Real Estate Market Report 1st qtr 2011

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Real Estate Market Report 1st qtr 2011

  1. 1. Q1 2011 | QUARTERlY UPDATEColliers international | the knowledgepHILIppINE REAL ESTATEMARKET REpORT Executive Summary eConoMY: VUlneraBle to gloBal Conditions Despite the recent tragedy in Japan and the political unrest in the Middle East, the philippine government is still optimistic in achieving a GDp growth of 7% - 8% for 2011. Inflation has also started to accelerate, with March at 4.3%, a nine-month high. The ADB recently upgraded its forecast for the philippines to reach 5% at the end of the year. Land values are still inching up, albeit at a slower pace than the last quarter of 2010. With the current planned developments in the traditional business districts, land values are expected to grow at an average of 3% - 5% for 2011. For the full year of 2010, the HLURB issued more than 324,000 licenses, lower than in 2009 by more than 100,000 licenses issued. Leading the pack, high-rise residential licenses continued to rise, accounting for 17% of all licenses issued. The low cost segment, where the majority of the backlog for housing is coming from, increased by only 6%. oFFiCe: BPos shiFting to non-CBds; loCation still transit-oriented Bonifacio Global City increased its office stock by 30,000 sq m, with three office buildings completed in the First Quarter. Other areas with new supply are Alabang, Eastwood City, pasay City and Quezon City.Market indiCators Rents in the Makati CBD continued to climb by 1.2% for premium buildings, to p820 per sq m, and oFFiCe 2.4% for Grade A buildings, averaging p680 per sq m. residential With a high take-up of about 40,000 sq m, the vacancy rates in the Makati CBD decreased further, retail — to 3.8% from the previous quarter’s 5.4%. The Outsourcing & Off-shoring industry is still the major driver in occupying space across all submarkets tracked by Colliers, although Makati is still the preferred address of traditional offices. residential: sUrge oF sMaller Units driVes oCCUPanCies low For the First Quarter, Bonifacio Global City has about 500 units recently completed and about 2,500 more in the pipeline, more than 30% of the total inventory expected for 2011. For the Luxury segment, the market is awaiting the anticipated Raffles Residences in Makati, which is set to be complete by year-end. Vacancies in the Makati CBD and Bonifacio Global City continually widens at the 9% level for the First Quarter, compared to 6% in the previous Quarter. In the other major CBDs, vacancies remain stable at the 3% to 4% level. In Makati, Ortigas, and Rockwell considered as prime locations, and with an availability of Luxury Three Bedroom units, average rents continue to rise and, although there will be no new supply coming in the medium term, long-term prices are still expected to rise, due to the limited supply for expatriate requirements.www.colliers.com
  2. 2. PHIlIPPINES | 1Q 2011 | THE KNOWLEDGEretail: geograPhiC eXPansion to taP ProVinCial MarketsRetail continues to grow, with new expansion plans of mall developers gearing towards the provinces. The current trend in Metro Manila are theredevelopment or small-scale expansion of existing malls, there are also new community malls that are seen as a support component for theBpO offices and the residential community.Vacancies across the super-regional and regional malls continue to be at an all-time low, with occupancy rates at the 99% level, thus pushingrental rates to p1,180 per sq m in the Makati CBD. ECONOMIC INDICATORS 2005 2006 2007 2008 2009 1Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 Gross National product 5.06% 6.10% 7.80% 6.20% 3.00% 4.00% 9.50% 7.90% 7.50% 6.70% Gross Domestic product 5.00% 5.40% 7.30% 3.80% 0.90% 1.10% 7.30% 7.90% 6.50% 7.10% personal Consumption Expenditure 4.90% 5.50% 6.00% 4.70% 3.80% 4.10% 5.90% 4.90% 4.20% 7.60% Government Expenditure 4.00% 6.10% 10.00% 3.20% 8.50% 10.90% 18.50% 5.60% -6.10% -7.60% Investments -6.00% 2.70% 9.30% 1.70% -9.90% -5.70% 24.30% 11.00% 15.60% 22.80% Exports 4.20% 11.20% 3.10% -1.90% -14.20% -13.40% 17.90% 27.40% 28.00% 21.10% Imports 2.40% 1.90% -5.40% 2.40% -5.80% -1.90% 20.30% 23.90% 16.00% 21.80% Agriculture 1.80% 3.80% 5.10% 3.20% 0.10% 0.00% -2.50% -3.00% -2.50% 7.10% Industry 4.90% 4.50% 6.60% 5.00% -2.00% -0.90% 15.70% 15.80% 9.20% 11.40% Services 6.40% 6.70% 8.70% 3.30% 3.20% 2.80% 6.10% 6.40% 7.70% 9.70% Inflation (full-year) 7.66% 6.20% 2.80% 9.30% 3.20% 6.40% 4.40% 3.90% 3.80% 3.80% Budget Deficit (Billion pesos) p146.8 p62.2 p12.4% p68.1 p270 p112 p132 p62 p63 p54 p: US$ (Average) p55.0 p51.3 p46.1 p44.7 p47.6 p48.4 p45.2 p45.3 p45.9 p43.7 Average 91-Day T-Bill Rates 6.40% 5.30% 3.40% 5.20% 4.00% 4.41% 4.30% 3.90% 4.00% 2.60% Source: National Statistical Coordination BoardeConoMYAmidst the political unrest in the Middle East and the recent economiccurb in Japan, the philippine government remains optimistic in OFW Remittancesachieving a 7%-8% growth in the economy. The external global crisisdisplacing thousands of OFW’s suggested remittances would slow 20,000down; however, they increased by 6.8% in February to $2.98B, brought 18,000about by the strong demand of Filipino workers abroad. BSp is now 16,000 In Million US Dollars 14,000reviewing its projection that it may result in lower growth this year. 12,000 10,000 8,000Inflation continued to accelerate faster, as the demand for oil 6,000strengthened and supply remained disrupted. Common prices of oil 4,000 2,000increased from p38.00/litre (diesel) and p48.50/litre (gasoline) as of -the end of last year, to p47.10/litre (diesel), and p54.60/litre (gasoline) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011in the first quarter. In March, price movements continued to behavewell with a 4.3% inflation rate, despite the surging prices of fuel and 1Q 2Q 3Q 4Qfood.The export sector is going to experience an impact from the tragedy in Source: Bangko Sentral ng Pilipinasthe country’s second-largest bilateral partner, Japan, still on the road * As of February 2011to recovery. Total exports to Japan amounted to $565.81 million lastJanuary. philippine merchandise exports manifested a 12% increasein January by 11.8% to $4B. The Export Development Council plans are-channeled distribution of products from Japan to China inexpectation of reduction in orders.The philippine government sees the negative impacts of these globalcrises as temporary and that the target for the economic growth is stillachievable, yet there may still be a possible revision of the year-endtarget. P. 2 | Colliers international
  3. 3. PHIlIPPINES | 1Q 2011 | THE KNOWLEDGEland ValUesImplied land values in Makati CBD barely increased, to an average of p268,202 per sq m (an AV of p16,763 per developable area) during thestart of this year. In Ortigas Center, average land values appreciated a bit higher than Makati to p122,714 per sq m. Modest growth at an averageof 3%-5% is expected for land values in these traditional business districts over the next twelve months due to moderate developments plannedto complete this year. Makati CBD and Ortigas Average Land Values 500,000 400,000 pesos per square meter 300,000 200,000 100,000 - 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 1Q12 1Q11F Makati CBD Ortigas Ctr Source: Colliers International Philippines Research COMpARATIVE LAND VALUES pESO / SQUARE METER 1Q11 4Q10 % Change (QoQ) 1Q12F % Change (YoY) MAKATI CBD 256,989-279,414 255,000-279,324 0.39% 267,337-283,538 2.70% ORTIGAS CENTER 92,828-155,055 91,909-153,520 1.00% 97,469-162,808 5.00% Source: Colliers International Philippines ResearchliCenses to sellThe number of HLURB licenses-to-sell continued to decline but at24% YoY less. Issued licenses in December were at 44,489 - the HLURB LICENSE TO SELLhighest recorded on a monthly basis last year. However, 4Q10 licenses Jan-Dec Jan-Dec % CHANGEfell by 7% compared to the previous quarter. In the year to December UNITS 2010 2009 YOY2010, total issued licenses reached 324,207, more than a hundred Socialized Housing 52,602 59,345 -11.4%thousand short of those issued in the same period of 2009. Low Cost Housing 64,537 61,124 5.6% Mid Income Housing 32,541 46,478 -30.0%Continuing its upward trend, the number of granted licenses for high-rise residential projects climbed by 17%, to 38,936. The same applies High Rise Residential 38,936 33,177 17.4%to the low-cost housing segment, which increased by 6%. Some of Commercial Condominium 2,622 2,474 6.0%the approved high-rise projects last December are palm Tree 2 at New Farmlot 225 283 -20.5%port City (Megaworld), La Verti Residences and Accolade place (DMCIHomes), The Grove by Rockwell Towers C & D (Rockwell Land), The Memorial park 116,645 209,543 -44.3%Meranti at Two Serendra (Serendra Inc.), and Azure Urban Resort Industrial Subdivision 35 - -Residences St Trop (Century Limitless). Commercial Subdivision 374 921 -59.4% Total (philippines) 308,517 413,345 -25.4%The most significant decrease in the number of issued licenses ishighly notable in the mid-income housing segment, which dropped by Source: Housing and Land Use Regulatory Board30%, to 32,541 units followed by socialized housing which fell by11.4%. The average total number of issued licenses across theresidential sector went down by 6%, twice the dip recorded inNovember 2010. P. 3 | Colliers international
  4. 4. PHIlIPPINES | 1Q 2011 | THE KNOWLEDGE | OFFICE HLURB Licenses 180,000 140,000 160,000 120,000 140,000 100,000 120,000 units 80,000 units 100,000 80,000 60,000 60,000 40,000 40,000 20,000 20,000 - - 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 1Q07 1Q08 1Q09 1Q10 Quarterly Approvals Moving 12-Month Average (RHS) Source: Housing and Land Use Regulatory BoardoFFiCe seCtor Makati CBD vs. Metro Manila Office Stock 7,000,000 600,000Supply 6,000,000With more than twice the supply in 2010, 500,000office stock across major business districts in 5,000,000Metro Manila is expected to grow this year by 400,000 in sq.m.385,000 sq m in NUA. Bonifacio Global City 4,000,000 in sq.m.remained the most active business district, 300,000 3,000,000generating almost 50% of the growth. 200,000 2,000,000Contrary to BGC, the Makati CBD office stock 100,000 1,000,000remains unchanged, but is expected to reach2.75 million with the completion of the Zuellig - 0Building (57,000 sq m) beginning in 2012. In 2011F 2012F 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010the first quarter, total office stock reached ataround 92,500 sq m. Completed projects in Metro Manila Stock Makati CBD YoY Change (RHS)BGC include W Office (7,060 sq m), ActiveFun Bldg. (15,800 sq m), and Jeco prime(15,800 sq m). Other developments which Makati CBD Office Supply and Demandwere granted occupancy permits are Vector 1 270,000 20%(13,850 sq m) in Alabang, and MDC 100 220,000(39,800 sq m), in Eastwood City which will 15%soon be fitted out by its tenants. 170,000 10% in sq.m. 120,000With a significant number of intended BpOoffices shaping up in major CBDs, notably in 70,000 5%BGC, other locations should not be discounted, 20,000as the completion of Two-Ecom Centre 0%(59,700 sq m) in pasay, and Eton Centris 2 (30,000)(15,300 sq m) in Quezon City suggestsgrowth in office stock even across non-major (80,000) -5%business areas. 2011F 2012F 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 New Supply During Year Take-Up During Year Vacancy at Year End (RHS)DemandThe high net take-up of around 40,000 sq m Source: Colliers International Philippines Researchpressed vacancy rates in Makati to fall to3.8%. An additional stock of around 50,000 The apparent demand for office space pushed vacancies for Grade A buildings to drop bysq m by the start of 2012 may lower almost 3% lower while premium and Grade B buildings experienced less than 1.5% decline tooccupancy rates by an inch, but vacancy rates 6.09% and 3.15%, respectively.may rebound at the 3% level, as Makati shouldstill receive high take-up rates in the long Vacated spaces across all grades were easily occupied, due to heavy demand for BpO spacesterm. used for either contact centers, or back-office functions. Apart from this, Makati remains highly occupied by the mix of traditional offices. P. 4 | Colliers international
  5. 5. PHIlIPPINES | 1Q 2011 | OFFICE MAKATI CBD COMpARATIVE OFFICE VACANCY RATES 1Q11 4Q10 1Q12F pREMIUM 6.09% 7.52% GRADE A 4.87% 7.79% GRADE B & BELOW 3.15% 4.41% ALL GRADES 3.80% 5.47% 3.00% Source: Colliers International Philippines Research FORECAST OFFICE NEW SUppLY LOCATION End-2010 2011 2012 2013 MAKATI CBD 2,699,696 - 57,353 76,681 ORTIGAS 141,018 12,480 27,786 - FORT BONIFACIO 485,693 188,175 90,603 99,397 EASTWOOD 252,979 75,605 - - ALABANG 234,305 27,701 - - OTHER LOCATIONS* 685,362 81,007 - 23,000 TOTAL 4,499,053 384,968 175,742 199,078 Source: Colliers International Philippines Research *Manila, Pasay, Mandaluyong, and Quezon CityRentsYoY, the Makati CBD premium rates increased by 4%, to an average of p820 per sq m monthly (per net useable area.) Grade A offices stood atp680 per sq m monthly, growing by 2% over the first quarter. Similarly, Grade B office rental rates increased by an average of 3% to p450 persq m monthly.As comparative rental rates continue to tighten, demand for office space in Makati tends to be inelastic, considering that the stock is limited.Expectations are for both Grade A and B office rental rates to climb by 9%-11% over the next twelve months. While premium rental rates mayrise to more than p900 per sq m monthly by the start of 2012. COMpARATIVE OFFICE RENTAL RATES MAKATI CBD (BASED ON NET USEABLE AREA) pESO/SQ M/MONTH 1Q11 4Q10 %CHANGE (QOQ) 1Q12F %CHANGE (YOY) pREMIUM 752-889 740-880 1.2% 791-916 4.0% GRADE A 472-889 450-880 2.4% 530-955 9.1% GRADE B 422-480 402-471 3.3% 461-529 9.7% Source: Colliers International Philippines Research NOTABLE LEASING DEALS Building Area Size (sq m) Hanston Square Ortigas 9,102.00 Alphaland Southgate Tower Makati 8,500.00 Robinsons Cybergate 3 Mandaluyong 6,235.93 Source: Colliers International Philippines Research P. 5 | Colliers international
  6. 6. PHIlIPPINES | 1Q 2011 | OFFICE | RESIDENTIALCapital Values Makati CBD Office Capital ValuesAverage office capital values across allbuilding types in Makati appreciated minimallyby 1.3%, at a rate similar to the previous 130,000quarter. Capital values among premium 120,000Grade Buildings is now at p103,000 per sq m, 110,000which continues to escalate since it breached 100,000 in peso per sq.m.the one hundred thousand level during late- 90,0002010. Grade A & B offices likewise rose by 80,0002.07%, to p78,500 and 0.09% to p53,000, 70,000respectively. 60,000 50,000Capital values are capped to appreciate by 7% 40,000by the same period next year. By the end of 30,000this year, valuation for premium grade 4Q11F 1Q96 4Q96 3Q97 2Q98 1Q99 4Q99 3Q00 2Q01 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11buildings should peak at p110,000 per sq m,while Grades A & B should rise to p82,000 Premium Grade A Grade B/B-and p55,000, respectively. Apart from Makati,growth in other major locations is estimatedto be at 4% YoY. Source: Colliers International Philippines Research COMpARATIVE OFFICE CApITAL VALUES MAKATI CBD (BASED ON NET USEABLE AREA) pESO/SQ M 3Q10 2Q10 %CHANGE (QOQ) 3Q11F %CHANGE (YOY) pREMIUM 94,484-111,540 92,000-110,000 2.0% 103,557-122,495 9.7% GRADE A 67,210-89,979 65,000-89,000 2.1% 71,333-97,439 7.4% GRADE B 45,000-61,050 45,000-61,000 0.1% 47,060-62230 3.0% Source: Colliers International Philippines ResearchRESIDENTIAL SECTORSupplyAcross the five sub-markets tracked by Colliers, some 518 units under Bonifacio Global City were added to the supply stock this quarter. Theseprojects include Crescent park Residences (198 units), Stamford Executive Residences 2 (320 units) Overall unit inventory for this year isexpected to reach 8,958 units, 60% of which is lined up for completion in the fourth quarter.In Makati, projects with around 1,800 units are in the pipeline and are slated for completion come end-2011. These projects include the highlyanticipated branded luxury-residential, Raffles Residences, quoted to have a 74% sales take-up.Strong market signals seem to hint growth across premium grade condominiums, however the market is continually fed by low- to mid-costprojects reducing supply of bigger unit sizes. In Metro Manila, condominium projects offer 70% of studio and one-bedroom units, with averagesizes of 25 sq m to 35 sq m. The trend is most likely to continue in the medium term in accord with the emergence of the BpO sector, one ofthe drivers of growth for this segment. Makati CBD Residential Stock 18,000 25% 16,000 20% 14,000 12,000 15% in units 10,000 10% 8,000 6,000 5% 4,000 0% 2,000 - -5% 1Q98 4Q98 3Q99 2Q00 1Q01 4Q01 3Q02 2Q03 1Q04 4Q04 3Q05 2Q06 1Q07 4Q07 3Q08 2Q09 1Q10 4Q10 3Q11F Residential Stock YoY Change (RHS) Source: Colliers International Philippines Research P. 6 | Colliers international
  7. 7. PHIlIPPINES | 1Q 2011 | RESIDENTIAL FORECAST RESIDENTIAL NEW SUppLY LOCATION End-2010 2011 2012 2013 TOTAL MAKATI CBD 13,076 2,181 1,961 1,895 19,439 ROCKWELL 2,382 1,336 - - 3,718 FORT BONIFACIO 10,709 3,052 2,417 2,397 18,575 ORTIGAS 7,481 2,389 934 1,579 12,383 EASTWOOD 5,735 - 558 977 7,270 TOTAL 39,383 8,958 5,870 6,848 61,385 Source: Colliers International Philippines ResearchDemand Makati CBD Residential VacancyWider inventories in Makati CBD pushed 18%vacancy rates higher at the 9% level this 16%quarter and may reach to as high as 11% bythe end of the year. In other sub-markets 14%such as Eastwood and Rockwell, vacancies 12%remained stable by 3% and 4% respectivelyconsidering that the stock remains stable. 10% 8%Rental market demand for the luxury 6%residential was high with an occupancy rate 4%of 90% in Makati CBD. However, thecontinuous inflow of smaller-size units, which 2%are easily absorbed by the investors market, 4Q11F 1Q96 4Q96 3Q97 2Q98 1Q99 4Q99 3Q00 2Q01 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11may escalate vacancy rates further as moreof these spaces will still be left for lease. Source: Colliers International Philippines ResearchRents MAKATI CBDRents for the luxury 3BR residential rates in COMpARATIVE RESIDENTIAL VACANCY RATESMakati CBD adjusted slightly, to p560 per sq 1Q11 4Q10 1Q12Fm monthly, which translates to 162,400 sq mmonthly for a 290-sq m unit. QoQ change LUXURY 9.9% 6.3%was minimal by less than one percent, whichyields an average increase of 4% over the OTHERS 15.0% 10.0%next 12 months. Taking into account the ALL GRADES 9.4% 8.8% 11.6%limited availability of these unit types, pricestends to move elastically, with a continueduptrend in demand. Source: Colliers International Philippines Research P. 7 | Colliers international
  8. 8. PHIlIPPINES | 1Q 2011 | RESIDENTIALRockwell Center still offers the highest rental Makati CBD, Rockwell, Bonifacio Global Cityrates averaging at p736 per sq m since itincreased by 3% quarterly during the end of prime 3BR Units Residential Rents2010. A gradual increase in rate, however 900inevitable, may only ease temporarily, as theinventory in this location widens over the next 8003 years. 700 in peso per sq.m. per month 600 500By an increase of 1.5%, rental rates in BGCrose to p636 per sq m monthly, translating to 400p159,000 per month for a 250-sq m unit. The 300completion of Fort Victoria B and C, with an 200inventory of mostly 3BR units, will temper 100rental rates, considering that the availabilityof these unit types will increase. - 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11F 1Q12F Makati CBD Rockwell Bonif acio Global City Source: Colliers International Philippines Research METRO MANILA RESIDENTIAL CONDOMINIUM COMpARATIVE LUXURY 3BR RENTAL RATES pESO/SQ M 1Q11 4Q10 %CHANGE (QOQ) 1Q12F %CHANGE (YOY) MAKATI CBD 360-759 360-753 0.5% 376-790 4.2% ROCKWELL 642-830 620-810 2.9% 679-878 5.7% BONIFACIO GLOBAL CITY 528-744 520-733 1.5% 553-782 5.0% Source: Colliers International Philippines Research COMpARATIVE RESIDENTIAL LEASE RATES THREE-BEDROOM pREMIUM, SEMI-FURNISHED MINIMUM AVERAGE MAXIMUM %CHANGE (YTD)Apartment Ridge/Roxas Triangle Rental Range 55,000 104,500 225,000 -0.48% Average Size 230 270 350Salcedo Village Rental Range 55,000 78,750 120,000 0.23% Average Size 150 190 320Legaspi Village Rental Range 60,000 146,667 225,000 0.57% Average Size 175 212 274Rockwell Rental Range 120,000 154,000 190,000 0.00% Average Size 184 224 286Fort Bonifacio Rental Range 80,000 151,000 215,000 1.34% Average Size 145 240 309 Source: Colliers International Philippines Research P. 8 | Colliers international
  9. 9. PHIlIPPINES | 1Q 2011 | RESIDENTIAL | RETAILCapital ValuesIn Makati CBD, a slight movement on thesecondary market manifests a minimalincrease in capital values to around p103,000per sq m this quarter. The prevailing price for Makati CBD Residential Capital Valuesthe new market of a 3BR unit in Makati CBDis at p120,000 per sq m. in average. pre- 120,000selling projects remained to be muchpreferred due to its flexibility in paymentterms and better facilities. 110,000 in peso per sq.m. 100,000In Rockwell Center, where secondary marketrates are slightly higher than Makati, an 90,000increase of 4% is expected over the next 12months from the current p107,200 per sq m. 80,000Edades, as the only pre-selling project in thearea is now selling at an average of 125,000per sq m for a 3BR unit. Both secondary and 70,000new market prices are to appreciate graduallyin a much wider gap. 60,000 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11F 1Q12FCapital value in Bonifacio Global City is now atp103,000 per sq m and may further increase Makati CBD Rockwell Bonifacio Global Cityby 3%-4% after a year. As an emergingbusiness district and with a number ofplanned residential projects, both secondaryand new market prices tend to be very high.price movements may, however, soften as Source: Colliers International Philippines Researchstiff competition across pre-selling projectseventually occurs. METRO MANILA RESIDENTIAL CONDOMINIUM COMpARATIVE LUXURY 3BR CApITAL VALUESpESO/SQ M 1Q11 4Q10 %CHANGE (QOQ) 3Q11F %CHANGE (YOY)MAKATI CBD 71,535-134,954 70,827-133,750 0.9% 73,704-145,768 6.3%ROCKWELL 92,000-122,500 92,000-121,000 0.7% 94,506-128,994 4.2%BONIFACIO GLOBAL CITY 86,287-121,557 85,943-121,073 0.4% 88,728-126,989 3.7% Source: Colliers International Philippines ResearchRETAIL SECTOR Metro Manila Retail Supply and Demand 600,000 20% 500,000 15% 400,000 10% in sq.m. 300,000 5% 200,000 100,000 0% - -5% 2010F 2011F 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 New Supply During Year Take-Up During Year Vacancy at Year End (RHS) Source: Colliers International Philippines Research P. 9 | Colliers international
  10. 10. PHIlIPPINES | 1Q 2011 | RETAILRETAIL SECTOR Metro Manila Retail StockSupply 5,400,000 16%By the end of 2011, additional stock of 108,000sq m is anticipated, as the construction of the 14% 4,900,000Lucky China Town Mall in Binondo, Manila is 12%set to complete. A year after the completion 4,400,000 10%of SM Novaliches, Metro Manila stock in sq.m.remained at 5 million sq m this quarter. 8% 3,900,000 6% 3,400,000 4%Besides BGC, and the future development ofEntertainment City (800 hectare) in Manila, 2% 2,900,000the limited space within the major districts 0%moved major retail developers to expand 2,400,000 -2%geographically. New provincial projects 1Q11F 3Q11F 1Q12F 1Q98 3Q98 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10include Robinson’s place palawan, SM CityMasinag, SM City Olongapo. While Ayala Land,on the other hand, announced its plans of Retail Stock YoY Change (RHS)expansion in Cavite, Cebu and Bacolod. Source: Colliers International Philippines ResearchApart from regional expansions, a trend in Demandretail development for the medium term isimminent in small–scale community malls, Occupancy rates were high at the 99% level across super regional and regional malls. In 1Q11,which function as the support component for vacancy rate is seen lower across super regional malls at 0.4% or at a range of 600 sq m tothe BpO offices and residential communities. 800 sq m. Regional malls on the other hand, has higher vacancies at a 0.8% rate (700 sq m toStill, there are a few district-to-regional-sized 900 sq m). With most of these mall-types located in major CBDs, vacated stores are expectedmalls expected to rise on the fringes of Metro to be easily replaced by new tenants pushing vacancy rates to be at a long-term low. InManila. Simultaneously, retail activities are addition, heavy foot traffic strengthened occupancy as the result of the expansion of internationalalso geared towards the retrofitting and brands, varied products and services offerings have emerged.expansion of the existing malls. METRO MANILA RETAIL VACANCY 1Q11 SUpER REGIONAL 0.40% REGIONAL 0.90% Source: Colliers International Philippines Research RETAIL STOCK METRO MANILA SQ M 1Q11 4Q10 %CHANGE (QOQ) 1Q12F %CHANGE (YOY) SUpER REGIONAL 2,938,562 2,938,562 0.0% 3,051,353 3.8% REGIONAL 1,065,378 1,065,378 0.0% 1,065,378 0.0% DISTRICT/NEIGHBORHOOD 1,050,331 1,050,331 0.0% 1,050,331 0.0% ALL LEVELS 5,054,271 5,054,271 0.0% 5,167,062 2.2% Source: Colliers International Philippines ResearchRentsAs of 1Q11, rental rates in Makati CBD, particularly Ayala Center, increased by 0.9% to p1,180 per sq m since last quarter. Lower than in Makati,Ortigas rental rates increased by 0.5% to p1,055 per sq m. With an increase in consumer confidence, volume sales on products such as appareland electronics are expected to improve, leading to the build-up of effective rents to as high as 5% over the next twelve months. P. 10 | Colliers international

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