3Q 2012 | MARKET OVERVIEW

RESEARCH & FORECAST REPORT

PHILIPPINE REAL ESTATE MARKET

Executive Summary
ECONOMY
The Philippine economy posted a growth of 5.9% in 2Q 2012. The services sector was the main contributor, accounting for 4.3 percentage points of the total GDP growth. Meanwhile, remittances from OFWs reached US$13.7 billion as of YTD August (+5.4%). This has consistently fuelled domestic consumption backed by benign inflation and low mortgage lending rates of 5% to 8%. Driven by the 6.1% growth in the first half of this year, analysts forecasts were recently upgraded to range between 5.0% and 5.5% for the year.

In the next two years, Metro Manila office stock will exceed the seven million sq m mark as developers anticipate sustained demand from the O&O industry. Particularly, new supply is expected to be at over 500,000 sq m in 2013, an increase of 28% YoY and a new historical high. Meanwhile in the Makati CBD, total office stock increased to over 2.75 million following the completion of Zuellig Building (57,000 sq m).

OFFICE

RESIDENTIAL

MARKET INDICATORS
OFFICE RESIDENTIAL RETAIL

In the first nine months of 2012, new supply of high-rise residential condominiums in the five sub-markets tracked by Colliers reached almost 5,000 units. Majority of these are located in Fort Bonifacio. In the Makati CBD, the stock is unchanged at 15,513 units since March of this year. Other upcoming completions include Raffles Residences (237 units), Greenbelt Madison (276 units), and The Grand Midori Tower 1 (279 units). Both the Makati CBD and Fort Bonifacio will have the strongest supply pipeline in the next two years.

RETAIL

In the first nine months of this year, Metro Manila new retail supply reached over 60,000 sq m. This is owed to the completion of Magnolia Town Center in Quezon City and the partial relaunch of Glorietta 1 and 2 in Ayala Center. There are roughly 400,000 sq m of super-regional, 150,000 sq m of regional and some 100,000 sq m of district and neighborhood malls currently in the pipeline. In the long term, retail developments will consistently expand across the untapped geographic markets in Metro Manila, around BPO and commercial centers, and within the masterplanned communities.

www.colliers.com

PHILIPPINES | 3Q 2012 | THE KNOWLEDGE

ECONOMIC INDICATORSa
2007
Gross National Product (%) Gross Domestic Product (%) Personal Consumption Expenditure (%) Govt Expenditure (%) Capital Formation (%) Exports (%) Imports (%) AHFFb (%) Industry (%) Services (%) Average Inflationc (%) Budget Deficit (Billion Pesos) P:US$ (Average) Average 91-Day T-Bill Rates (%)
a At constant 2000 price b Agriculture, Hunting, Forestry, Fishing c at constant 2006 prices 6.10 6.60 4.4 6.90 -0.50 6.70 1.70 4.70 5.80 7.60 2.9 (P12.4) P46.1 3.40

2008
6.00 4.20 4.2 0.30 23.40 -2.70 1.60 3.20 4.80 4.00 8.3 (P68.1) P44.7 5.20

2009
6.50 1.10 4.6 10.90 -8.70 -7.80 -8.10 -0.70 -1.90 3.40 4.1 (P298.5) P47.6 4.00

2010
8.40 7.60 3.7 4.00 31.60 21.00 22.50 -0.20 11.60 7.20 3.9 (P314.4) P45.10 3.70

2011
3.20 3.90 2.3 1.00 8.10 -4.20 0.20 2.70 2.30 5.10 4.6 (P197.7) P43.31 1.37

1Q12
5.80 6.40 3.4 24.00 -23.50 7.90 -2.60 1.00 4.90 8.50 3.1 (P33.9) P43.30 1.88

2Q12
5.60 5.90 6.10 5.90 2.30 8.30 4.40 0.70 4.60 7.60 2.90 (P573.0) P42.80 2.33

ECONOMY
The Philippine economy posted a growth of 5.9% in 2Q 2012. Regionally, the countrys economic growth outperformed that of Malaysia (+5.4%), Vietnam (+4.4%), and Singapore (+4.2%), and came in third after China (+7.8%) and Indonesia (+6.4%). The services sector was the main contributor, accounting for 4.3 percentage points of the total GDP growth. It grew by 7.6% in the second quarter which has been attributed to the development of the following subsectors: Real Estate (+19%), Renting and Business Activities (+9.8%) and Ownership of Dwellings (+2.1%). Similarly, government spending on infrastructure facilitated this growth as it increased by 45.7%. Meanwhile, remittances from OFWs reached US$13.7 YTD August (+5.4%). This has consistently fuelled domestic consumption backed by benign inflation and low mortgage lending rates of 5% to 8%. Other supporting fundamentals in the second quarter include employment (+2.8%), and tourist arrivals (+7.0%). Driven by the 6.1% growth in the first half of this year, analysts forecasts were recently upgraded to range between 5.0% and 5.5% (previously 4.5% and 5.0%) by year-end, well within the governments target of 5.0% - 6.0%.

OFW Remittances
25,000 20,000
In Million US Dollars

15,000 10,000 5,000 -

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

1Q

2Q

3Q

4Q

Source: Bangko Sentral ng Pilipinas * as of August 2012

2012

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PHILIPPINES | 3Q 2012 | THE KNOWLEDGE

LAND VALUES
Implied land values in the Makati CBD appreciated by 1.5% in the third quarter to average at PHP289,100 per sq m. This translates to an accommodation value of PHP18,069 per sq m. In Ortigas, land values have been consistently appreciating at a modest rate, currently 1.0% this quarter, with the average land value pegged at PHP132,000 per sq m. In BGC, land values sustained double-digit growth on an annual basis, resulting in an average accommodation value of PHP23,500. The forecast for both Makati and BGC land values are seen to increase between 8% and 9% by the third quarter next year.

Makati CBD, Ortigas & Fort Bonifacio Average Land Values

500,000 400,000
pesos per square meter

300,000 200,000 100,000 -

Makati CBD

BGC

Ortigas Ctr

Source: Colliers International Philippines Research

COMPARATIVE LAND VALUES PESO / SQ M MAKATI CBD ORTIGAS CENTER BGC 3Q12 280,100 - 298,100 99,399 - 166,032 195,000 - 275,000 2Q12 272,170 - 297,100 98,434 - 164,420 155,500 - 229,647 % CHANGE (QoQ) 1.57 0.98 5.60 3Q13F 290,312 - 338,951 105,250 - 176,200 195,000 - 315,000 % CHANGE (YoY) 8.83 6.03 8.51

Source: Colliers International Philippines Research

LICENSES TO SELL
Overall residential licenses issued by the HLURB in the first seven months of this year expanded by 24.5%. The latest figures indicate that 119,357 units were licensed as of July, up by around 76,512 units compared to the same period last year. Noticeable rises were seen in the high-rise residential (+77.2%) and low-cost housing segments (+15.9%). Meanwhile, the number of licenses in the socialized housing segment started to improve since the decline in May, however in sluggish increments, up by just 5.9%. In contrast, licenses in the middle-income horizontal housing segment depicted lingering depression which resulted in a contraction of 23.8%. The same segment has decelerated at double-digit rates since March of this year. The decline is believed to be due to an increase in vertical development positioned towards the middle income segment. In Metro Manila, over 50,000 high-rise residential licenses were issued in 2011. Roughly around 82% are in the middle-income segment. This translates to a standard contract price of PHP1.25 million to less than PHP5.0 million. In the first half of 2012, licenses remain geared towards the same segment or approximately 78% of the 37,000 units issued. The most recent of these were Arezzo Place by Phinma Properties (2,160 units), The Pearl Place by RLC (1,367 units), Amaia Skies Avenida North Tower (1,167 units), and Paseo De Roces by Federal Land (1,044 units).

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3Q13F
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3Q97

3Q98

3Q99

3Q00

3Q01

3Q02

3Q03

3Q04

3Q05

3Q06

3Q07

3Q08

3Q09

3Q10

3Q11

3Q12

PHILIPPINES | 3Q 2012 | THE KNOWLEDGE

HLURB LICENCES TO SELL UNITS

Socialized Housing Low-Cost Housing Middle-Income Housing High-Rise Residences Commercial Condominiums Farm Lots Memorial Parks Industrial Subdivisions

JAN - JUL 2012 21,375 28,972 15,723 53,287 1,357 51 70,933 0 399 192,097

JAN - JUL 2011 20,178 24,995 20,626 30,070 460 60 99,018 30 437 195,874

% CHANGE YoY 5.9 15.9 -23.8 77.2 195.0 -15.0 -28.4 -100.0 -8.7 -1.9

Commercial Subdivisions 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

2Q99 4Q99 2Q00 4Q00 2Q01 4Q01 2Q02 4Q02 2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12
Quarterly Approvals (LHS) Moving 12-Month Average (RHS)

units

100,000 80,000 60,000 40,000 20,000 -

Source: Housing and Land Use Regulatory Board

OFFICE SECTOR
Supply In the next two years, Metro Manila office stock will exceed the seven million sq m mark as developers anticipate sustained demand from the O&O industry. Particularly, new supply is expected to be at 500,000 sq m in 2013, an increase of 28% YoY and a new historical high. A large majority of these new office spaces are dedicated BPO facilities. Meanwhile in the Makati CBD, total office stock increased to over 2.75 million following the completion of Zuellig Building (57,000 sq m). Other projects in the pipeline are Alphaland Makati Tower (38,400 sq m), V-Tower (23,000 sq m) and the Glorietta 1 and 2 BPO buildings (27,000 sq m). Office buildings that have been likewise delivered in the third quarter are Net Lima (51,000 sq m) in Fort Bonifacio, and Aseana One (30,000 sq m) in Pasay. While developable land in the major CBDs are constrained, construction activities are expected to build-up around the fringes of Ortigas, Makati, and in other pocket developments in Pasay and Quezon City.

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PHILIPPINES | 3Q 2012 | OFFICE

Makati CBD vs. Metro Manila Office Stock

8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 16% 14% 12%

7,000,000 6,000,000 5,000,000

in sq.m.
in sq.m.

600,000 500,000 400,000 10%

8% 300,000

3,000,000 2,000,000 1,000,000 --

200,000 100,000
2% 4%

6%

2000 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011F 2011 2012F 2012F 2013F

1990 1990

1991 1991

1992 1992

1993 1993

1994 1994

1995 1995

1996 1996

1997 1997

1998 1998

1999 1999

2000

2001

Metro Manila Stock (LHS)

Metro Manila Stock

Makati CBD (Stock) (LHS)

Makati CBD

YoY Change (RHS)

Total Stock YoY Change (RHS)

Source: Colliers International Philippines Research

OFFICE SECTOR
Demand In 3Q12, the premium vacancy rate in Makati spiked to 7.6%, from the 2.1% registered in the previous quarter. The increase was mainly due to the remaining inventories in the Zuellig Building. Despite this, the overall rate was narrowed due to the drop in vacancies across Grade A and B offices, by 2.0% and 3.1%, respectively. The outlook on vacancy is that it will decrease at slightly above 3% in the next twelve months while demand gradually picks up.

Makati CBD Office Supply and Demand

270,000 220,000 170,000 20%

2013F

0 0%

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

2011

2012F

New Supply During Year (LHS)

Take-Up During Year (LHS)

Vacancy at Year End (RHS)

Source: Colliers International Philippines Research

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2013F

-5%

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in sq.m.

4,000,000

PHILIPPINES | 3Q 2012 | OFFICE

MAKATI CBD COMPARATIVE OFFICE VACANCY RATES (%) 3Q12 PREMIUM GRADE A GRADE B & BELOW ALL GRADES 7.62% 2.03% 3.19% 3.55% 2Q12 2.12% 3.46% 4.47% 3.99% 3.10% 3Q2013F

Source: Colliers International Philippines Research

FORECAST OFFICE NEW SUPPLY LOCATION MAKATI CBD ORTIGAS FORT BONIFACIO EASTWOOD ALABANG OTHER LOCATIONS* TOTAL End-2011 2,699,696 1,145,350 592,272 292,819 265,552 766,369 5,762,058 2012 57,353 166,989 35,765 18,889 117,693 396,689 2013 87,837 75,127 136,884 10,040 196,483 506,371 2014 22,800 193,796 36,843 266,415 519,854 TOTAL 2,844,886 1,243,277 1,089,941 328,584 331,324 1,346,960 7,184,972

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

Rents Rent in Makati CBD remains on an upward trend. Premium rental rates grew by 0.8% and exceeded the PHP900 per sq m average. This will grow by 7% in the next twelve months. Grade A and B rents rose by 0.7% and 0.5% to PHP730 and PHP500 per sq m, respectively. Both grades may increase by 5% in the next twelve months. Meanwhile, in BGC, despite the substantial supply next year, rental rates are seen to grow modestly between 3% to 4%.

COMPARATIVE OFFICE RENTAL RATES (PESOS/SQM/MONTH) MAKATI CBD (BASED ON NET USEABLE AREA) 3Q12 PREMIUM GRADE A GRADE B 855-950 560-900 450-550 2Q12 840-950 550-900 465-530 % CHANGE (QoQ) 0.8 0.7 0.5 2Q 13F 8701,060 595-940 458-595 % CHANGE (YoY) 6.9 5.1 5.3

Source: Colliers International Philippines Research

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Capital Values Currently, prices for premium units are now pegged at an average of PHP123,050 per sq m and will grow by 6.3% in the next twelve months . On a quarterly basis, capital values for both Grade A and B offices grew by 1.2% to PHP84,400 and PHP57,450 per sq m, respectively. Both grades will increase by almost 5% in the third quarter of next year.

Makati CBD Office Capital Values

150,000

130,000

in peso per sq.m.

110,000

90,000

70,000

50,000

30,000
3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13F 3Q13F

Premium

Grade A

Grade B/B-

Source: Colliers International Philippines Research

COMPARATIVE OFFICE CAPITAL VALUES (PESOS / SQM) MAKATI CBD (BASED ON NET USEABLE AREA)
3Q12 PREMIUM GRADE A GRADE B 118,000 - 128,100 71,015 - 97,794 49,298 - 65,600 2Q12 115,800 - 126,113 70,173 - 96,634 48,810 - 64,700 % CHANGE (QoQ) 1.7 1.2 1.2 3Q13F 121,200 - 133,665 73,790 - 101,380 49,810 - 67,300 % CHANGE (YoY) 3.6 3.8 1.9

Source: Colliers International Philippines Research

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PHILIPPINES | 3Q 2012 | RESIDENTIAL

RESIDENTIAL SECTOR
Supply In the first nine months of 2012, new supply of high-rise residential condominiums in the five sub-markets tracked by Colliers reached almost 5,000 units. Majority of these are located in Fort Bonifacio. In the third quarter however, project completions were minimal. These were Eastwood Le Grand 1 (558 units) in Eastwood City and Tuscany Private Residences (380 units) in Fort Bonifacio. In the Makati CBD, the stock is unchanged at 15,513 units since March of this year. Other upcoming completions include Raffles Residences (237 units), Greenbelt Madison (276 units), and The Grand Midori Tower 1 (279 units). Both the Makati CBD and Fort Bonifacio will have the strongest supply pipeline in the next two years. Together with the other major districts, new supply will be at 7,600 units in 2013, but will decline by 50% the following year.

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

3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13F 3Q13F

Residential Stock (LHS)

YoY Change (RHS)

Source: Colliers International Philippines Research

FORECAST RESIDENTIAL NEW SUPPLY

End-2011 MAKATI CBD ROCKWELL FORT BONIFACIO ORTIGAS EASTWOOD TOTAL 14,735 3,718 12,714 9,870 5,735 46,772 2012 1,553 3,053 1,117 1,095 6,818 2013 2,825 3,450 934 440 7,649 2014 875 441 1,276 792 278 3,662 TOTAL 19,988 4,159 20,493 12,713 7,548 64,901

Source: Colliers International Philippines Research

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PHILIPPINES | 3Q 2012 | RESIDENTIAL

Demand Residential vacancy in the Makati CBD slightly decreased by 1.55% QoQ. Despite the limited completions in the last six months, vacancy remained at double digits, currently at 10.3%. Still, the bulk of the remaining inventories (lease and sales) consist mainly of studio and onebedroom units. In 3Q12, both Premium and Grade B vacancies were stable at below 5% and 15%, respectively. In contrast, Grade A vacancy dropped by 2.8% to 8% QoQ. In the next twelve months, besides Raffles Residences, new stock will be wholly Grade A residential condominiums. This suggests that vacancy for the same segment may increase by 4% at the most in 3Q13. On the other hand, Grade B vacancy is seen to decrease to 8% while Premium vacancy will remain stable.

Makati CBD Residential Vacancy

18% 16% 14% 12% 10% 8% 6% 4%
3Q98 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 1Q12 3Q12 1Q13F 3Q13F

2%

Source: Colliers International Philippines Research

MAKATI CBD COMPARATIVE RESIDENTIAL VACANCY RATES (%) 3Q12 LUXURY OTHERS ALL GRADES 4.6 11.1 10.3 2Q12 5.0 12.8 11.8 10.1 3Q13F

Source: Colliers International Philippines Research Rents Rents for luxury 3-BR condominiums have been trending upward over the last three years. Premium 3-BR rental rates in the Makati CBD grew by 15% annually and are pegged at PHP710 per sq m on average. This translates to a monthly rate of PHP177,500 for a 250 sq m unit. Premium rates for both the Makati CBD and BGC are almost the same and will improve modestly by 5% to 6% in the next twelve months due to the considerable upcoming supply. In Rockwell, where supply is limited, Premium rental rates grew 5% YoY to an average of PHP790 per sq m. This is seen to exceed PHP800 per sq m per month in the next six months.

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PHILIPPINES | 3Q 2012 | RESIDENTIAL

Makati CBD, Rockwell, Bonifacio Global City Prime 3BR Units Residential Rents
900 800
in peso per sq.m. per month

700 600 500 400 300 200 100

3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13F 3Q13F

Makati CBD

Rockwell

Bonifacio Global City

Source: Colliers International Philippines Research

METRO MANILA RESIDENTIAL CONDOMINIUM COMPARATIVE LUXURY 3BR RENTAL RATES

3Q12 MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 525-890 677-900 568-850 2Q12 520-875 675-900 562-828 % CHANGE (QoQ) 1.45 0.14 2.05 3Q13F 538-973 712-945 577-935 % CHANGE (YoY) 5.85 5.07 6.60

Source: Colliers International Philippines Research

COMPARATIVE RESIDENTIAL LEASE RATES THREE-BEDROOM, SEMI-FURNISHED TO FULLY 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
* in pesos per month ** in square meters

AVERAGE 150,000 280 95,000 190 190,000 210 200,000 260 160,000 200

MAXIMUM 250,000 330 135,000 330 250,000 280 300,000 330 280,000 300

100,000 210 65,000 170 65,000 120 150,000 200 75,000 130

Source: Colliers International Philippines Research

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PHILIPPINES | 3Q 2012 | RESIDENTIAL

COMPARATIVE RESIDENTIAL LEASE RATES (EXCLUSIVE VILLAGES) 3BR - 4BR, UNFURNISHED TO SEMI-FURNISHED LOW Forbes Park Dasmarinas Village Urdaneta Village Bel Air Village Ayala Alabang Village San Lorenzo Village 250,000 200,000 180,000 100,000 85,000 80,000 HIGH 550,000 450,000 450,000 300,000 300,000 280,000

Source: Colliers International Philippines Research

Capital Values Capital values for premium residential condominiums in the Makati CBD and BGC are currently the same at PHP116,000 per sq m. BGC secondary prices will eventually increase by 6.7% in 3Q13 and will be closely followed by Makati by 6.2%. In Rockwell Center, rates are pegged at PHP123,695 per sq m and will increase by 5.9% in the next twelve months.

Makati CBD Residential Capital Values

140,000 130,000

in peso per sq.m.

120,000 110,000 100,000 90,000 80,000 70,000

3Q01

1Q02

3Q02

1Q03

3Q03

1Q04

3Q04

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13F

Makati CBD

Rockwell

Bonifacio Global City

Source: Colliers International Philippines Research

METRO MANILA RESIDENTIAL CONDOMINIUMS COMPARATIVE LUXURY 3BR CAPITAL VALUES (PESOS / SQ M)
3Q13 MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 78,950-153,150 99,902-147,489 91,293-141,387 2Q12 78,936-151,922 98,913-141,816 90,658-136,746 % CHANGE (QoQ) 0.5 2.8 2.4 3Q13F 81,350-161,257 101,850-160,002 92,705-155,500 % CHANGE (YoY) 6.2 5.9 6.7

Source: Colliers International Philippines Research

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3Q13F

60,000

Metro Manila Hotel Room Stock PHILIPPINES | 3Q 2012 | RETAIL

RETAIL
Supply In the first nine months of this year, Metro Manila new retail supply reached over 60,000 sq m. This is owed to the completion of Magnolia Town Center in Quezon City and the partial re-launch of Glorietta 1 and 2 in Ayala Center. Despite the increase, the recently demolished Ever Grand Central (21,700 sq m) resulted in a reduction of retail stock to settle at 6.7 million sq m of leasable space. In the long term, retail developments will consistently expand across the untapped geographic markets in Metro Manila, around BPO and commercial centers, and within master-planned communities. Moreover, retail complexes are likewise anticipated to roll out in the upcoming Entertainment City in Pasay. There are roughly 400,000 sq m of super-regional, 150,000 sq m of regional and some 100,000 sq m of district and neighborhood malls currently in the pipeline. Besides shopping malls and complexes, a substantial number of superstores have also been widely introduced. These are mainly supplied by major retail chain owners such as Puregold Price Club Inc., SM Prime, and Rustans Super Centers, Inc. In Metro Manila, there are over 80 superstores at present which are estimated to amount to 420,000 sq m. This segment is expected to expand further while the amount of largescale developable land becomes limited coupled with the heightened consumer interest in this retail format.

RETAIL STOCK METRO MANILA (SQ M)

3Q12 SUPER-REGIONAL REGIONAL DISTRICT / NEIGHBOURHOOD ALL LEVELS 3,051,353 1,115,378 1,103,011 5,269,742 2Q12 3,051,353 1,115,378 1,065,734 5,232,465 % CHANGE (QoQ) 0.00 0.00 3.50 0.71 3Q13F 3,051,353 1,245,378 1,103,011 5,399,742 % CHANGE (YoY) 0.00 11.66 0.00 2.47

Source: Colliers International Philippines Research

Demand Due to tightened competition, major retail players are moved to reinvent plans and upgrade from traditional retail set-ups. On top of the numerous introductions of local and international brands, mall expansions and continuous refurbishments are progressively done to further accommodate more tenants and eventually intensify foot traffic. These on-going reconstructions have resulted in a temporary reduction in the occupancy rates. Together with the inclusion of new supply, vacancy rates on both super-regional and regional malls rose to 3.17% in the 3Q12 or an occupancy rate of 96.8% from the 98.6% in the previous quarter. Vacancy rates are expected to narrow simultaneous with the re-opening of new mall spaces towards the holiday season.

METRO MANILA COMPARATIVE RETAIL VACANCY RATES (%)

3Q12 SUPER-REGIONAL REGIONAL 3.00 3.63 2Q12 1.23 1.56

Source: Colliers International Philippines Research

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PHILIPPINES | 3Q 2012 | RETAIL

Rents Rental rates in Ayala Center increased by 1.6% to an average of PHP1,270 per sq m. Meanwhile, rental rates in Ortigas Center marginally improved by 0.6% to about PHP1,095 per sq m. Rental rates in both districts are projected to grow by 3% - 4% in the next twelve months supported by the robust consumer spending.

Ortigas Retail Rent

4% 1,150
Php/ sq m/ month

4% 3%

950

3% 2% 2%

750

1% 1%
2Q13F 3Q13F
50% 40% 30% 20% 10% 0% -10% -20% -30%
1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(Ortigas) Monthly Rent

(Ortigas) YoY Increase (RHS)

Source: Colliers International Philippines Research

Spending Indicators During the first nine months of this year, total vehicle sales grew by 2.4% annually to 111,586 units. However, on a quarterly basis, it contracted by 3.8% and fell short by 1,556 units. The decline in sales mainly occurred in August when the severe flooding on top of fewer working days hampered sales activities. The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), however, sees sustained strong performance for the remainder of the year. The inflows of new vehicle models backed by a positive economic outlook were cited as the main growth drivers.

Quarterly Vehicle Sales

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -

Car Sales

YoY Change (RHS)

Source: Chamber of Automotive Manufacturers of the Philippines

1Q13

550

0%

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PHILIPPINES | 3Q 2012 | THE KNOWLEDGE COLLIERS INTERNATIONAL 522 offices in PHILIPPINES MANAGEMENT TEAM 62 countries on
INVESTMENT SERVICES Ieyo De Guzman | Executive Director OFFICE SERVICES - Landlord & Tenant Representations Jie Espinosa | Director REAL ESTATE MANAGEMENT SERVICES Christian Espinar | Director

6 continents

United States: 147 offices Canada: 37 offices Latin America: 19 offices Asia Pacific: 201 offices EMEA: 118 offices $1.8 billion in annual revenue 1.25 billion square feet under management

Over 12,300 professionals worldwide VALUATION & ADVISORY SERVICES Marissa Benitez | Director RESIDENTIAL SERVICES Gigi Limguangco | Associate Director REAL ESTATE MANAGMENT SERVICES Micky Oriola | Associate Director

COLLIERS INTERNATIONAL PHILIPPINES

10F Tower 2 RCBC Plaza Ayala Avenue, Makati City Philippines TEL +632 888 9988 FAX +632 845 2612 www.colliers.com

Karlo Pobre

RECENT RECOGNITIONS

Research Analyst Consultancy & Valuation Services Main +632 888 9988 ext. 4030 Fax +632 845 2612 Email karlo.pobre@colliers.com

Julius Guevara

PHILIPPINE EUROMONEY Real Estate Awards 2011 - Winner * Best Overall Adviser & Consultant * Agency | Letting * Valuation * Reseach

Associate Director Advisory & Research Main +632 888 9988 ext. 4024 FAX +632 845 2612 Email julius.guevara@colliers.com

David A. Young

Managing Director Colliers International Philippines Main +632 888 9988 FAX +632 845 2612 Email david.a.young@colliers.com
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