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MANILA - The stakes are high, and in this cycle of the property market, the government is placing its bets on casinos to boost the country's tourist arrivals.
It was not too long ago when instead of casinos, the government was betting on golf courses to drive tourism traffic, especially the big-spending type. But the financial success of Macau and Singapore is proof that the once conservative Asian population has embraced gaming as a way of life.
"The Philippines has just about accepted that hobby despite what the different church and religious groups say about it. And as what's happened in Singapore where casinos have become a significant driver to its economy, we're all hoping that will happen to the Philippines," said David Leechiu, Jones Lang LaSalle Leechiu country manager.
The Philippines hopes to ride on the gaming boom in Asia with the Entertainment City project of state-owned Philippine Amusement and Gaming Corp. Pagcor expects to generate $10 billion in revenues when all four casinos in the reclaimed area along Manila Bay become operational by 2016, putting the country in a position to give gambling hubs Las Vegas and Singapore a run for their money.
“From what I understand, it's a very big market and a lot of people will look at the Philippines as a cheap place to go gambling in a very same way that back in 1992 to 1997, the Philippines was the cheapest place to go golfing," said Leechiu.
Those years marked the emergence of the Filipino middle-class, which increased the appeal for golf, widely considered before as a game for the wealthy. This triggered a boom in the development of golf courses with Filipinos buying multiple club shares so they could play in these different courses while speculating on the price.
"We produced so many golf courses all throughout Luzon that we produced a glut in golf course prices. Now there's very little value put in golf course shares. In fact many property developers are tucking that in free when you buy property today," said Leechiu.
During the Asian financial crisis, prices of club shares fell and since then, only two golf courses managed to maintain their value: the Manila Golf Club in Makati and the Sta. Elena Golf and Country Club in Sta. Rosa, Laguna.
Leechiu said shares in Manila Golf fell from P26 million apiece in 1997 to P11 million each in 2008 before increasing to P20 million apiece today. Sta. Elena has preserved its value at P3 million each.
“I think that it did take off but it slowed down and it is starting to revive itself again. With the advent of these integrated resorts, people come here for gaming and tourism, others will also want to play golf because it’s so much more cost-effective here,” said Rick Santos, chairman and chief executive of CBRE Philippines.
Fifteen years later, so many things have changed and the Philippines has so much more to offer.
"I like the year 2012 because it reminds of the years similar to 1992, the first time in 30 years when the Philippines opened up to global markets. It coincided with a boom in Asia Pacific. 2012 is a year when the Philippines is genuinely entering the global markets again. What's interesting is that it is doing so at a very favorable time, at very favorable conditions and despite the crisis of Europe and US," said Leechiu.
The Philippines has gracefully come out of the 2008 financial crisis and has managed to ride out the European crisis anchored on its two strong legs: the overseas Filipino remittances and the business process outsourcing industry.
Last year, overseas remittances flushed a record of over $20 billion in the economy, while the BPO sector contributed $11 billion, driving consumer spending in the country, and fuelling demand for real estate.
"We feel that the demand for the development is sustainable this time whereas before it was speculative. The difference between now and the Asian financial crisis is you have a lot of real demand. Pre-1997, there was no BPO here and overseas remittances were not as huge," said Santos.
Tourism can very well be the country's third strong leg as government ramps up its investments in infrastructure in an effort to expand the industry's contribution to the economy from the present $3 billion.
The Philippines has not been on the radar screen of travellers as only 3.5 million of the 980 million travellers in 2011 went to the country. But with the troubles in the West, the rising affluence in Asia bodes well for the Philippines since studies show that 80 percent of travellers will do so within their region.
"The fact that people don't see kidnappings anymore, they don't see rallies on Makati Avenue or Ortigas, is a very big positive for the country. It means people will be less concerned about coming to the Philippines. They will not perceive this as a dangerous place and casinos will be a big driver of that because they will give the stamp of credibility to the country," said Leechiu.
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