Philippines’ SM Group eyes new growth as Manila’s gaming ban hits real estate

Name: SCMP
Telephone: +852-2680-8888

SM Prime is relying on fundamentals and remittances to drive growth as Manila prepares to kick out Chinese workers in the online gambling industry

Reading Time:4 minutes

Why you can trust SCMP

SM Mall of Asia in Pasay City, Philippines, is one of the largest shopping centres in the world. Photo: Handout

Cheryl Arcibal

Published: 9:30am, 19 Aug 2024Updated: 9:32am, 19 Aug 2024

SM Prime Holdings, the property development unit of the Philippines’ wealthiest family, and other SM group companies are banking on the country’s young population, remittances from overseas Filipino workers (OFWs) and stable economic fundamentals to spur growth after Manila ordered a total ban on Chinese gaming operators.

Last month, Philippine President Ferdinand Marcos Jnr ordered all Chinese-operated online gaming companies, known as Philippine Offshore Gaming Operators (Pogos), to close by the end of the year over alleged links to criminal activities. Government agencies were given two months to deport the industry’s foreign workers, made up mainly of Chinese nationals.

Online gaming operators contributed significantly to a real estate boom after they set up business in the Philippines because online gambling is illegal in China.

Office, retail and residential property segments are all likely to see “significant impact” from Pogos’ exit from the Philippines, according to Cushman & Wakefield.

Office vacancy rates could rise from the current 16 per cent to more than 20 per cent by the end of the year, when about 385,000 square metres or 4.14 million square feet of new office space is set to be completed, according to real estate firm. This would mark some of the highest vacancy rates since the historical high of about 30 per cent in the early 2000s following the 1997 Asian financial crisis.

The residential segment, particularly flats, could see a halt in the small appreciation of rents and capital values, as vacant units are turned back over to the market given the high cost of capital expenditure to reinstate the properties previously occupied by Pogo employees, the property consultancy added.