The CEO of leading real estate specialist and broker Leechiu Property Consultants discussed these implications in a recent interview with ABS-CBN News Channel.
“I can tell you the market is flooded with second-hand Alphards,” Leechiu said, referring to Toyota's high-end vans that sell for around P4.6 million brand new.
“I think a lot of the landlords are in a panic because those in the secondary market in particular are anticipating that many of their tenants are going to be gone,” he added.
Race against time
During his State of the Nation Address, President Marcos ordered the closure of all POGO operations by the end of 2024.
The Philippine Amusement and Gaming Corp. is now racing against time, with only six months left to finalize the implementing guidelines for the phaseout.
No banking sector distress
Some landlords and developers have taken out loans, adding pressure to the situation, but Leechiu does not anticipate any banking sector distress as lenders have relatively small exposure in POGOs.
Bearing the brunt of the impact are residential condo owners either looking to sell or lease their units in locations such as Manila Bay, Alabang, and Makati City.
Rents to plummet
“I think the high-end market should be okay, the low-end market should be okay. It’s really just the secondary market in the middle-end,” Leechiu said.
For office rents, he said landlords can expect to slash rates by about 50 percent or more and expect to wait 1-2 years to lease out their units given that POGOs still occupy about 1 million square meters of space today.
Construction slowdown
This could also lead to a slower pace of property development in Manila and some provincial areas.
“It will have an impact on the construction sector because building owners who wanted to build are now saying, ‘wait a minute, let’s see what happens to the market first’,” said Leechiu.
More affordable housing?
On the flip side, the departure of POGOs means more affordable prices for people looking to purchase or lease space.
“Investors on the condo side had a four-year boom, a very short-lived four-year boom and then after that uh it’s back to normal,” Leechiu said.
‘Back to normal means that instead of getting 5-6 percent returns on your investment you’re only going to get 1-2 percent return which is fine again for the consumers who want to lease cheap space but I have to stress that the Philippines has been doing cheap rents, especially in the condos, already for decades,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
