Click here
 

Colliers International Research - Asia Pacific

When Published, Hong Kong
Comprehensive and up-to-date research reports covering real estate markets across Emerging Asia, by leading real estate solutions provider - Colliers International
 

Philippine Property Market - Q4 2011

Apr 04, 2012
  • Print

Q4 2011 | the knowledge

research & forecast report

pHILIppINE pROpERTY MARKET

Executive Summary
ecoNoMY
The philippine economy grew by 3.2% in the third quarter last year. Consumer spending, which remained a major growth driver, grew by 7.1% from the 2.4% recorded in 2010. In terms of production, the service industry contributed the most with a 5.3% growth. Currently, macroeconomic fundamentals are strong as against to a weak global growth outlook due to economic uncertainties. The philippine economy is expected to remain sound this year albeit growing at a slower pace of 3.5 - 4.0% as forecast by most multilateral financial institutions.

Office development in the Makati CBD remains limited. In 2Q 2012, Zuellig Tower (57,000 sq m) remained the only new office building in the CBD for more than a decade. Consequently, office rental rates continue to increase quarter-on-quarter. premium rental rates grew by 1.13% to P850 per sq m in 4Q 2011. Rental rates on Grade B buildings rose by 1.7% to average at P696 per sq m. While, increasing the highest were rents on Grade A buildings at 2.4% to P481 per sq m. Vacancy rate is expected to rebound at the sub-3% level in the next twelve months.

offIce

resIDeNtIaL

Market INDIcators
offIce resIDeNtIaL hoteL & LeIsUre INDUstrIaL

Across the major CBDs in Metro Manila, the added stock last year reached over 5,900 units and is 53% higher than in 2010. While in the first nine months of last year, condominium projects continue to surge all over the metro area with new launches translating to about 39,000 units. Currently, in Makati CBD, residential supply arrived to about 14,700 units while over 2,000 units are expected to be completed annually over the next two years. Luxury three-bedroom rental rates in the same district reached P630 per sq m while premium vacancy rate was the same at 6.2%.

hoteL & LeIsUre

--

Hotel room inventories in Metro Manila continue to increase annually with last year posting over 800 new units delivered. These hotels include Acacia Grove Hotel (262 rooms) in Alabang, F1 City Center (240) in Bonifacio Global City and the recently completed Remington Hotel (300 units) in New Port City. As of 2H 2011, overall hotel occupancy was at 65% while room rates for both five-star and four-star remain generally stable at US$255 to US$260 per night. Expectation on occupancy is to exceed 65% at the end of this year considering the increase in visitor arrivals particularly towards the holiday season.

INDUstrIaL

As of August of last year, the area of the manufacturing economic zones registered with PEZA is unchanged at 3,800 hectare. Region IV vacancies remained at 12% while rental rates improved very minimally. As of the second half of 2011, land leasehold rates and lease rates for warehouses and standard factory buildings in the region experienced minor upticks of 1% and 0.51% to P22.46 and P163.76 per sq m respectively. Rental rates are expected to be stable over the 1H 2012 as demand remains constantly flat.

www.colliers.com

PhIlIPPIneS | 4Q 2011 | THE KNOWLEDGE ECONOMIC INDICATORS
2007
Gross National Product Gross Domestic Product personal Consumption Expenditure Government Expenditure Investments Exports Imports Agriculture Industry Services Inflation (full year) Budget Deficit (Billion Pesos) P : US$ (Average) Average 91-day T-Bill Rates
7.8% 7.3% 6.0% 10.0% 9.3% 3.1% -5.4% 5.1% 6.6% 8.7% 2.8% p12.4 P46.1 3.4%

2008
6.2% 3.8% 4.7% 3.2% 1.7% -1.9% 2.4% 3.2% 5.0% 3.3% 9.3% P68.1 p44.7 5.2%

2009
3.0% 0.9% 3.8% 8.5% -9.9% -14.2% -5.8% 0.1% -2.0% 3.2% 3.2% p270 P47.6 4.0%

1Q 2010
9.50% 7.30% 5.90% 18.50% 24.30% 17.90% 20.30% -2.50% 15.70% 6.10% 4.40% p132 p45.2 4.30%

2Q 2010
7.90% 7.90% 4.90% 5.60% 11.00% 27.40% 23.90% -3.00% 15.80% 6.40% 3.90% P62 p45.3 3.90%

3Q 2010
7.50% 6.50% 4.20% -6.10% 15.60% 28.00% 16.00% -2.50% 9.20% 7.70% 3.80% P63 P45.9 4.00%

4Q 2010
6.70% 7.10% 7.60% -7.60% 22.80% 21.10% 21.80% 4.10% 6.50% 6.40% 2.90% p10 p43.7 2.60%

1Q2011
3.60% 4.90% 4.90% -17.20% 37.60% 3.30% 8.80% 4.20% 7.20% 3.70% 4.30% P26 p43.5 1.16%

2Q 2011
1.90% 3.40% 9.90% 9.20% 12.80% -0.60% 8.00% 7.10% -0.60% 9.40% 4.30% P8.9 (+) p42.57 1.45%

3Q 2011

3.20% 11.30% 14.30% -12.10% 5.10% 10.30% 3.70% 9.70% 4.40% p 35.7 P43.64 -

Source: National Statistical Coordination Board

ecoNoMY
The philippine economy grew by 3.2% in the third quarter but decelerated for the third consecutive period in 2011. The sluggish growth has been attributed to the high cost of fuel, insufficient government spending and the reduced output from fishing caused by the series of storms that hit the country. Nonetheless, the economy has continually drawn support from consumer spending which grew by 7.1% from the 2.4% recorded in 2010. In terms of production, the service industry contributed the most with 5.3% growth derived from the improved performances of the following subsectors: Real Estate, Renting and Business Activities (7.6%); Other Services, (7.0%); Public Administration and Defence; Compulsory Social Security Other Services (5.4%); Transport, Storage and Communications (4.9%); and Trade and Repair of Motor Vehicles, Motorcycles, Personal and Household Goods (3.8%). Despite the weak global growth outlook due to uncertainties, the Philippine economy is expected to remain sound this year albeit growing at a slower pace of 3.5 - 4.0% as forecast by most multilateral financial institutions. Currently, macroeconomic fundamentals remain strong. Overseas Filipino Remittances increased to US$18.3 billion up 7% from January to November of last year. The inflation rate remains stable and has settled at 4.8% while lending rates ended at an average of 6.4% in December 2011.

OFW Remittances
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

In Million US Dollars

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1Q

2Q

3Q

4Q

Source: Bangko Sentral ng Pilipinas * As of November 2011

2011

p. 2

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | THE KNOWLEDGE

LaND VaLUes
As of 4Q 2011, implied land values in the Makati CBD increased by 1.4% to P277,850 per sq m. This translates to a price of P17,336 per developable area. In Ortigas Center, land values appreciated by almost 2% to an average of p128,850 per sq m ­ twice the increase seen over the third quarter last year. Both Makati and Ortigas land values are expected to increase by 4% in the next twelve months. However, Bonifacio Global City land values are expected to grow more by over 12% at the end of 2012 from the currently pegged P185,365 per sq m.

Makati CBD, Ortigas & Fort Bonifacio Average Land Values
400,000
pesos per square meter

300,000 200,000 100,000 -

PESOS / SQ M MAKATI CBD ORTIGAS CENTER BGC

4Q 2011 266,177 - 289,521 96,504 - 161,196 150,000 - 220,730

1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11F 3Q11 4Q11 1Q12F 2Q12F 3Q12F 4Q12F
Makati CBD Ortigas Ctr BGC

Source: Colliers International Philippines Research

COMPARATIVE LAND VALUES 3Q 2011 262,551 - 285,731 94,574 - 158,126 145,000 - 210,000 % chaNGe (QoQ) 1.35% 1.98% 4.40% 4Q 2012 276,842 - 301,102 100,364 - 167,644 162,225 - 253,816 % chaNGe (YoY) 4.00% 4.00% 12.00%

Source: Colliers International Philippines Research

LIceNses to seLL
Total residential licenses issued by HLURB continue to decline annually with a 9% drop recorded as of October 2011. Licenses on socialized and economic segments contracted by 25.67% and 26.7% respectively but eased from the 28% recorded during the first nine months. In the same way, licenses on mid-income housing fell short by some 2,754 units which is 8% lower than the same period in 2010. Developers remain geared towards residential condominiums as the licenses to sell in the same segment increased annually at an average of almost 50%. The latest data shows that there are some 44,570 issued high-rise residential licenses which is 37% higher than in the first ten months in 2010. Some of these include projects consisting of a high number of units: Green Residences in Manila (3,378 units), Viceroy in Taguig (1,240 units), Amaia Skies Cubao Tower 1 in Quezon City (1,126 units) and Solemare Parksuites Phase 2 in Paranaque (819 units). In the coming months, licenses will gradually increase in the high-rise residential segment since over 39,000 units of new projects were launched during the first nine months of 2011.

p. 3

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | THE KNOWLEDGE
HLURB LICENCES TO SELL UNITS
Socialized Housing Low-Cost Housing Mid-Income Housing High-Rise Residential Commercial Condominium Farm Lot Memorial park Industrial Subdivision

JAN - OCT 2011 30,821 38,539 29,356 44,570 666 444 103,888 30 473 248,787

JAN - OCT 2010 41,440 52,572 32,110 32,419 2,562 174 87,389 33 232 248,931

% CHANGE YoY -25.6% -26.7% -8.6% 37.5% -74.0% 155.2% 18.9% -9.1% 103.9% -0.1%

Commercial Subdivision Total (Philippines)

Source: Housing and Land Use Regulatory Board

HLURB Licenses
160,000 140,000 120,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 -

units

80,000 60,000 40,000 20,000
1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11

-

Quarterly Approvals

Moving 12-Month Average (RHS)

Source: Housing and Land Use Regulatory Board

offIce sector
Supply The O&O industry remains the major source of growth in the commercial sector. According to the Business Processing Association of the Philippines, the industry's full-time employees are seen to number about 630,000 in 2011 which could absorb over two million square meters of office space. This reflects over 40% of the total office space in Metro Manila and may further build up as the number of employees is expected to reach over a million by 2016. Following the completion of Science Hub 1 and BHS Central in Bonifacio Global City, Two E-com Center in Pasay, and Eton Centris 2 in Quezon City, over 100,000 sq m of net usable space was delivered in the fourth quarter last year. This brings the total office stock in Metro Manila to 5.7 million sq m which is expected to grow by a further 20% in a span of two years. Fort Bonfiacio carries the highest number of developments as registered in the pipeline. On the other hand, office development in the Makati CBD remains limited. In 2Q 2012, Zuellig Tower (57,000 sq m) remained the only new office building in the CBD for more than a decade. Other announced projects remain stalled except for the on-going construction of Alphaland Makati Tower (38,000 sq m) set to be completed in 2013.

p. 4

units
| coLLIers INterNatIoNaL

100,000

PhIlIPPIneS | 4Q 2011 | OFFICE

Makati CBD vs. Metro Manila Office Stock
8,000,000 7,000,000 7,000,000 6,000,000 6,000,000 5,000,000 5,000,000 4,000,000 4,000,000 3,000,000 3,000,000 2,000,000 2,000,000
1,000,000 1,000,000 -

600,000 600,000 500,000 500,000 400,000 400,000
300,000 300,000 200,000 200,000 100,000 100,000
1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011F 2011F 2012F 2012F 2013F 2013F in sq.m.

in sq.m. in sq.m.

0 0

Metro Manila Stock

Metro Manila Stock

Makati CBD

Makati CBD

YoY Change (RHS)

YoY Change (RHS)

Source: Colliers International Philippines Research

offIce sector
Demand In 4Q 2011, the vacancy rate in the Makati CBD grew slightly to 4.08% from the 3.84% recorded over the previous quarter. This was derived mainly from the movement of Sun Life from Enterprise Center to its own office building in Bonifacio Global City. This has left an available space of some 10,000 sq m. Thus, the vacancy rate of premium buildings increased considerably from 1.90% to 5.52%. On the other hand, demand for Grade A and B offices remains strong with vacancy rates improving to 4.15% and 3.81% respectively. Despite the scarcity of commercial development sites and the threat of Bonifacio Global City (attracting back-offices and non-financial institutions), Makati, as a premiere location, is expected to continually pull vacancies down at the sub-3% level in the next twelve months. This amounts to over 93,000 sq m of net take-up which is more than twice the amount of 2011.

Makati CBD Office Supply and Demand
270,000 220,000 170,000 20%

15%

in sq.m.

120,000 70,000 20,000 (30,000) (80,000)

10%

5%

0%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011F

New Supply During Year

Take-Up During Year

Vacancy at Year End (RHS)

Source: Colliers International Philippines Research

p. 5

2012F

-5%

| coLLIers INterNatIoNaL

in sq.m.

PhIlIPPIneS | 4Q 2011 | OFFICE

MAKATI CBD COMPARATIVE OFFICE VACANCY RATES 4Q 2011 PREMIUM GRADE A GRADE B & BELOW ALL GRADES 5.52% 4.15% 3.81% 4.08% 3Q 2011 1.90% 4.66% 3.93% 3.84% 3.48% 4Q 2012F

Source: Colliers International Philippines Research

FORECAST OFFICE NEW SUPPLY LOCATION MAKATI CBD ORTIGAS FORT BONIFACIO EASTWOOD ALABANG OTHER LOCATIONS* TOTAL End of 2010 2,699,696 1,126,018 485,693 252,979 234,305 685,362 5,484,053 19,332 112,434 42,330 32,824 81,007 287,927 2011 2012 80,353 37,930 249,944 38,000 142,910 549,137 2013 115,082 69,720 284,305 33,560 23,000 525,667

Source: Colliers International Philippines Research *Manila, Pasay, Mandaluyong, and Quezon City

Rents Landlord confidence towards the demand in the O&O industry pushed rental rates to consistently increase quarter-on-quarter. In the Makati CBD, premium rental rates averaged P850 per sq m in 4Q 2011 which was an increase of 1.13% quarter-on-quarter. Average rental rates for Grade A buildings grew by 1.7% to P696 per sq m and are starting to build-up to the P700 per sq m range similar to that in 2007. Grade B rental rates increased the highest by 2.4% to p481 per sq m on average and will eventually breach the p500 per sq m mark by mid-2012. Consequently, an average of an 8% year-on-year increase in rental rates is expected in the similar building type due to the continuous interest of contact centres relocating and expanding in the CBD.

COMPARATIVE OFFICE RENTAL RATES MAKATI CBD (BASED ON NET USEABLE AREA) PESOS / SQ M / MONTH PREMIUM GRADE A GRADE B 4Q 2011 788 - 912 497 - 895 451 - 510 3Q 2011 776 - 905 488 - 881 445 - 560 % CHANGE (QoQ) 1.1% 1.7% 2.4% 4Q 2012F 832 - 950 535 - 947 501 - 543 %CHANGE (YoY) 4.8% 6.3% 8.8%

Source: Colliers International Philippines Research

p. 6

| coLLIers INterNatIoNaL

PhIlIPPIneS |

4Q 2011 | OFFICE

NOTABLE LEASING DEALS Building Two E-com Center Tower A One Corporate Centre Raffles Corporate Center Area pasay pasig pasig Size (sq m) 2,678 7,545 3,343

Source: Colliers International Philippines Research

Makati CBD Office Capital Values
Capital Values With the anticipated completion of Zeullig Tower, capital values for premium buildings started to increase drastically in 4Q 2011 to 3.49% or P108,800 per sq m­ the highest quarter-on-quarter increase since 2009. By the time the building is completed, capital values are expected to peak at an average of P125,000 per sq m. Likewise, Grade A and B capital values increased by 1.4% and 0.9% respectively to an average of p81,400 and
130,000 120,000 110,000
in peso per sq.m.

100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000
1Q12F 4Q12F 1Q00 4Q00 3Q01 2Q02 1Q03 4Q03 3Q04 2Q05 1Q06 4Q06 3Q07 2Q08 1Q09 4Q09 3Q10 2Q11

Premium

Grade A

Grade B/B-

Source: Colliers International Philippines Research

COMPARATIVE OFFICE CAPITAL VALUES MAKATI CBD (BASED ON NET USEABLE AREA)
PESOS / SQ M PREMIUM GRADE A GRADE B 4Q 2011 100,443 - 117,190 69,933 - 92,950 47,000 - 63,000 3Q 2011 96,734 - 113,557 68,696 - 91,942 46,500 - 62,500 %CHANGE (QoQ) 3.5% 1.4% 0.9% 4Q 2012F 117,112 - 131,530 71,978 - 99,847 48,992 - 65,806 %CHANGE (YoY) 14.2% 4.9% 4.1%

Source: Colliers International Philippines Research

p. 7

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | RESIDENTIAL
RESIDENTIAL SECTOR
Supply High-rise residential condominiums continue to surge across Metro Manila with new launches translating to about 39,000 units in the first nine months of last year. The majority of these are in the mid-cost segment and are broadly located across the outskirts of the major business districts. Brisk sales from middle-income property developers last year imposes project launches to heighten in the succeeding months. Across the major CBDs, the added stock in 2011 reached over 5,900 units and is 53% higher than in 2010. Some of the most recently completed buildings are Eton Emerald Lofts (540 units) and The Exchange Regency (785 units) in Ortigas, Greenbelt Excelsior (326 units) in the Makati CBD and One Rockwell West (504 units) in Rockwell Center. The completion of Raffles Residences, on the other hand, was moved to 2Q 2012. Currently, the total stock in the same district has reached about 14,700 units while over 2,000 units are expected to be completed annually over the next two years.

Makati CBD Residential Stock
20,000 18,000 16,000 14,000
in units

25% 20% 15% 10% 5% 0% -5%

12,000 10,000 8,000 6,000 4,000 2,000
1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12F 3Q12F

-

Residential Stock

YoY Change (RHS)

Source: Colliers International Philippines Research

FORECAST
RESIDENTIAL NEW SUPPLY LOCATION MAKATI CBD ROCKWELL FORT BONIFACIO ORTIGAS EASTWOOD TOTAL (cumulative) 2010 13,076 2,382 10,709 7,481 5,735 39,383 2011 1,659 1,336 1,365 1,604 5,964 2012 2,483 4,099 672 558 7,812 2013 2,105 2,397 1,379 977 6,858 TOTAL 19,323 3,718 18,570 11,136 7,270 60,017

Source: Colliers International Philippines Research Demand Residential vacancies across all grades remained generally stable in 4Q 2011 at the sub-10% level. Premium vacancy was the same at 6.2% while Grade A slightly increased to 8.36% from the 8.09% recorded over 3Q 2011. Grade B vacancy remained the highest, yet dropped marginally by 13.41%. The same segment continues to have the highest number of units for lease which ended in a net take-up of some 230 units less than in 2011. Overall vacancies are expected to reach 12% in the next twelve months.

p. 8

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | RESIDENTIAL Makati CBD Residential Vacancy
18% 18% 16% 16% 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2%

LUXURY OTHERS ALL GRADES

Rents In 4Q 2011, luxury three-bedroom rental rates in the Makati CBD reached P630 per sq m or 1.94% higher than in the previous quarter. While expatriate demand continues to shift to Bonifacio Global City due to its newer residential buildings, rental rates in Makati are expected to increase by only 4.5% in the next twelve months against the 6% expected on the prior. Rental rates in Bonifacio Global City are currently at P655 per sq m which translates to P163,750 monthly rent for a premium 250-sq m unit. In Rockwell Center, luxury three-bedroom rental rates continue to rise by over 2.2%, as vacancy rates drop to the sub-2% level and while the supply remains constricted. Current rental rates average p770 per sq m and may breach the p800 per sq m range by the end of 2012.

900 800

in peso per sq.m. per month

in peso per sq.m. per month

700 700 600 600 500 500 400 400 300 300
200200 100100

1Q01 3Q01

3Q01 1Q02

1Q02 3Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

3Q08 3Q08

1Q08

1Q09 1Q09

3Q09 3Q09

1Q10 1Q10

3Q10 3Q10

1Q11 1Q11

3Q11 3Q11

1Q12F 1Q12F

Makati CBD Makati CBD

Rockwell Rockwell

Bonifacio Global City Bonifacio Global City

Source: Colliers International Philippines Research

p. 9

3Q12F 3Q12F

1Q01

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

1Q98 1Q98 3Q98 4Q98 1Q99 3Q99 3Q99 1Q00 2Q00 3Q00 1Q01 1Q01 3Q01 4Q01 1Q02 3Q02 3Q02 1Q03 2Q03 3Q03 1Q04 1Q04 3Q04 4Q04 1Q05 3Q05 3Q05 1Q06 3Q06 2Q06 1Q07 1Q07 3Q07 1Q08 4Q07 3Q08 3Q08 1Q09 3Q09 2Q09 1Q10 3Q10 1Q10 1Q11 4Q10 3Q11 1Q12F 3Q11 3Q12F 2Q12F

Source: Colliers International Philippines Research

MAKATI CBD COMPARATIVE RESIDENTIAL VACANCY RATES
4Q 2011 6.2% 10.9% 10.5% 3Q 2011 6.2% 11.0% 10.4% 12.6% 4Q 2012F

Source: Colliers International Philippines Research

Makati CBD, Rockwell, Bonifacio Global City Prime 3BR Units Residential Rents
900 800

-

-

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | RESIDENTIAL

METRO MANILA RESIDENTIAL CONDOMINIUM COMPARATIVE LUXURY 3BR RENTAL RATES
PESOS / SQ M / MONTH MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 4Q 2011 415 - 840 660 - 875 543 - 768 3Q 2011 397 - 835 650 - 853 537 - 755 % CHANGE (QoQ) 1.9% 2.2% 1.5% 4Q 2012F 451 - 860 687 - 911 570 - 820 % CHANGE (YoY) 4.5% 4.1% 6.0%

Source: Colliers International Philippines Research

COMPARATIVE RESIDENTIAL LEASE RATES THREE-BEDROOM PREMIUM, SEMI-FURNISHED
MINIMUM Apartment Ridge / Roxas Triangle Rental Range Average Size Salcedo Village Rental Range Average Size Legaspi Village Rental Range Average Size Rockwell Rental Range Average Size Fort Bonifacio Rental Range Average Size 90,000 130 185,000 250 215,000 300 120,000 180 154,000 250 230,000 330 55,000 170 150,000 120 200,000 230 55,000 170 75,000 190 135,000 320 70,000 230 170,500 270 250,000 350 AVERAGE MAXIMUM

Source: Colliers International Philippines Research

Capital Values Average capital values for a premium three-bedroom condominium unit in the Makati CBD have already exceeded that of Bonifacio Global City after being virtually the same at P107,000 per sq m. In the fourth quarter of last year, the Makati CBD capital values increased by almost 2% to an average of P109,215 per sq m, slightly higher than the P108,373 registered in Bonifacio Global City. Expectations on capital values in both locations are set to increase by 4% over the next twelve months. In Rockwell Center, capital values rose by 1.4% to an average of P133,000 per sq m. This remains the highest across the CBDs. With limited project completions over the next two years, capital values are expected to grow sluggishly by just 3% until the end of 2012.

p. 10

| coLLIers INterNatIoNaL

PhIlIPPIneS | 43Q 2011 | RESIDENTIAL | HOTEL & LEISURE Makati CBD Residential Capital Values
130,000 120,000 120,000 110,000

in peso per sq.m.

in peso per sq.m.

110,000 100,000 100,000 90,000 90,000

80,000 80,000
70,000 70,000

3Q08 3Q08

1Q09 1Q09

3Q09 3Q09

1Q01 1Q01

3Q01 3Q01

1Q02 1Q02

3Q02 3Q02

1Q03 1Q03

3Q03 3Q03

1Q04 1Q04

3Q04 3Q04

1Q05 1Q05

3Q05 3Q05

1Q06 1Q06

3Q06 3Q06

1Q07 1Q07

3Q07 3Q07

1Q08 1Q08

1Q10 1Q10

3Q10 3Q10

1Q11 1Q11

3Q11F 3Q11

1Q12F 1Q12F

Makati CBD Makati CBD

Rockwell Rockwell

Bonifacio Global City Bonifacio Global City

Source: Colliers International Philippines Research

METRO MANILA RESIDENTIAL CONDOMINIUM COMPARATIVE LUXURY 3BR CAPITAL VALUES
PESOS / SQ M MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 4Q 2011 74,230 - 144,200 94,069 - 133,041 89,212 - 127,533 3Q 2011 73,638 - 140,699 92,920 - 131,074 88,514 - 125,724 % CHANGE (QoQ) 1.9% 1.4% 1.2% 4Q 2012F 76,629 - 150,349 96,251 - 138,167 90,737 - 135,203 %CHANGE (YoY) 3.9% 3.2% 4.2%

Source: Colliers International Philippines Research

HOTEL & LEISURE
Supply Investors are kept positive in their outlook on the hotel and leisure industry as key market scenarios had a favourable impact on the tourism sector last year. This includes the rise in business and leisure travel which was driven by competitive travel packages, discounted rates of different airlines and agencies, and heightened local tourism campaigns, over a backdrop of a generally stable economy. The latest government data shows that in the first eleven months of 2011, international arrivals reached 3,522,887 or a 12.6% increase over the same period a year ago, even topping the total arrivals of 3,520,471 recorded in the full year of 2010. Similarly, air passengers continued to increase by 14.1% to 14.03 million from January to September last year. As a result, hotel room inventories in Metro Manila continue to increase annually with last year posting over 800 new units delivered. These hotels include Acacia Grove Hotel (262 rooms) in Alabang, F1 City Center (240) in Bonifacio Global City and the recently completed Remington Hotel (300 units) in New Port City. Over 20 more hotel developments are expected to be completed in the course of two to three years translating to almost 6,000 hotel rooms all over the metro area. Projects continue to be geared towards the boutique and budget types, businessman hotels, and particularly gaming hotels in anticipation of the development of the PAGCOR Entertainment City in Pasay.

Metro Manila Hotel Room Stock

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

De Luxe

First Class

Standard

Economy

Source: Department of Tourism
p. 11 | coLLIers INterNatIoNaL

3Q12F

60,000 60,000

PhIlIPPIneS | 4Q 2011 | HOTEL & LEISURE

Forecast Hotel Room Supply
3500 3000 2500 2000 1,901 1500 1000 500 0 2010 2011 2012 2013 2014 729 802 934 3,094

Source: Colliers International Philippines Research

Demand As of the first 6 months of last year, overall hotel occupancy was at 65% and has managed to even out over the last two years. The highest occupancy level manifested across the deluxe-type rooms at an average of 73% followed by the standard, first-class and economy hotels with 68%, 64%, and 57% respectively. Furthermore, the length of stay slightly improved to 2.43 days from the 2.34 days over a year ago across all hotels. The longest stay was more than three days on average at the deluxe type. Expectation on occupancy is to exceed 65% at the end of this year considering the increase in visitor arrivals particularly towards the holiday season. Together with the new tourism campaign and continuous government efforts, ten million tourists are projected to visit the country in the span of five years. However, this remains insufficient to breach the 70% occupancy range or similar to the 2006 - 2008 level when the average number of international visitors reached over three million per year. Furthermore, considerations should continue to delve on the construction of quality hotel rooms, full implementation of the open sky policy, immediate development of key infrastructure (airports and major roads & highways), and further promotions of eco-tourism.

Metro Manila Hotels ­ Average Occupancy Rate
80% 70% 60% 50% 40% 30% 20% 10% 0% 2Q10 3Q10 4Q10 1Q11 2Q11 Deluxe First Class Standard Economy

Source: Department of Tourism

p. 12

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | HOTEL & LEISURE | INDUSTRIAL Metro Manila Hotels ­ Average Length of Stay
3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 2Q10 3Q10 4Q10 1Q11 2Q11 Deluxe First Class Standard Economy

Source: Department of Tourism

Rates Average room rates in Metro Manila increased slightly by 0.78% to US$215. Both five-star and four-star hotels increased minimally by 1.2% and 0.8% to US$259 and US$257, respectively. On the other hand, average rates per night at three-star hotels remained the same at US$129 as occupancies dipped by almost 10% as of 1H 2011.

INDUSTRIAL
Supply Among the 64 operational economic zones registered with the Philippine Economic Zones Authority (PEZA) almost half are located in Cavite, Batangas and Laguna ­ the nearest provinces to Metro Manila with major sources of processing and storage facilities. Over a year, there have been 63 approved economic zones in the region which translates to about 7,360 hectare. However, more than half of them are still in progress while only 38% have been declared operational. As of August of last year, the area of the manufacturing economic zones is unchanged at 3,800 hectare. Of these, all of the proclaimed sites failed to reach operational status while the number of PEZA-registered locators continues to weaken. This is similar to the case of Pampanga Export Processing Zone and the Poro Point Special Economic Zone. The others however, are in the construction phase including the following: South Coast Ecozone (195.54 ha), RLC Special Economic Zone (87.43 ha), First Batangas Industrial Park (53.81 ha), Cavite Productivity Economic Zone (116.22 ha), Cavite Eco-Industrial Estate, (104.95 ha), and Fil-Estate Industrial Park (80.62 ha).

*Philippine Industrial Supply Stock (Manufacturing)

* PEZA accredited economic zones Source: Philippine Economic Zone Authority

p. 13

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | INDUSTRIAL
* INDUstrIaL sUppLY stock (MaNUfactUrING) Region IV
Batangas Cavite Laguna Total

Hectares
1,004.63 800.24 1,023.43 2,828.30 * PEZA accredited economic zones Source: Philippine Economic Zone Authority

Demand The tragedies which damaged major processing and storage facilities in Japan and Thailand have recently surface interests on manufacturers relocating to alternative countries such as the philippines. However, most of these queries are yet to materialize and the industry continues to suffer from weaker global and domestic demand. The latest government data shows that the country's export revenue in November of last year dropped by 19.4% to US$3.342 billion compared to the US$4.088 registered over the same period in 2010. Similarly, export receipts on manufactured goods (which comprises 80% of total exports) decreased by almost 24% to US$2.703 billion. Consequently, vacancies in Region IV remained at the 12% level with a minor uptick of 0.11% from the first to the second half of last year. Average vacancy in Batangas and Cavite is unchanged at 3% and 7% respectively, while in Laguna vacancies increased marginally to an average of 25% - the highest among the said provinces.

* INDUstrIaL VacaNcY rates 1h11 (MaNUfactUrING) Region IV
Batangas Cavite Laguna Total 3.07% 6.60% 24.66% 11.61% * PEZA accredited economic zones Source: Colliers International Research

Region IV Industrial Land Values
4,000 3,500 3,000 2,500 2,000
Calabarzon

1,500 1,000 500 -

1Q01

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

Source: Colliers International Research

3Q11

p. 14

| coLLIers INterNatIoNaL

PhIlIPPIneS | 4Q 2011 | AUTOMOTIVE
Rates As of the second half of 2011, land leasehold rates and lease rates for warehouses and standard factory buildings in the region experienced minor upticks of 1% and 0.51% to P22.46 and P163.76 per sq m respectively. The outlook is that rates will be stable over 1H 2012 as demand remains constantly flat. Average land values appreciated by 1% quarter-on-quarter to end last year at P3,630 per sq m.

512 offices in 61 countries on 6 continents
United States: Canada: Latin America: Asia Pacific: EMEA: 125 38 18 214 117

INDUstrIaL Lease rates 1h11 (MaNUfactUrING) Region IV
Leasehold (Land) Lease Rates (SFB)

(Php/sq m/month)
22.46 163.76 *PEZA accredited economic zones

· $1.5 billion in annual revenue in 2010 · 979 million square feet under management · Over 12,500 professionals

Spending Indicators With the normalization of Japan's auto industry, monthly car sales steadily improved towards November of 2011 to peak at over 13,400 units. However, due to the recent floods which hit Thailand, the disruption of supply has resulted in a drop in the recent numbers of car sales. The latest data from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) shows that the total vehicles sold during the first 11 months of last year contracted to 131,242 units, down by 1.9% compared to 2010. Commercial vehicles were slightly affected posting a decrease of 0.04% to just 53,752 units sold. Suffering a bigger loss were passenger vehicles which fell short by some 2,463 units from the 44,252 units sold in 2010. A sales recovery is expected to be seen this year as the take-up gradually increases upon the quick normalization of vehicle production.

10F Tower 2 RCBC Plaza Ayala Avenue, Makati City philippines TEL +632 888 9988 FAX +632 845 2312 www.colliers.com

coLLIers INterNatIoNaL phILIppINes

karlo pobre

Research Analyst Consultancy and Valuation Services Main +632 888 9988 ext.4030 Fax +632 845 2612 Email Karlo.Pobre@colliers.com

Quarterly Vehicle Sales
50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07
Car Sales

paul Vincent chua
40% 30% 20% 10% 0% -10% -20%

Associate Director Consultancy and Valuation Services Main +632 888 9988 ext.4024 Fax +632 845 2612 Email paul.chua@colliers.com

David a. Young

Managing Director, Philippines Main +632 888 9988 FAX +632 845 2312 Email David.a.Young@colliers.com
Copyright © 2011 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

Source: Chamber of Automotive Manufacturers of the Philippines

3Q07

1Q08

3Q08

YoY Change (RHS)

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

www.colliers.com