable rental rates.
 
These users sometimes lease out entire condo hotels for their staff use and commit to pre-construction office buildings for their operations. At IQI Caliver, we are now actively assisting these clients.
 
We foresee the lease take-up remaining firm as the offshore gaming firms expand into the previously off-limits areas of Quezon City and Ortigas.
 
This boom has led to complaints that the Chinese gaming industry is squeezing Filipinos out of the residential market. However, the areas where offshore gaming is having the most significant impact suffered from an oversupply of obsolete inventory before the current boom. Now, there is near-full occupancy. 
 
In 2020, online gaming will expand to new areas as other local major cities and suburbs seek a share of the investment and economic activity the POGOs represent. 
 
This expansion is taking place amidst the imposition of stricter governmental regulations for the industry to ameliorate any negative impact and to ensure a level playing field for all businesses. We believe this regulation is vital and will help ensure stable and beneficial growth over the long term.

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