Fitch: PH landlords to weather Pogo exit, vacancies

MANILA — Philippine developers have adequate financial buffers to minimize risks from rising vacancies triggered by the pandemic’s onslaught and departure of many offshore gambling operators, several of which are run by Chinese companies, Fitch Ratings said on Thursday.

In a report sent to reporters, the debt watcher said there was a “spike” in delinquent mortgages in the Philippines when the pandemic smashed household incomes and after the exodus of foreigners working at offshore gaming firms, which used to drive up demand and prices of condominiums and office spaces.

The good news, according to Fitch, is that landlords managed to mitigate the risks from rising vacancies with their healthy financial buffers. But the credit rating agency nevertheless cautioned the Philippines from “speculative booms” in property demand.

Delinquent mortgages

Data compiled by Fitch showed mortgage loan growth in the country averaged 14 percent from 2016 to 2019, with condominiums accounting for 50 percent to 60 percent of new housing loans toward the end of this period.

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That boom was widely attributed to robust demand for shelter from Chinese workers at Philippine offshore gaming operators (Pogos), whose number had dwindled in the past three years after the cash-strapped government cracked down on those that were not paying taxes at the height of the pandemic.

“The spike in the Philippines’ mortgage NPL (nonperforming loan) ratio was triggered by a pandemic lockdown that was one of the tightest in the region, but it was also an illustration of the vulnerabilities that can be created by speculative booms,” Fitch said.

“Condominium prices were up by around 40 percent year-on-year when the pandemic began, buoyed by rapid inflows of Chinese Pogos and speculative borrowing,” it added.