Property consultancy firm CB Richard Ellis Philippines Inc. (CBRE Philippines) said the country is on its way to becoming a strong rival of
Las Vegas and Macau in the gaming industry, driven largely by fast-track developments in Philippine Amusement and Gaming Corp’s (Pagcor) Entertainment City in Parañaque City and improving tourism.
Rick Santos, chairman and chief executive officer of CBRE Philippines, said in a press briefing that the Philippines is expected “to rival Macau and Las Vegas” in the gaming arena as it is “currently the ‘sunshine’ market due to strong demand and supply coming online in the coming years.”
“With Las Vegas, gaming revenues are already in a decline. I think the top gamers in Las Vegas have been traditionally Asian gamers. In Macau, there’s Singapore and the Philippines [as market challengers]… I think Macau has had a long track of a crackdown, while Singapore has outperformed but in only a couple of different venues,” Santos said.
Santos was referring to recent aggressive efforts by Chinese and Macau authorities to curb money-laundering in Macau casinos, resulting in losses for the sector as high rollers stay home, or look for alternative destinations like the Philippines.
“But in the Philippines, [the development of entertainment complexes are]much more of family style, there is tourism, large resorts and it is cheaper as well in terms of accommodation. So I think the Philippines will give you the whole package — conventions, tourisms, entertainment, value and others. This is not just for the high-end gamers, but also for the mass market gamers,” he added.
Santos opined that the Philippines “will be the full gambling, tourism, hotel, resorts, convention, leisure experience” in the next few years.
Strong hotel growth
According to CBRE’s 2014 real estate report, the country generated more than 1,000 new hotel rooms last year with the opening of Solaire Resort & Casino’s Solaire Sky Tower, as well as City of Dreams Manila’s Nobu, Hyatt and Crown Hotels.
Two more gaming and entertainment complexes are slated to open in the next few years, including the Okada Group’s Manila Bay Resorts in 2016 and Andrew Tan’s Resorts World Bayshore to be launched by 2018.
Foreign hotel brands entering the Philippines are expected to generate over 8,000 hotel rooms through 2018, including 3,427 hotel keys from Crown Towers, Novotel Hotels, and Conrad Hotels & Resorts by this year; 1,724 rooms from Movenpick, Citadines and Savoy by 2016; 850 rooms from Somerset and Sheraton by 2017; and 2,192 rooms from Okura, Westin and Crockfords Tower by 2018.
Retail potential noted
Along with gaming, CBRE said the retail segment is also an emerging sector, having “a great potential to be a major shopping haven in Asia” and being “the next battleground for profits” of companies.
“Real estate developers continue to diversify into the retail segment to accommodate consumer demand for shopping convenience. The advent of ‘retail-tainment’ has come, offering Filipino shoppers the overall retail experience incorporating entertainment centers into shopping malls,” Morgan McGilvray, CBRE Philippines director, said in the same briefing.
McGilvray said foreign retailers see the potential in the Philippines and plan to expand here as there is high demand for international retail brands from different markets.
The report said there is diversification of brands from different countries, not only coming from the Philippines’ traditional source, the United States, which accounts for 40.37 percent of the established retail brands in the Philippines.
Besides the US, there is a growing population of retail brands from the United Kingdom (9.94 percent share) and Japan (12.42 percent) entering the local market, while the rest of the existing brands (37.27 percent) come from Spain, France, Hong Kong, Singapore, Denmark and others.
CBRE said major developers are taking advantage of the ‘retail-tainment’ concept by tailoring their projects to integrate residential and office spaces into one community. The incorporation of these sectors reflects the strong activity in the business process outsourcing (BPO) industry and overseas remittances, it added.
Overall, the Metro Manila retail market is seen to remain strong and stable for the remainder of the year, powered by the expanding BPO industry, OFW remittances, increasing tourism and a growing middle-income market.
Slower industrial growth
For his part, CBRE Philippines Manager Kash Salvador said the country is should grow its industrial spaces by more than 5 percent this year, slower than the 9.5 percent growth in 2014. Most growth will be in the Calabarzon region given the special economic zones abundant in the area, he added.
“Manufacturing activity will continue treading an upward growth trajectory through 2015, with foreign investors becoming more bullish towards the country given the government initiatives to market the industrial sector,” Salvador said.
“Collaboration projects between public and private corporations in improving the Philippines’ infrastructure are needed to sustain and support the re-emergence of the manufacturing industry. Manila’s outskirts should be developed into areas for industrial growth,” he added.
For the past year, Salvador noted that the bulk of industrial locators were from Singapore, mostly in the semiconductor manufacturing industry.
He said the expected increase in industrial production and capacity utilization this year “prompts manufacturers to expand factory space.”
Ending 2014 on a positive note and with the sustained demand across all sectors, CBRE said the Philippine real estate industry now looks to a stronger 2015 especially with the upcoming Asean integration and national elections.