Modern 'Chinatown' rises, and it's driving up property prices

Jessica Fenol and Joel Guinto, ABS-CBN News

Posted at May 23 2018 06:45 AM | Updated as of May 23 2018 08:46 AM

The DoubleDragon Plaza in the Manila Bay area is shown in this photo taken on May 22, 2018. Property prices in the commercial area have gone up due to Chinese demand. Mark Demayo, ABS-CBN News

MANILA – A short taxi ride from one of the world's oldest Chinatowns, a new Chinese enclave is emerging, one that is driving up property prices while serving as a testament to warmer ties between Manila and Beijing.

Prices in the Manila Bay area jumped 8 percent in the first 3 months of 2018, underscoring demand from offshore gaming firms that employ Chinese nationals to answer queries from the Mainland.

The increase is more than double compared to Makati, Ortigas and Fort Bonifacio and is a bright spot in an industry that is faced with plateauing demand from business process outsourcing companies, data showed.

"The entire Bay Area has benefited substantially from Chinese investments," DoubleDragon Properties chief investment officer Hannah Yulo told ABS-CBN News.

Offshore gaming operations account for 60 percent of DoubleDragon's leasable space in the area, where it was able to increase rates by as much as 27 percent, Yulo said.

For 6 months, from October 2017 to to March this year, Megaworld disclosed 40,000 square meters in leases to offshore gaming. This compares to the 80,000 square meters that was built over 21 months from the start of 2016, its senior vice president, Jericho Go, told ABS-CBN News.

MANILA'S VEGAS

Manila Bay is home to DoubleDragon Plaza, an imposing white structure with red, yellow and green accents, and SM Mall of Asia, one of the world's largest shopping malls that is owned by the country's richest man, Henry Sy.

It also houses Entertainment City, a glittering strip of billion-dollar casino resorts that the government hopes would lure Chinese high rollers away from Las Vegas, Singapore and Macau.

Until the rise of the Mall of Asia complex, the area that sits on reclaimed land was known mainly for the Cultural Center of the Philippines, the Senate offices at the GSIS building and the US and Japanese embassies.

Philippine Offshore Gaming Operators or POGOs took up 35 percent of office space in 2017, Colliers data showed. Over 50 such companies have licenses to operate from the Philippine Amusement and Gaming Corp, according to the regulator.

"It’s a positive thing because it’s extending to other property sectors like residential," Colliers International Manila director Dom Frederick Andaya told ABS-CBN News.

Manila's Chinatown is shown in this file photo. Property prices in the commercial area have gone up due to Chinese demand. Jonathan Cellona, ABS-CBN News

BPO PLATEAU

The government has flagged a slowdown in office space demand from outsourcing firms, highlighting the need for the industry to shift to higher skills as companies automate tasks and look to artificial intelligence.

Office space take-up from BPOs grew 39 percent in 2017, from 65 percent in 2016, data from Leechiu Property Consultants showed. 

Offshore or online gaming grew 412 percent during the same period, tripling its share of the entire portfolio to 30 percent from 9 percent in 2016, data showed.

Chinese investors also want to move things fast, said senior director for Research and Consultancy Jan Custodio of property consultancy firm Santos Knight Frank.

"In terms of rates, they're quite flexible in terms of negotiating, which is why the space take-up has been quick," he said.

Santos Knight Frank CEO Rick Santos said he was "optimistic" over the Chinese investments but the boom should benefit both the Philippines and China.

"It’s a mutually beneficial relationship and I think it can be done that way," he told ABS-CBN News.

"There will be continued demand for multinational business. As long as investors have an opportunity in making a fair return of investments," he said.