CHINESE employees of offshore gaming companies are pushing rental rates by 30% to 50% higher in some residential condominium properties in the Bay Area and Makati City, as the offshore gaming sector continues to expand in the country.
This is according to the Philippine unit of real estate consultancy Colliers International, which noted that rental rates of residential units near offices of offshore gaming firms are commanding higher rents compared to the average rates in Metro Manila.
“In fact for a number of buildings, previously lease rates would be P1,000 per square meter (sq.m.) a month, but for the second quarter we saw one building in the Bay Area already charging P1,500, so that’s a 50% increase. That’s one sub-location that really recorded the fastest (increase),” Colliers Philippines Research Manager Joey Roi Bondoc told BusinessWorld in an interview.
In contrast, Colliers Philippines said average rents in prime three-bedroom units in Makati Central Business District (CBD) went up by 0.9% to P540-1080 per sq.m each month, while rents in Fort Bonifacio rose by 0.4%, according to its second quarter property report.
The company also reported that vacancy of condominiums in Metro Manila declined to 11.3% from 12.4% in the previous quarter. Vacancy in the Makati CBD alone went down to 11.5% from 12.3% quarter-on-quarter, while Fort Bonifacio’s dropped to 15.8% from 17.3% in the same period.
Colliers Philippines said it observed that condominiums in the fringes of business districts are attracting Chinese employees of offshore gaming companies. Gaming firms accounted for 25% of the total office space take-up in the first half of 2018 at over 180,000 sq.m., making it the second largest driver for office spaces during the period.
Mr. Bondoc said the confidence of these Chinese companies is tied with the country’s improving relations with China under President Rodrigo R. Duterte’s term.
“A number of offshore companies that closed with us are actually tied with the duration of the term of President Duterte. I’ll have to say that we’re good for the next three to four years,” Mr. Bondoc said when asked how sustainable the market for Chinese tenants is.
Even with a change in administration come 2022, Mr. Bondoc said the government should not change its openness toward Chinese gaming firms given their potential contributions to the property sector.
“There’s a spillover impact in residential, even leisure and retail. We’re seeing condo buildings near offshore gaming companies diversifying their retail mix, offering Chinese restaurants. It has tremendous multiplier impact, almost all properties are growing from a single sector,” Mr. Bondoc said.
With the entry of Chinese gaming firms, Colliers Philippines is recommending companies with ready-to-occupy units to target Chinese nationals.
“Condominium projects in the Makati fringe are particularly popular among these employees. Hence, developers with completed projects in the area should zero in on this opportunity,” the company said.