Condo units that used to cost Php 100,000 per sqm now fetch as much as Php 360,000 per sqm. And POGOs get preferential treatment. “They have a higher budget, pay up to one year in advance, and their checks don’t bounce.”

Business has been very good to Mariel in the past few years. The real estate agent is still busting her heels doing sight viewings and client calls—but much of her demeanor has noticeably changed. While the end of each month used to make her anxious and fidgety, she is more relaxed and happy these days. “I used to go a month or even two without any closings. But now I would get at least one new lease contract per week,” Mariel says (Mariel is not her real name; she requested anonymity). She credits this surge in business to the proliferation of Philippine based offshore gaming operators, or POGOs, operated by Mainland Chinese citizens.

Real estate consulting company Colliers International confirms that POGOs currently occupy 35 percent to 40 percent of the new supply of office space in Metro Manila. This has led to a corresponding increase in demand for residential units for the over 100,000 POGO employees in the country. The bulk of demand is in the bay area where property prices have skyrocketed in just a few years. Condominiums that used to cost Php 100,000 per square meter now fetch as much as Php 360,000 per square meter.

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Averting the crash

POGO hubs have also been identified in Alabang, Makati, Ortigas, and Quezon City, while Clark, Pampanga, Cebu, Cavite and Laguna have become preferred sites outside of Metro Manila. To property developers, brokers, and property owners, the deluge of offshore gambling operators on Philippine soil is an ironic blessing of sorts. “The (property) market could have crashed two years ago or [been] corrected at the very least. But because of POGOs it was averted,” attests Joey Bondoc, Colliers International’s Senior Research Manager.

An ANC report on the Cavite POGO hub in July, which used to be a leisure park for locals.

The gambling operators quickly lapped up the oversupply of both office and residential units, and even created additional demand. Mariel has witnessed this first hand. While she used to have condominium units that would go tenant-less for up to a year, the same units are now not only being occupied but have commanded rates 40 to 50 percent higher than in the pre-POGO era. “They [POGOs] have a higher budget, pay up to one year in advance, and their checks don’t bounce,” says Mariel. The POGOs’ requirement could also easily meet or even exceed an agent’s quota, as just one company could require up to a hundred units all at once. For Mariel, the biggest requirement has been for over 60 units from just one client, or an approximate commission fee of Php 1.5 million from a single transaction.

For Mariel, the biggest requirement has been for over 60 units from just one client, or an approximate commission fee of Php 1.5 million from a single transaction.

The gain is even more enticing for government. PAGCOR expects to collect Php 8 billion this year from royalties and licensing fees of POGO operators, which represents 12 percent of its total revenues in 2018. The Finance Department, which has started collecting income taxes from POGO workers, also expects to register an additional Php 24 billion in tax revenues.

A report by real estate consulting company, Colliers International, shows number of units launched at Sail Residences by SMDC since first quarter of 2019.

A report from Colliers International shows increase in prices of select projects in the bay area.

The ultimate losers

But while some are winning, others warn Filipinos might ultimately be the losers in this phenomenon. The hefty premium that Chinese clients are willing to pay is causing a continued price increase in an already expensive property market, which might eventually price out the average Filipino buyer. In the bay area for instance, there have been news reports of Filipino buyers unable to continue payments on their condo investments because they are suddenly being charged exorbitant miscellaneous fees and interest rates by the developer. The same buyers later find out that the developer is talking to POGO companies willing to pay a premium for their units.

There have been news reports of Filipino buyers unable to continue payments on their condominium investments because they are suddenly being charged exorbitant miscellaneous fees and interest rates

Even mere tenants are experiencing the same predicament. Janna (not her real name) lives with her husband in a condominium in the south with a rising number of POGO workers. She and her husband were forced to move out as their landlord suddenly wanted a 30 percent jump in their rental rate. “It started around April. Hindi na niri-renew mga kontrata,” laments Jana. But with more and more units in their building being converted to staff houses, she says the place had already lost its original allure and no longer appealed to their family anyway. “Yung units nila puro bunk beds. Every hour nagdadagsaan sila papuntang work. I complain about the noise. Maraming nagkakalat atsaka nag-aaway.”

Kai (not her real name) is a landlord in a township community with POGO offices. She tells me that she, too, was being offered higher rental fees by a broker—if she agreed to convert her unit to a staff house. “The broker did not even look at my unit first. She immediately made an offer: one-year contract with six months advance and higher rate.” But Kai, who is a Canadian immigrant who holds dual citizenship, rejected the offer.

Kai says she had already seen a similar phenomenon happen in Canada many years ago, when Hong Kong Chinese investors began purchasing chunks of properties in Toronto and Vancouver which led to an exorbitant rise in property prices. “In Vancouver, regular people are already priced out of the market by Chinese investors,” she warns.

Chinese nationals queue outside the Bureau of Immigration in Manila last June. Photo by Eloisa Lopez, Reuters

A ban on all online gaming?

But in this debate, the POGOs’ critics are getting an unlikely supporter from the Chinese government itself. China prohibits all types of gambling in its territory and has expressed concern over how the POGO industry encourages criminal activities and takes part in unfair labor practices. In response, the Philippine Amusement and Gaming Corporation (PAGCOR) has stopped issuing new POGO licenses until all concerns are addressed.

In a press briefing in China last August, The Philippine News Agency quoted Chinese Foreign Ministry Spokesperson Geng Shuang as saying that while the gesture of ceasing the issuance of POGO licenses was appreciated, they hope the Philippine government would do more. “We hope the Philippines will go further and ban all online gaming,” Shuang said.

But Colliers International believes a permanent ban is unlikely, since taking the moral high ground would also mean losing billions in government revenues. “It’s good for the remainder of President Duterte’s term. After, let’s see. But if you just look at the economic impact, regardless of who it [the next president] is, he or she would think twice [to remove POGOs],” Bondoc concludes. He notes that while POGOs is a highly controversial sector, the money it brings in to help the economy and the country’s poor cannot be overlooked. “It’s a tenth of PAGCOR’s revenues, and these go to social services.”

The money it brings in to help the economy and the country’s poor cannot be overlooked. “It’s a tenth of PAGCOR’s revenues, and these go to social services.”

But some observers beg to ask: Should the end justify the means? For Janna and Kai, the answer is no. Janna explains: “I’m worried because their numbers are growing in our area. I was even surprised to see a Chinese lady selling bread by the sidewalk and a friend of mine saw another Chinese vendor selling chips on the bus home.”

To Kai, the POGOs are not the real issue but its what they represent—to her and a growing number of Filipinos who worry about the administration’s business decisions and chosen ally. “It’s not just the online gambling. You also have the Chinese debt trap—other countries are resisting it. Here, the government seems to be encouraging it,” says Kai. “If everybody sells out, then that would just be the beginning of the end.”