INVESTORS unloaded stocks in some of the country’s top property developers on Thursday, amid worries that China’s crackdown on online gambling will dent the rising demand for office space and condominiums fueled by Philippine Offshore Gaming Operators (POGOs) and their Chinese workers.
The property counter was the biggest loser out of six sectoral indices at the Philippine Stock Exchange (PSE) yesterday, losing 1.78% or 73.28 points to 4,034.69.
This came after China’s Foreign Ministry Spokesman Geng Shuang urged the Philippines to ban all forms of online gambling, even as the Philippine Amusement and Gaming Corp. already suspended the issuance of new licenses to POGOs.
China claimed that hundreds of millions of yuan have been flowing out of the country illegally due to online gambling.
“Investors started selling down their property stocks on speculation that the possible POGO ban will be detrimental to the bottomline of developers,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in a mobile phone message.
Megaworld Corp., one of the country’s largest office space tenants, saw its shares drop 8.51% or 45 centavos to close at P4.84 each.
Shares in SM Prime Holdings, Inc., whose office spaces are mostly located in the Bay Area —the preferred location of POGOs — also slid 1.96% or 70 centavos to P35 apiece.
Ayala Land, Inc., who earlier said their exposure to POGOs is less than 10%, was not spared as share prices shed 0.71% to P49.15 each.
Other players also saw their shares decline: DoubleDragon Properties Corp.’s were down 0.21% to P23.60; D.M. Wenceslao & Associates, Inc.’s retreated 4.57% to P9.40; while Filinvest Land, Inc.’s decreased by 2.33% to P1.68.
“Should the government push through with banning the POGO industry, major property developers will have the rising demand from the IT-BPM and traditional office industry to fall back on. This won’t fully correct the loss of revenues from the POGOs, but will at least partially offset it,” Ms. Agravio said.
Real estate consultancy firm Colliers International Philippines noted that POGOs currently occupy about 970,000 square meters (sq.m.) of office space in Metro Manila. This is projected to breach the one-million sq.m. mark before the year ends.
“That’s about 8% of the total leasable space in Metro Manila, hence raising the Metro Manila office vacancy to 12.9% from the current 4.9% if POGOs leave the country,” Colliers Senior Research Manager Joey Roi Bondoc said in an e-mail.
Mr. Bondoc noted that other tenants such as traditional offices and business process outsourcing (BPO) firms could fill the void should POGOs leave the country.
“These demand drivers may not easily fill the additional 8% vacancy but given the sustained pace of office take up, overall vacancy should still be at sub-10%,” Mr. Bondoc said. — Arra B. Francia