GOV'T ZEROES IN ON ONLINE CASINOS
The Bureau of Internal Revenue (BIR) has requested the Philippine Amusement and Gaming Corporation (PAGCOR) to include a proof of tax registration and payment as a requirement to renew the licenses off Philippine-based Offshore Gaming Operators (POGOs). In the Memorandum Circular 102-2017 that BIR issued, it included an outline of taxes that POGOs must abide by such as the 5% franchise tax, income tax, value-added tax and withholding tax for its employees and service providers. At the same time, the BIR is also seeking to work with the Labor and Immigration department for an inter-agency task force due to the influx of foreign workers taking on POGO jobs and several establishments operating without proper licenses in the country. The influx of online gaming firms started in 4Q 2016, following the establishment of the POGO office.
The entry of more POGO firms from China and expansion of existing locators have benefitted the Philippine property market. Among the POGO firms’ requirements are an expansive office space and a residential complement. Developers have been quick in responding to these firms’ demand. Colliers has observed that POGOs have liquid capital and tend to prioritize immediate take up of office space rather than negotiating on the rental rates. This has resulted in a sustained increase of office lease rates in locations that accommodate POGOs. Colliers recommends future tenants to close deals immediately especially in sub-locations where new buildings will be completed over the next 12 months. Non-POGO tenants should also lock-in pre-leasing rates that are relatively cheaper. Meanwhile, developers with limited PEZA-proclaimed space should consider leasing out space to POGO firms.
CPG ALLOTS P3B AFFORDABLE HOUSING PROJECTS
Century Properties Group, Inc. (CPG) will spend at least P3 billion this year on the affordable housing segment as they continue to expand their offerings. To be able to raise funds for this project, the company plans to offer fixed-rate retail bonds amounting up to P3 billion. In 2017, CPG entered the affordable housing segment. Since then, the company has launched affordable housing projects in Lipa, Batangas and Tanza, Cavite with a monthly amortization of as low as P9,000. Aside from affordable housing, CPG also plans to develop new office, retail and hospitality projects starting 2020.
The aggressive foray of CPG into the affordable housing segment should provide more opportunities to those who wish to live in more affordable houses outside Metro Manila. The lack of developable land in the metro and relatively cheaper land prices in nearby urban areas such as Batangas and Cavite should compel developers to leverage their expertise in strategic land banking and capture a greater fraction of the end-user residential market outside of the country’s capital. Colliers believes that the sustained pace of affordable housing demand is partly due to stable growth of overseas Filipino workers’ (OFW) remittances.
NAIA CONSORTIUM HOPES TO START SWISS CHALLENGE BY MID-2019
The super consortium of the Ninoy Aquino International Airport (NAIA) is still hopeful that the Swiss challenge for the much-awaited rehabilitation can begin in mid-2019 as it continues to negotiate with the Department of Transportation (DoTr). Government officials and Public-Private Partnership (PPP) proponents define Swiss Challenge “as a form of procurement where companies are invited to challenge an original proponent’s project, after which the latter has the chance to match the competing bid.” Throughout its 15-year contract, the consortium aims to increase the airport’s capacity to 65 million in four years from the expansion of existing terminals and construction of new taxiways.
Colliers is optimistic that foreign arrivals will continue to rise over the next three years due to the growing interest from China, Japan, Korea, United States, Australia and Taiwan, the Philippines’ traditional visitor markets. In our opinion, the tourism department’s goal of attracting 10 million tourists (from 7.1 million in 2018) in 2022 remains formidable. Colliers believes that the completion of the NAIA rehabilitation project should support the growth of foreign arrivals moving forward. This should be complemented by the modernization of airports in Clark, Bacolod, Iloilo, and Cagayan de Oro; and development of new facilities in Bulacan and Cavite. In our opinion, the government should establish a comprehensive airport development program across the country to sustain foreign and domestic arrivals and further raise the country’s air transport infrastructure competitiveness.