With the exit of Philippine overseas gaming operators (POGOs) in the country – many of which are linked to crimes committed in the country – an expected oversupply of condominium units and buildings is expected to suffer substantial rental declines (of about half their values before) and an oversupply of minivans used by POGO operations would flood the country.
Property expert David Leechiu said President Ferdinand "Bongbong" Marcos Jr.’s ban on POGOs would force rental fees to drop by as much as 50 percent giving the secondary market a tough time.
He added that because rents would plummet it would take longer to get tenants [that] mostly locals, as against the foreign tenants of POGOs,” Leechiu, who heads the Leechiu Property Consultants, told ANC in a recent interview.
“[T]hey are the ones who are leasing a lot to POGO and POGO-related tenants. I think the high end market should be okay, the low end market should be okay,” he added.
Marcos announced a ban on POGOs in his 3rd State of the Nation Address last July 22. POGO hubs are given until the end of the year to close down.
Another unintended consequence of the POGO ban is the rise in office and residential space vacancies.
Secondhand van boom
“I can tell you that the market is flooded with secondhand Alphards right now,” he said in the same ANC interview.
The Toyota Alphard is a first-class type of van which is commonly used as the shuttle service to bring foreign nationals from the POGO office and to their rented homes in the Philippines every day.
The POGO ban meant there was no more need for a premium shuttle for workers and other personalities involved in the business.
“I think a lot of landlords are in panic because that secondary market in particular is anticipating that many of their tenants are gonna be gone,” Leechiu added.
A brand new 2021 Toyota Alphard retails at P4.7 million, but with the POGO ban in effect, those looking for a new car can scout online for nice bargains.
Already, many online sites are selling secondhand minivans.
Pinoys really didn't benefit
In a related development, Finance Secretary Ralph Recto said the country got only less than half of the economic costs it incurred from allowing POGO operations or P166.49-billion a year, which is below by 37 percent the estimated total costs of P265.74 billion.
This is based on the DOF’s cost-benefit analysis given to the President before the SONA, which led to him ordering the Philippine Amusement and Gaming Corporation (Pagcor) to wind down and cease operating POGOs by the end of 2024.
The net cost, excluding production, reached P99.52 billion each year.
The benefits came mainly from tax obligations from the Bureau of Internal Revenue (BIR) and gross gaming revenues from Pagcor. Other estimated economic benefits include income from office and residential space rentals, transportation, and demand from employees’ and entities’ private consumption.
Indirect economic benefits, which comprised the associated economic activities and government revenues earned from POGOs’ multiplier effects, were also considered.
The economic costs of POGOs took into account the effects of reputational risks, such as POGO-related crimes, which impacted foreign direct investments.
Recto said that these crimes negatively impacted the country’s attractiveness as a tourist destination in addition to the unquantifiable social costs of POGO-related crimes that include loss of life, physical and psychological harm to victims of criminal activities, and fear and anxiety associated with illegal activities.
The perception that groups engaged in illegal or criminal activities wield significant economic influence in certain areas erodes institutional integrity, Recto also said.
“Banning them won't significantly affect the economy because the costs of keeping them far outweigh the benefits,” the Manila Bulletin quoted him saying.
Photo Courtesy: Rappler
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