RESEARCH

METRO MARKET UPDATE Q3 2018

METRO MANILA REAL ESTATE SECTOR REVIEW PHILIPPINE COMPETITIVENESS AND GNI PER CAPITA ON A CONSTANT RISE COVER | Local firms benefitting from the country’s economic growth and planned infrastructure programs

Figure 1 Philippine GDP Growth Rate Forecasts for 2018 SNAPSHOTS 6.8 6.7 6.7 6.7 6.5 6.3 6.4 6.5 Economic Indicators 5.1 6.1% GDP Q3 2018 Fitch Solutions Asian Development International World Bank Bank Monetary Fund Original Forecast Revised Forecast Developing Asia 6.7% Inflation Rate Rising to the 5th spot among Global economists predict that the September 2018 ASEAN (Association of Southeast will be able to attain a Asian Nations) countries, the GDP growth rate that is above 6% Philippines once again proved itself in 2019. Economists of both the as a rising economic powerhouse First Metro Investment Corporation on the world stage. The World (FMIC) and the University of Asia Economic Forum recently published and the Pacific (UA&P) remain 2.5% the World Competitiveness Report optimistic of an economic rebound OFW Remittances 2018 using a new metric called the in the second half of 2018, due to August 2018 New Global Competitiveness Index the rising national government 4.0. Additional categories were disbursements and capital outlay created and used in ranking the for infrastructure projects, higher 140 economies. New drivers of peso equivalent of remittances, and productivity and long-term growth increasing volume of exports. during the era of the Fourth 6.15% Industrial Revolution were added. In Several local companies wish to Avg. Bank Lending take advantage of the Philippine’s the report, the Philippines’ September 2018 strongest suits were its Market Size, competitive market and rising Labor Market, Financial System, income per capita by expanding Business Dynamism and their respective businesses. One of Macroeconomic Stability. the country’s biggest conglomerates, San Miguel The Philippines is envisioned to Corporation (SMC), is prepping for a 3.35% become an upper middle-income group-wide expansion program that 91-Day T-Bill will cost around PhP742 billion. country by the end of 2019. The September 2018 country’s current Gross National Ginebra San Miguel, one of the Income per capita is just below SMC subsidiaries, reported plans of $3,900, which is slightly lower than building 4 new plants in various the World Bank’s $3,956 to locations across the country and $12,235 metric for upper middle- launching new products, adding to income countries. The Philippines its existing wide array of needs to grow 4.4% next year in manufactured beverages. 53.94 order to make it to the upper middle-income bracket. The Avg. PhP-USD present Gross Domestic Product September 2018 (GDP) growth levels of the country render the goal of moving up highly Continued on page 11. . . attainable.

2 MANILA OFFICE SECTOR SUSTAINS MARKET OPTIMISM OFFICE | Tighter vacancies and higher lease rates noted despite introduction of additional supply

The office market growing firms and new entrants sustained momentum in the third from the PAGCOR-enabled TABLE 1 quarter of 2018. The overall companies. Q3 2018 OFFICE DATA vacancy rate continued to decline despite additional office stock from Rental rates in Metro Manila Weighted Avg continued to escalate albeit at a Vacancy newly completed developments, Area Lease Rates more gradual pace. Overall Rate indicating robust demand for office (PhP/sq.m./mo.) space. Q3 2018 vacancy dipped to weighted average asking lease rate grew 0.81% quarter-on-quarter and 3.96%, coming from 4.51% in the 1,377.03 3.42% previous quarter. Moreover, net 9.72% year-on-year. Headline rent for the third quarter was noted at Fort absorption picked up remarkably at 1,111.59 3.34% 154,855 square meters, the highest PhP1,018.32 per square meter per Bonifacio month. The continuous growth in figure yet recorded for the year. The 782.16 2.52% value more than offsets the 133,000 rates supports the positive market square meters of leasable area outlook on the office sector. Quezon 895.99 8.09% added to Metro Manila’s total office Makati’s weighted average lease City supply, upon completion of 6 new rate remains the highest headline Ortigas 682.67 4.09% office buildings. rent among Metro Manila’s Central Various construction activities and Business Districts (CBD). The rents Bay Area 765.94 1.42% project launches further fortify the in Makati was pegged at an average of PhP1,377.03 per square METRO office market of Metro Manila. 1,018.32 3.96% About 1.3 million square meters of meter per month, slightly higher MANILA office space is expected to be than last quarter’s PhP1,362.05 per available by the end of 2018. square meter per month. With an Source: Santos Knight Frank Research Majority of these spaces are already additional Gross Leasable Area pre-leased and the remaining (GLA) of 10,407 square meters from newly operational M1, Makati office vacant stock will cater to the FIGURE 2 supply expanded to about 930,000 Upcoming Supply (in sq.m.) square meters. By the end of 2018, another 286,317 square meters of office space is expected to add to 800,000 the existing office stock in the area. 700,000 600,000 In , the newly turned 500,000 over One added 28,992 square meters of 400,000 GLA to the area’s total supply, 300,000 increasing Fort Bonifacio’s vacancy 200,000

rate to 3.34% from 3.24% last 100,000

quarter. In terms of weighted 0 average lease rate, Fort Bonifacio Makati Fort Alabang Quezon Ortigas Bay City came in second to Makati, with Bonifacio City office rents pegged at PhP1,111.59 Q4 2018 2019 2020 2021 per square meter per month.

Quezon City further expanded its Source: Santos Knight Frank Research supply of office spaces with the Four E-com Center

3 completion of two prime office Recent Philippine Economic Zone buildings in the third quarter: Zeta Authority (PEZA) data show an Tower (35,000 square meters in 8.82% percent growth in the GLA) and Skysuites Corporate number of investment pledges from Tower (8,273 square meters in IT-BPO companies. The BPO GLA). Upcoming office building industry continues to expand its Centris Cyberpod Five (42,336 services to include animation, data sq.m. in GLA), targeting expanding analytics, legal research and BPO companies and multinational analysis, game development and companies in the area, is expected accounting, among other things. to commence operations before the Artificial Intelligence (AI) is seen as end of the year. an opportunity to move the industry up the value chain and present new In the Bay Area, Nexgen Tower and roles to the Filipino workforce. Aseana 3 went online in Q3 2018, Despite the looming threat of adding a total of 50,329 square automation and AI, the IT-BPO meters or 8.7% to the total stock in sector is still expected to flourish in the business district. Weighted the next three to five years as Uptown Place Towers average asking lease rates for evidenced by the growing number and Bay Area went up of office leasing transactions. in the third quarter of the year to PhP895.99 per square meter per month and PhP782.16 per square meter per month, respectively. FIGURE 3 The largest change in vacancy rate Weighted Average Lease Rate (in PhP) and Year-on-Year Growth was recorded in Ortigas, coming Rate (in %) down to 4.09% from 6.41% last quarter. Alabang also exhibited tighter vacancies at an average of 1,600.00 18 2.52% of the total office stock. No 1,400.00 16 new office buildings were turned 1,200.00 14 over in the aforementioned markets. 1,000.00 12 10 However, a total of 192,467 square 800.00 meters and 76,332 square meters 8 600.00 6 of GLA are expected to add to the 400.00 4 Ortigas and Alabang office supply, 200.00 2 respectively. 0.00 0 The Philippines remains an Makati Fort Alabang Quezon City Ortigas Bay City Bonifacio attractive investment destination for BPO companies amidst Lease Rate (Php) Growth Rate uncertainties caused by the country’s tax reform program. Information Technology and Source: Santos Knight Frank Research Business Process Association of the Philippines (IBPAP) reported that existing investors continuously expand and new entrants are likewise expected to come in. The Philippines continues to capitalize on its young, highly educated and English-speaking labor force, as well as infrastructure developments that will spur investment and business activities in the country.

4 MANILA RESIDENTIAL DEMAND DRIVEN BY INFRASTRUCTURE PROGRAMS AND CREATION OF MIXED-USE DEVELOPMENTS RESIDENTIAL | Infrastructure projects key to the identification of project sites and investment opportunities

Real estate developers continue to The infrastructure projects support The emerging in capitalize on the present these developments by bringing is generating considerable interests government’s Build! Build! Build! down the travel time from the from investor. Most of the program by acquiring land and Central Business Districts (CBD) to residential projects in Arca South master-planning projects relative to the fringe areas. Several residential are 97 to 100% sold as of the third the reported location of the planned projects are located outside the quarter of 2018. The newest infrastructure projects. Developers CBDs, such as The Vantage by project, Park Cascades 2 (launched likewise highlight the completion of Rockwell Primaries, Empire East’s April 2018), is approximately 75% the infrastructure projects as an Kasara Urban Resort Residences sold. Taguig’s average absorption important and effective selling and DMCI’s Kai Garden Residences rate is 97.96% to-date. strategy. and Prima Residences.

Access to ’s Arca South TAKE-UP & ABSORPTION TABLE 2 will greatly improve following the Q3 2018 Residential Residential condominiums in the completion of the on-going 7.7- Metro Manila CBDs continue to Condominium Sales Market kilometer C5 Southlink Project, enjoy high take-up rates. Makati Statistics which connects Taguig to the NAIA and Alabang registered significant terminal 3. The Metro Manila increases in take-up from the Avg. Expressway Project, also known as, Units second quarter to the third quarter “C6”, is another project that Area Monthly of 2018. Average residential take- Sold (%) increases the attractiveness of Arca Take-up up in Makati was pegged at 33.3 South projects: Avida Vireo, Avida units per month in the third quarter, Towers One Union Place, Alveo Makati City 97.71% 33.30 which is a significant increase from Arbor Lanes, and Alveo Park the 22.8 units per month take-up Cascades. The Taguig Integrated Taguig City 97.96% 11.70 noted in the previous quarter. The Terminal Exchange tops the list of take-up of residential projects in infrastructure projects that is Quezon City 91.50% 21.20 Alabang almost doubled in Q3 expected to add value to Arca 2018, with an average take-up rate South. It is considered as a landport Ortigas* 93.86% 24.40 of 16.4 units per month compared terminal for people going in and out to the 9.9 units per month in Q2 of Metro Manila. 2018. Alabang 95.88% 16.40 Ortigas & Company’s developments Studio Units continue to be the inside (The Bay Area 94.91% 40.20 most marketable type of Maven, The Imperium, The condominium unit, with average METRO Royalton, and The Connor) are 94.75% 23.21 monthly take-up increasing to 14.09 MANILA described to be within walking units in the third quarter from 11.04 distance from a future units in the second quarter. Buyers Subway station while SMDC’s SELLING PRICE of Studio Units are mostly investors Trees Residences and Avida’s targeting lessees working within the Avida Astrea projects in Fairview Prices of residential units in Metro CBDs and PAGCOR-enabled (Quezon City) boast of proximity to Manila continue to escalate, driven companies with the intention of the MRT Line 7 station. by the high demand created by using the units for employee future infrastructure projects and Planned infrastructure projects housing. convenience of living in a walkable paved the way to the development urban development. The rising As of the third quarter of 2018, of various business district fringe number of PAGCOR-enabled about 95% of the floated areas. The scarcity of developable enterprises likewise continues to condominium inventories in Metro land within the CBDs forces influence the movement of Manila has been sold. Makati and developers to look for properties residential prices. Taguig (including Bonifacio Global outside the city core and develop City) both exhibited high absorption them into independent mixed-use Bay Area recorded the highest levels. Century City and Circuit developments. year-on-year growth in selling price Makati are notable performers in (per square meter) among the Makati.

5 Shang Residences at Wack-Wack Avida Towers: Makati Southpoint is Metro Manila CBDs. Bay Area in Source: Shang Properties, Inc. displayed a 64% year-on- another notable project of Avida year growth rate. The average Land. The project is located along selling price in Bay Area, Pasay is in Makati City presently pegged at PhP 240,606 and targets the Makati workforce. per square meter. Completing all of Megaworld’s Main financial districts and residential projects in Uptown BGC Philippine headquarters, Makati and is the Uptown Arts Residences. Taguig both experienced 20% year- Uptown Arts Residences is a 45- on-year growth in condominium storey high-end condominium selling prices as of the third quarter project set to be completed by the of 2018. The average selling price of year 2024. a residential condominium in Taguig is PhP 214,491 per square meter Uptown Arts Residences while the average selling price in Source: Megaworld Makati is PhP 205,452 per square meter. Current selling prices of middle- income developments in Metro Avida Towers: Verge Tower 1 Manila average PhP 147,975 per Source: Avida Land square meter, an 11% increase from the previous quarter’s PhP 133,100 per square meter and a 20% increase from last year’s PhP 122,355 per square meter.

UPCOMING DEVELOPMENTS

In the third quarter of 2018, four new condominium developments were launched (under the pre- selling stage), which added another 4,336 units to the overall inventory of residential projects in Metro Manila. Shang Properties and Avida Land recently introduced Shang Residences at Wack-Wack and Avida Towers: Verge in City. Shang FIGURE 4 Residences at Wack-Wack is a 50- Indicative Average Selling Prices per Area (PhP/sq.m.) storey resort-type high-end development of Shang Properties 600,000 located at the vicinity of Wack- 502,894 Wack Golf and Country Club. 500,000 415,650 Avida Towers: Verge, on the other 400,000 hand, is a 34-storey middle-income condominium project along 290,271 300,000 Reliance St. that caters to young professionals working in nearby 198,861 210,082 175,266 CBDs. The two projects are 200,000 scheduled to be turned over by 156,353 2023. 100,000 125,605 93,442 95,663 75,873 81,650 0 Makati City Taguig City Quezon City Ortigas Alabang Bay Area

6 SUSTAINED INDUSTRIAL GROWTH OPENS NEW DOORS INDUSTRIAL | Local Companies taking on the underserved logistics market

Data from the Philippine Statistics SM Investments Corporation FIGURE 5 Authority show that the contribution debuted in 2017 with the of the Industry sector to the acquisition of a 34.5% stake in the Industry Sector Composition (Q2, Philippine’s Gross Domestic Negros Navigation Company, Inc., 2018) Product (GDP) has been steadily the parent company of the rising in the past 5 years. Q2 2018’s country’s largest logistics provider, Electricity, Mining & industry growth was recorded at 2GO Group, Inc. SM is presently Gas and Quarrying Water 4% 6.3%, with largest contributions negotiating with another local Supply coming from Construction and logistics provider, Airspeed, for the 9% Manufacturing, growing at rates of acquisition of a 35% stake in the 13.5% and 5.6%, respectively. company. Manufacturing was boosted by the Construction 21% further strengthening of the retail Metro Pacific Investments Corp. market while Construction was (MPIC) has likewise acquired a 12% Manufacturing supported by the booming property stake in Air21. Together with its 66% sector and various government wholly owned subsidiary, Metropac infrastructure projects. Movers, Inc., MPIC currently has equity on two companies that are Expansions in the Logistics Industry engage in logistics.

Driven by the continuous expansion In addition, the International rates of warehouses typically range of the Philippine Economy, the Container Terminal Services Inc. from PhP150 to more than PhP500 logistics industry is expected to (ICTSI) has increased its stake in per square meter per month. capitalize on the country’s Manila North Harbor Port Inc. to Newer, well-maintained and better- economic momentum. The industry 50%. The move is expected to situated properties command the is envisioned to grow despite significantly lower costs and higher prices as supply dwindles challenges due to the country’s inefficiencies in the transport of and demand intensifies. Scarcity of archipelagic landscape, worsening goods. developable land for industrial use traffic situation and rising fuel costs. within Metro Manila continue to Logistics firms and retailers enter push developers to nearby According to a study made by Ken joint venture agreements for faster provinces. Research, the Philippine’s Logistics and wider distribution of products and Warehouse market is and services. Grab Philippines Double Dragon Properties Corp. forecasted to reach over PhP970 recently requested Bangko Sentral (DD) is a notable new entrant with billion by the year 2023, led by the ng Pilipinas approval to launch a the opening of its first industrial automotive, electronic products, cashless payment system for warehouse in Tarlac. DD has plans apparel & accessories, chemicals groceries and food delivery. Grab of constructing seven more of the and pharmaceuticals sectors. also partnered with Shopee, an same template throughout the Moreover, the Department of Trade online shopping platform in country, bringing its overall and Industry (DTI) crafted a National and Taiwan, offering industrial portfolio to 1.2 million Logistics Master Plan, with the main same-day delivery services of square meters of leasable spaces objective of advancing the Shopee products anywhere in by 2020. Philippine’s global competitiveness Metro Manila. through the creation of an efficient Metro Pacific Investments Corp. transport and logistics system. Notable New Entrants and through its logistics arm, Metropac Acquisitions Movers Inc., recently bought a 20- Realizing an opportunity in the hectare land in from Property logistics industry, Most industrial properties Company of Friends, Inc. (Pro- acquired Zalora’s last mile delivery (warehouse, standard factory Friends). 141,000 square meters of system, seeking to convert it to a buildings and land) for lease within the acquired portion will be full-service courier and freight- Metro Manila are located in the developed into a covered forwarding firm. Ayala will be northern district commonly known warehouse for consumer goods, allotting PhP700 million to expand as the CAMANAVA (, consumer durables, automotive and the operations of its new acquisition , , Valenzuela). A e-commerce products. This will add number are likewise situated in the to the company’s existing fringes of the Makati and Ortigas aggregate warehouse space of Central Business Districts. Lease 207,000 square meters scattered throughout the country.

7 ACCOMMODATION INVENTORIES SURGE AS TOURIST ARRIVALS INCREASE

HOSPITALITY | Luxury and budget hotels go hand-in-hand in catering to market demand

January to September 2018 foreign could then be used for other PhP7,600 per night for a Deluxe tourist arrivals recorded an purposes. Room and PhP17,000 per night for impressive 8.32% increase, in The Staycation trend is further a Suite. These Integrated Resorts comparison to the same period of booming with 60 million locals and Casinos merge hotels, casinos, last year. Visitor arrivals reached a visiting different parts of the country retail outlets and performance whopping 5.36 million visitors year- each year. Majority of them are from theaters together in order to offer to-date as of the end of the third urban areas, aspiring for a break guests a whole new level of quarter of the year. Demand from their hectic work lives, experience in what is known as the remained driven by arrivals from spending quality time with family Las Vegas of the Philippines. South Korea, China and USA, with and bonding time with friends. Affordable hotel rates and China displaying the fastest growth Unlike hotels in the Entertainment competitive room packages are City, hotels in the major business at a rate of 34.9%, way ahead of factors enabling an increasing the two other countries. USA had districts cater to a totally different number of individuals to check-in to market. Budget hotels are an increase of 7.94% while South hotels just for a staycation. In an Korea decreased by 1.19%. attempt to attract the growing mushrooming to serve the frequent staycation market, hotels are business-related travelers. The The Philippines constantly improves likewise improving hotel amenities average daily rates of budget hotels its reputation as a MICE (meetings, and attractions, adding to the pull down the overall hotel rates in incentives, conferences and number of activities that could be the various cities. exhibitions) destination, according done without leaving the hotel to the Department of Tourism (DOT) premises. Standard Rooms in Makati hotels Secretary Wanda Tulfo-Teo. have an average daily rate of Businessmen accounted for 8% of PhP2,800 per night. In Quezon City, the total tourist arrivals, Source: When in Manila a Standard Room costs PhP2,100 corresponding to a 3% year-on- per night at an average. In Ortigas, year increase. When it comes to the average daily rate of Standard conferences, foreign companies Rooms is PhP2,000 per night. consider holding them in the Moreover, the average costs of Philippines because of the country’s Suites are PhP11,000, PhP9,500, competitive hotel rates and high- and PhP7,700, in Makati, Quezon quality deliverables (rooms, City and Ortigas, respectively. amenities and other features) that Standard Rooms in Alabang cost are at par with international PhP200 less than a Deluxe Room, standards. which is priced at PhP4,400 per The influx of businessmen created a night. In BGC, the cheapest room is demand for co-working spaces a Deluxe Room which is priced at inside hotels. Exercising the trend is PhP9,000 per night. A Hotel Suite in Savoy Hotel by local property BGC is about PhP3,400 more developer, Megaworld, which expensive per night than a Deluxe opened last June 2018 at Newport Room. City. Savoy’s designated co- The Squares at Savoy Hotel Due to the high demand for hotel working space is called The rooms, local developers are Squares, which is situated in aggressively competing for a larger Newport City has the most various hotel floors. Several power share in the hospitality market. outlets and a high-speed internet expensive daily rate, averaging PhP5,700 per night for a Standard Leading property developers are are accessible in The Squares. Room, PhP15,900 per night for a taking part of the hospitality Having co-working spaces close to Deluxe Room and PhP28,800 per limelight. Seda Hotel, the hospitality the place of accommodation fosters night for a Suite. Hotels in the brand of Ayala Land Inc., collaboration. Moreover, the allotted (Bay Area) are announced four new branches budget for renting out an office closely priced at PhP5,200 per night underway: two in Makati, one in space during the businessmen’s for a Standard Room, stay in the country,

8 Source: Travel Book Remington Hotel rebranded as Holiday Inn Express opened last July with newly refurnished rooms. Crimson Alabang

Taguig and one in Bay Area. In the next 5 years, Makati will be Rockwell Land is another welcoming 1,713 new hotel rooms FIGURE 6 developer that has entered the from Ayala North Exchange, Seda Average Daily Rate for 5-Star hospitality field, with homegrown , Mandarin Oriental, Hotels brand, Aruga, that has a branch in Aruga Boutique Hotel, Somerset Makati and two upcoming Salcedo Village, Somerset Valero, branches: a boutique hotel in and Citadines Benavidez. Novotel 6,000 Makati and an outside-of-Manila Suites, Westin Hotel, and Citadines 5,000 forerunner in Mactan. Greenhills will make 893 rooms available within the vicinity of the 4,000 The Metro Manila hospitality Ortigas CBD. 1,284 rooms will be 3,000 sector is to experience further launched in Taguig, coming from 2,000 expansion with the continuing Seda Arca South, Dusit D2 The Fort hotel construction boom. Metro and Red Planet The Fort in BGC. 1,000 Manila is expecting a total of Quezon City will boast of 200 0 7,473 additional hotel rooms in additional rooms by Citadines the remainder of the year until Roces and Hop Inn Tomas Morato. 2023. 24 hotels are in the Metro Adding to the Bay Area hotel supply supply pipeline, are Seda Bay Area and Red Planet representing both new entrants Entertainment City, with a and planned expansions. Majority combined total of 680 rooms. Standard Deluxe Suite Family of the rooms will be launched in Megaworld’s Newport City and Westside City, where 6 new FIGURE 7 hotels are scheduled to be Average Daily Rate for 5-Star Hotels unveiled in the next 5 years. Hotel Okura Manila, Okura in Westside City, Sheraton Manila, Hilton Manila, Grand Westside Hotel, BGC 16,600 and Kingsford Hotel will have a 11,700 combined total of 2,703 new NEWPORT CITY 28,800 rooms. Part of New Port City’s 17,000 development plan is the ALABANG 10,200 rebranding of Maxims Hotel into 4,000 Ritz Carlton. ORTIGAS 10,300 5,200

MAKATI 14,000 5,900

BAY AREA 18,700 8,700

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Suite Deluxe

9 INCREASING DEVELOPMENT ACTIVITIES AND INNOVATIVE TRENDS BOOST MANILA’S RETAIL SECTOR

RETAIL | Developers mull over consumer volume and preferences in transforming the retail experience

OPENINGS & EXPANSIONS FIGURE 8 New mall openings and expansions Philippines”. It features the biggest UT UPCOMING RETAIL SUPPLY depict a robust retail market in Q3 (Graphic Tee) collection in the country PER RETAIL CATEGORY 2018. The main objective remains and boasts of a gaming space, where unchanged, which is to cater to the guests could play Jump Force (the latest BANDAI NAMCO Entertainment growing consumer demand while game), in line with their new JUMP X providing a better retail experience Uniqlo UT collection. to each mall guest. Others Food 39% 35% Circuit was opened to the public on July 27, 2018. It is situated within Ayala’s mixed-use Clothing & development in Circuit Makati Apparel (formerly Sta. Ana Race Track) and 26% adjacent to the existing Circuit Lane. The occupies Source: Santos Knight Frank Research 57,000 square meters of Gross Leasable Area (GLA). Retail brands TRENDS in Ayala Malls Circuit include Anello, Banapple, Bench, Mang Inasal, The in-store café concept made its way Luxe Duty Free to Metro Manila. Compared to full- Mesa, Macao Imperial Tea, Nike, Source: SM Mall of Asia Official Facebook serviced coffee shops, these cafes are Penshoppe, Regatta and Sbarro. Page less expensive in terms of operation and construction. In-store cafes aid in the Duty Free Philippines Corp. branding and overall marketing of retail launched the Luxe, a 3,000 square stores as they capitalize on giving meter duty free retail outlet that customers a unique shopping experience, which differentiates them aims to cater to balikbayans, from their competitors. Moreover, it tourists and travelers. The Luxe is helps brick and mortar operators to located at the SM Mall of Asia continually grow in a digital market. In- complex in Pasay City. It is one of store cafes in Metro Manila include Craft Duty Free’s world class outlet Central in Ayala Malls (Quezon City), Biblio in Ayala Malls stores in the Philippines, Circuit (Makati) and Dark Specialty showcasing prestigious international Coffee in SM North EDSA (Quezon brands such as Coach, Chanel, City). Michael Khors, Dior, Lancôme, Bobbi Brown and Jo Malone. It also Uniqlo Manila houses local brands such as Source: Spot.ph GoLokal and other Pinoy delicacies and pasalubongs. As of the third quarter of 2018, there are 232 upcoming brands in leading Aside from shopping mall retail establishments in Metro Manila. expansions, distinguished brands 26% of such is composed of clothing continue to grow their presence in and apparel, accessories such as the country. Uniqlo Manila was eyewear and timepieces, and footwear. recently unveiled in 5 Another 35% is made up of food (Makati City). The store covers businesses such as restaurants, coffee Source: Spot.ph 4,100 square meters of retail space shops and tea shops. The remaining Craft Central is a specialty store that sell and is labelled as “The Largest 39% consists of cosmetics, health art materials such as brushes, inks, Flagship Store in the clinics, gym, technology stores, concept paints, stickers and other DIY kits. stores, and school and office supply.

10 Source: Circuit Makati Web Page VACANCY AND RENTS In the third quarter of 2018, Metro Manila’s overall average lease rate was pegged at PhP1,341.61 per square meter per month while overall vacancy rate was estimated at 1.36%. Alabang posted the Source: When In Manila highest vacancy rate at 2.20% while Fort Bonifacio’s vacancy rate was Bark Central located at Eastwood Mall is the first indoor off-leash dog park in Metro 0.57%, lowest amongst all Metro Manila. Bark Central offers other services Manila CBDs. such as grooming, doggie party and a café where customers and their pets can dine. Makati’s retail rents range from Biblio in Ayala Malls Circuit is a specialty PhP900 to PhP1,850 per square bookstore and café that sells a variety of meter per month. Rents in Taguig imported pre-owned books and novelty merchandises like posters and art materials. malls fall within PhP1,200 to PhP1,800 per square meter per month. In Ortigas, mall rents average PhP800 to PhP2,000 per square meter per month.

Source: When In Manila

Bark Yard located in UP Town Center is an outdoor off-leash dog park where customers Source: SM North EDSA Official can play, train, and exercise with their pets. Continued from Page 2 Cover Facebook Page

Dark specialty coffee in SM North EDSA is linked to Onesimus (a formal wear shop SMC is likewise expanding its where one can purchases suits and poultry and piggery facilities, setting barongs). up a new glass packaging plant to be operational by the first quarter of 2019. Corrugated Retail establishments are likewise Fibreboard, Inc., another SMC becoming pet-friendly in order to Source: SM Official Web Page subsidiary, is presently increasing suit the lifestyles of the pet-owning its capacity with expansions to mall-goers. Notable malls such as other areas in and Ayala Malls Circuit, Ayala Malls The Mindanao for other packaging 30th, Bonifacio High Street, In addition, Artificial Intelligence (AI) materials such as glass and plastic. Eastwood Mall, Estancia, Evia is penetrating the retail sector as Lifestyle Center, , SM Prime Holdings announced a The present infrastructure boom in Powerplant, SM Aura Premier, The partnership with Cal-Comp the country, which is in line with , Trinoma, UP Town Center, Technology Philippines and the administration’s Build Build Build , Venice Grand Canal Taiwan-based technology program, has resulted to an Mall and Vertis North give pets company, New Kinpo Group, in increased demand for construction access to the shopping mall launching what is regarded as the materials, such as steel. In 2017 premises provided that the owners “First Ever In-Mall Smart Customer alone, the Philippines was reported apply for a pet ID and follow set Service Robot”. The robot will to have imported steel worth $4 house rules. in serve as a go-to guide that will billion. To address the huge supply Makati City specifically has an provide mall directions, deals, backlog, SteelAsia Manufacturing elevator allotted for customers who promos, and other new happenings Corp. will be investing over PhP100 are mall hopping with pets. to watch out for at SM. The newest billion for its expansion plans, which interactive mall attendant will debut is targeted to be completed within at SM Megamall in the 1st quarter the next five years. of 2019.

11 MANAGEMENT

Rick Santos Chairman and CEO +63 917 528 3687 Manila Office [email protected] 10th Floor, Ayala Tower One & Exchange Plaza , Makati City, 1226 OCCUPIER SERVICES AND COMMERCIAL AGENCY t: (632) 752-2580 / 848-7388 f: (632) 752-2571 Joey Radovan w: www.santos.knightfrank.ph Vice Chairman +63 920 906 7517 [email protected]

Cebu Office INVESTMENTS AND CAPITAL MARKETS Suite No. 30, Regus Business Center Calvin Javiniar th 11 Floor, AppleOne Equicom Tower Senior Director corner Biliran Road +63 917 574 3058 Business Park, 6000 [email protected] t: (6332) 318-0070 / 236-0462 VALUATIONS

Mabel Luna Director +63 917 865 3712 [email protected]

RESIDENTIAL SERVICES

Kim Sanchez Associate Director +63 917 537 9650 [email protected]

PROPERTY MANAGEMENT

Ed Macalintal Associate Director +63 917 533 7750 [email protected]

PROJECT MANAGEMENT

Allan Napoles Managing Director +63 917 5277638 [email protected]

RESEARCH & CONSULTANCY

Jan Custodio Santos Knight Frank Research provides strategic advice, consultancy services and forecasting to a Senior Director wide range of clients worldwide including developers, investors, funding organizations, corporate +63 917 574 3572 institutions and the public sector. All our clients recognize the need for expert independent advice [email protected] customized to their specific needs. Pai Javillonar Research Manager RECENT MARKET-LEADING RESEARCH PUBLICATIONS [email protected]

Rhys Revecho Research Analyst [email protected]

Maki Takagaki Research Analyst [email protected]

Gelo Manansala Research Analyst [email protected] The Wealth Report Global Cities Metro Manila Metro Cebu Ivy Ohoy Market Update Market Update 2018 The Report 2018 Q2 2018 1H 2018 Research Analyst [email protected]

Santos Knight Frank Research Reports are available at santos.knightfrank.ph/research Shai Retuya Research Analyst [email protected] © Santos Knight Frank 2018 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Santos Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Santos Knight Frank in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Santos Knight Frank to the form and content within which it appears. Santos Knight Frank is a long-term franchise partnership registered in the Philippines with registered number A199818549. Our registered office is 10/F Ayala Tower One, Ayala Ave., Makati City where you may look at a list of members’ names.