What makes PH better casino investment in Asia?
MANILA, Philippines – A bigger domestic market is the Philippines' key edge against other more established gaming destinations in Asia, states a report by Credit Suisse on the Philippine gaming industry.
In its ‘The Philippine Gaming Sector’ report, the Zurich-headquartered international financial services group said the Philippines is viewed as having a potentially large domestic market to complement the VIP market coming in from abroad. The VIP market is traditionally the main cash cow of casino hubs.
The Philippines' large domestic market is expected to sustain the gaming industry, more so than its casino hub neighbors Macau and Singapore.
“The Philippine population of 97 million is almost 3 times that of Singapore, Malaysia and Macau combined, presenting sizeable onshore potential for the higher-margin mass segment. Meanwhile, limited hotel capacity and the absence of new casinos elsewhere in the region until 2015 could result in a spill-over of foreign VIPs into Philippines,” the report stated.
The Philippines also has the fastest growing working age population in Asia, aside from Japan, and is forecast to grow about 2% annually over the next 10 years.
An improving economy, accelerating wage growth, higher spending power and consumer confidence, which is at near-record highs, all point to favorable demand prospects, the report states.
Philippines new casino complex, the Pagcor Entertainment City, which is due to open up slowly over the next few years, will also serve the interest of the regional VIP market as it is the only location in Asia that will introduce new casinos in the next few years.
“To our knowledge, there are no plans to expand gaming capacity in Malaysia and Singapore, while new supply in Macau does not begin until mid-2015 end,” the report stated.
The Solaire Manila casino of Bloomberry opened in March 2013. This will be followed by Belle Grande during the first half of 2014. The other two resorts, Manila Bay Resorts of Universal Entertainment and Resorts World Bayshore of Travellers are expected to open sometime in 2015 and 2016.
On the back of this new resort, Pagcor, the state gaming regulator and operator, expects annual gaming revenues to grow to as much as $10 billion by 2017.
Credit Suisse estimates around 89% of this amount will come from casinos owned and operated by Pagcor, Resorts World Manila and the 4 new integrated resorts set to open from 2013-16, with the balance made up of non-casino gaming and a handful of smaller casinos.
“We believe that the Philippine gaming industry is well placed to exceed the current size of the Singapore market within the next 6 years. In the near-to-medium term, we expect growth to be largely capacity driven, with sequential supply coming on stream during 2013 to 16 end.
"In the years after, we expect improvements in supporting infrastructure and the draw of a fully developed Entertainment City, complemented by adjacent real estate developments to continue driving growth,” the report stated.
However, potential risks to consider include political tensions between the Philippines and China which could affect visitation, gaming legislation abroad, and further delays in the roll-out of infrastructure projects. – Rappler.com