Real Estate Market Overview Real Estate
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RealReal EstateEstate Market Overview 30 September 2009 Outline • Market Overview: Retail, Residential, Office • Philippine Economic Overview • Market Overview: BPO • Tourism and Hotel Overview • Jones Lang LaSalle Leechiu: Who We Are, What We Do 2 Market Overview Retail4,500,000 Sector 1,600 4,000,000 1,400 3,500,000 1,200 Rent in Php/sqm/month 3,000,000 1,000 2,500,000 800 Area in Square Meters 2,000,000 600 1,500,000 400 1,000,000 200 500,000 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Prime Rental Rates Average Rental Rates Supply of Real Estate Demand (Take Up) Market Overview Residential Condominium Sector 35,000 600 Rents peaked in 2008, now softening due to additional supply 30,000 500 25,000 Rent in Php/sqm/month 400 Lowest vacancy rate of 1% 20,000 No. of Units 300 15,000 200 10,000 100 5,000 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Supply of Real Estate Demand (Take Up) Average Rental Rates Market Overview Residential Sector • Luxury and prime sector holding well • Enclosed villages up 10 – 15% in the last 12 months • Recommended buys in luxury condominium projects – i.e., West Block Rockwell, Pacific Plaza Towers, Essensa, One McKinley Place, Regent Parkway • Selling below replacement cost • Growth of OFW remittances will determine future direction of middle-end market • Banks are still lending at favorable rates, providing easy access to financing – both for buyers and developers Market Overview Office Sector 7,000,000 TODAY: Vacancy of 14%, or 1,000 500,000 square meters 900 6,000,000 Highest vacancy of 1.5 million Lowest vacancy rate of 4%, square meters or 193,000 square meters 800 5,000,000 Rent in Php/sqm/month 700 600 4,000,000 500 Area in Square Meters 3,000,000 400 300 2,000,000 200 1,000,000 100 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Makati Prime Rental Rates Makati Average Rental Rates Supply of Real Estate Demand (Take Up) Market Overview Office - Quarterly Supply vs Leased / Pre-Committed Space 375,000 Leased / Pre-Committed Supply Supply Reduction 350,000 325,000 Total of 1,707,244 sqm supply from 2008 - 2014 300,000 Oversupply Period Reduced by 341,867 sqm or 17% 275,000 250,000 225,000 Dramatic drop in supply may result 200,000 in rapid rise in rents. 175,000 150,000 125,000 100,000 75,000 50,000 25,000 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2012 2014 20082008 20092009 20102010 20112011 593,086593,086 sqm.sqm. 575,009575,009 sqm.sqm. 176,770176,770 sqm.sqm. 213,380213,380 sqm.sqm. Average Demand Market Overview Office - Supply vs Leased / Pre-Committed Space (2008 Fort Bonifacio Northgate Cyberzone Quezon City Makati Pioneer Complex McKinley Hill Total Supply: Eastwood City Ortigas Total Supply: 593,086 sqm Leased: Leased: 77.97% Bay City Others 593,086 77.97% 0 sqm 25,000 2008 50,000 75,000 100,000 125,000 150,000 Fort Bonifacio Northgate Cyberzone Quezon City Makati Pioneer Complex Leased/Pre-Committed: McKinley Hill Eastwood City Ortigas Leased/Pre-Committed:Total Supply: 41.09% Total Supply: 575,009 sqm - 2009) Bay City Others 575,009 0 sqm 25,000 41.09% 50,000 2009 75,000 100,000 125,000 150,000 Market Overview Office - Supply vs Pre-Committed Space (2010 – 2011) Fort Bonifacio Northgate Cyberzone Quezon City Makati Total Supply: Pioneer Complex McKinley Hill Total Supply: 176,770 sqm Ortigas Pre-Committed: Pre-Committed: 13.69% Eastwood Bay City Others 176,770 0 13.69% sqm 25,000 2010 50,000 75,000 100,000 125,000 150,000 Fort Bonifacio Northgate Cyberzone Quezon City Makati Total Supply: Pioneer Complex McKinley Hill Total Supply: 213,380 sqm Ortigas Pre-Committed: Eastwood Pre-Committed: 0% Bay City Others 213,380 0 0% sqm 25,000 50,000 2011 75,000 100,000 125,000 150,000 BPO Industry Overview Number of Seats Total Number of BPO Seats: 240,714 LUZON 209,060 Seats Metro Manila – 188,425 (78%) % of Total No. of BPO Seats VISAYAS 29,284 Seats Cebu – 22,569 (9%) % of Total No. of BPO Seats MINDANAO 2,370 Seats 10 BPO Industry Overview Metro Manila Seat Distribution Parañaque Manila Las Piñas Total Number of Seats in Metro Manila: 188,425 Marikina Bay City Alabang Northgate Cyberzone Fort Bonifacio McKinley Mandaluyong Pioneer Ortigas Makati Quezon City Eastwood UP-Ayala No. of Seats 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 11 BPO Industry Overview Provincial Seat Distribution General Santos Tarlac Camarines Sur Cagayan De Oro Total Number of Seats Outside Leyte Metro Manila: 52,287 Dumaguete Cavite Davao Rizal Batangas Baguio Bacolod / Iloilo Iloilo Laguna Pampanga Cebu No. of Seats 0 5,000 10,000 15,000 20,000 25,000 12 Philippine Economic Overview 1997 vs. 2008 Crisis vis-à-vis Property Market 1997 Asian Financial Crisis 2008 Global Financial Crisis Rapid climb in interest rates plus Falling rates forcing mobilization of capital appreciation of the US Dollar forced loan into real estate investments; credit still free- Interest Rates defaults, bankruptcies and unfinished flowing buildings 2.3 million square meters of Prime, Grade 1.4 million square meters of largely Grade Supply A and B stock, 60% of which is in Makati, B stock, spread across Metro Manila and 40% in Ortigas Severe contraction as companies closed BPO industry growing in the Philippines as Demand a result of cost-cutting measures of multinational companies Long "U" shape recovery after 5 years "V" shape recovery after 18 months to 2 Rents years Market Overview Demand By Big Movers Big Movers (By Industry) Required Size (sqm) Reasons Banking / Financial Services 6,000 Expansion 3,000 Disaster Recovery Site BPO 26,000 Expansion 21,000 Expansion 14,000 Expansion 14,000 Expansion 12,000 Expansion 10,000 First Facility in the Philippines IT 40,000 Relocation Consumer Goods 3,000 Relocation Various transactions ranging from 1,000 - 46,000 Relocation / Expansion 7,000 sqm TOTAL 195,000 • Demand coming mostly from the BPO industry • Timing to commit – 4Q 2009 to 1H 2010 • If these are successfully transacted, it will set a floor price on rentals 14 Market Overview BPO / Call Center Industry 16,000 7,000 14,000 6,000 12,000 5,000 10,000 4,000 8,000 3,000 6,000 2,000 4,000 1,000 2,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 BPO Industry Revenues Call Center Industry Revenues Number of Call Center Seats Source: BPAP, DOT BPAP, Source: Call Center Seats 100,000 120,000 140,000 160,000 CountryArrival Visitor and Seat Risk, Center Call 20,000 40,000 60,000 80,000 0 1997 Asian Financial Crisis 2000 Tech Bubble / US Stock Market Crash 2000 2001 2002 2003 2004 2005 2006 2007 2008 ERAP Impeachment Glorietta Mall Bombing SM Megamall Cinema Restroom Bombing Synchronized Bombing in Metro Manila 2001 Philippine General Elections Dos Palmas Kidnapping 911 EDSA Dos EDSA 3 Gracia and Martin Burnham Kidnapping 2002 Zamboanga Bombing Captured Jemaah Islamiyah Sentenced Jemaah Islamiyah 2003 SARS Outbreak Davao Airport Bombing Jemaah Islamiyah escape Jose Pidal Plunder Case Oakwood Mutiny "In The Presence of my Enemies" 2004 Philippine General Elections Infanta Mud Slide SuperFerry Bombing General Santos Christmas Bombing 2005 Davao Bus Terminal General Santos City Mall Bombing Hello "Garci" Scandal "To Fly Again" Valentine's Day Bombing V-Day Bombing Masterminds Death Sentence 2006 State of Emergency Declaration Milenyo Southern Leyte Mud Slide 2007 Cotabato Bus Station Bombing ERAP Conviction ZTE Scandal Glorietta 2 Bombing Congress Bombing Manila Peninsula Incident 2008 Cotabato City Bombing Tourist Arrivals Call Center Seats ZTE-NBN Irregularities Growth US Financial Crisis 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 16 Tourist Arrivals Tourist Source: BPAP, Google Finance Google BPAP, Source: Call Center Seats NASDAQ,Dow Growth Jones Seat Center and Call 100,000 120,000 140,000 160,000 20,000 40,000 60,000 80,000 0 1997 Asian Financial Crisis 2000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tech Bubble / US Stock Market Crash ERAP Impeachment Glorietta Mall Bombing SM Megamall Cinema Restroom Bombing Synchronized Bombing in Metro Manila 2001 Philippine General Elections Dos Palmas Kidnapping 911 EDSA Dos EDSA 3 Gracia and Martin Burnham Kidnapping 2002 Zamboanga Bombing Captured Jemaah Islamiyah Sentenced Jemaah Islamiyah 2003 SARS Outbreak Davao Airport Bombing Jemaah Islamiyah escape Jose Pidal Plunder Case Oakwood Mutiny "In The Presence of my Enemies" 2004 Philippine General Elections Infanta Mud Slide SuperFerry Bombing General Santos Christmas Bombing 2005 Davao Bus Terminal General Santos City Mall Bombing Hello "Garci" Scandal "To Fly Again" Valentine's Day Bombing V-Day Bombing Masterminds Death Sentence 2006 State of Emergency Declaration Milenyo Southern Leyte Mud Slide 2007 Cotabato Bus Station Bombing ERAP Conviction ZTE Scandal Glorietta 2 Bombing Congress Bombing Manila Peninsula Incident 2008 Dow Jones NASDAQ Call Center Seats Cotabato City Bombing ZTE-NBN Irregularities US Financial Crisis 17 TourismTourism The Next Big Thing Global Tourism Overview 2008 • Total international tourist arrivals: 922 million • Total tourism receipts of USD 944 billion, of which the Philippines got: 50%50% of 1% (USD 5 billion in tourist receipts), or 32%32% of 1% (3.2 million tourist arrivals in 2008) • 80% of international travel takes place within the same region • Top international tourism spenders Expenditure Expenditure Country Country (USD billion) (USD billion) 1.Germany 91.0 7.