The winners and losers in Duterte’s China play
Real-estate companies in the Philippines are riding a wave of Chinese investment driven by betting operations, squeezing local buyers from the market
As relations between China and the Philippines have seen an upswing since Beijing-friendly Rodrigo Duterte’s rise to power, real-estate groups such as Ayala Land and D.M. Wenceslao & Associates (DMWAI) have profited from Chinese capital.
In 2015, some predicted the bubble in the Philippine property market was about to burst as commercial real-estate debt ballooned while the business process outsourcing (BPO) sector – which provides third-party services, such as accounting, to larger firms – slowed and demand from overseas Filipino workers dropped.
Fears of a bubble have since receded with a massive influx of Chinese buyers. Commercial property prices in metropolitan Manila have risen 6 per cent this year, with the Manila Bay Area seeing the biggest increase at 27 per cent. Ayala Land’s international sales shot up by 32 per cent, accounting for 34 per cent of the entire company’s 122 billion peso (US$2.2 billion) sales in 2017. The same year, Chinese nationals accounted for more than 10 per cent of SM Prime Holdings’ international sales, up from 5 per cent in 2016. This year, Chinese buyers have made up 60 per cent of international sales at D.M. Wenceslao & Associates (DMWAI) and 50 per cent at DMCI.
“One thing is for sure, Chinese capital is driving real-estate growth and investment in the Philippines right now. There are condos populated entirely by mainland Chinese. The share of the Filipino middle class on the other hand has been shrinking,” said Lester Yupingkun, managing director of Strongbond Products Philippine.