Q2 2011 | QUARTERlY UPDATE

Colliers International | the knowledge

pHILIPPINE REAL ESTATE

MARKET REPORT

Executive Summary
ECONOMY: RESILIENT DESPITE GLOBAL DEVELOPMENTS
The Philippine economy grew 4.9% during the first quarter driven by the improved performance
in the industry and service sector which grew by 2.3% and 2.1% respectively. Expectation for the
second half of this year is a 5%-6% growth driven by the double digit-annual growth of private
investments which registered at 37.6% in the first quarter. Likewise, OFW remittances, which
grew by 6.3% to $9.6B as of June, is as well expected to further improve as it rebounds from its
successive deceleration in the previous months. However, the rising inflation remains a major
concern as global oil prices increases due to the supply disruption in the MENA region.

OFFICE: MAKATI REMAINS A PREFERRED LOCATION

Despite the increase in rents, Makati, followed by Bonifacio Global city, is still the most preferred
business destination among locators, based on Colliers inquiries. In Makati, rental rates for
premium buildings grew to P835 per sq m, Grade A slightly increased to P682 per sq m, while
Grade B pitched to 465 per sq m. The relocation of Mitsubishi Heavy Industries, downsizing of
Pfizer Inc and closure of Atkins Philippines have increased vacancies in Makati to 4.15% this
quarter. However, it is expected to taper off by 3% in the succeeding months considering that the
take-up rates are consistently strong.
market indicators

RESIDENTIAL: SUPPLY STOCK REMAINS ROBUST

Across major CBDs in Metro Manila, a total of 17 high-rise condominiums or around 8,900 units
are expected to complete this year with some 2,175 units delivered this quarter. Total residential
stock among major CBDs is expected to reach at some 61,000 units in the next two years which
is almost twice than the recorded supply stock in 2010.

OFFICE
RESIDENTIAL
HOTEL & LEISURE
INDUSTRIAL

HOTEL & LEISURE:

INDUSTRY

INCREASING TOURIST ARRIVALS TO BENEFIT HOTEL

Deluxe Class continues to dominate the hotel room inventory, with around 8,363 units in 2010,
while First Class and Standard rooms have grown modestly in the past few years with 1,824 and
4,247 units respectively. The growing number of domestic and international tourist arrivals may
bring occupancy rates across all hotel room categories to improve in the long term. Average
vacancy rates in 4Q10 were at 30%, while the De luxe Rooms are still most preferred by
international tourists, with an occupancy rate of 73%.

INDUSTRIAL: MANUFACTURING PREFERS LEASEHOLD OVER FREEHOLD

As of the 1H11, Region IV average occupancy rate was stable at about 88%, with some 330 ha still
being offered either for sale or for lease. Land acquisitions have softened in the past few years as
manufacturing companies find leasing (either warehouses/factory buildings) a practical
alternative.

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PHILIPPINES | 2Q 2011 | THE KNOWLEDGE

ECONOMIC INDICATORS
2006

2007

2008

2009

1Q 2010

2Q 2010

3Q 2010

4Q 2010

1Q 2011

Gross National Product

6.1%

7.8%

6.2%

3.0%

9.50%

7.90%

7.50%

6.70%

3.60%

Gross Domestic Product

5.4%

7.3%

3.8%

0.9%

7.30%

7.90%

6.50%

7.10%

4.90%

Personal Consumption Expenditure

5.5%

6.0%

4.7%

3.8%

5.90%

4.90%

4.20%

7.60%

4.90%

Government Expenditure

6.1%

10.0%

3.2%

8.5%

18.50%

5.60%

-6.10%

-7.60%

-17.20%

Investments

2.7%

9.3%

1.7%

-9.9%

24.30%

11.00%

15.60%

22.80%

37.60%

Exports

11.2%

3.1%

-1.9%

-14.2%

17.90%

27.40%

28.00%

21.10%

7.80%

Imports

1.90%

-5.4%

2.4%

-5.80%

20.30%

23.90%

16.00%

21.80%

22.80%

Agriculture

3.8%

5.1%

3.2%

0.1%

-2.50%

-3.00%

-2.50%

7.10%

4.20%

Industry

4.5%

6.6%

5.0%

-2.0%

15.70%

15.80%

9.20%

11.40%

7.20%

Services

6.7%

8.7%

3.3%

3.2%

6.10%

6.40%

7.70%

9.70%

3.70%

Inflation (full-year)

6.2%

2.8%

9.3%

3.2%

4.40%

3.90%

3.80%

2.90%

4.30%

Budget Deficit (Billion Pesos)

P62.2

P12.4

P68.1

P270

P132

P62

P63

P10

P26

P: US$ (Average)

P51.3

P46.1

P44.7

P47.6

P45.2

P45.3

P45.9

P43.7

P43.5

Average 91-Day T-Bill Rates

5.3%

3.4%

5.2%

4.0%

4.30%

3.90%

4.00%

2.60%

1.14%

Source: National Statistical Coordination Board

ECONOMY
The GDP growth rate during the first quarter grew 4.9% driven by the improved performance in the industry and service sector which grew by
3.2% and 1.3% respectively. Specific contributors to growth include Mining & Quarrying (+18.6%), Manufacturing (+8.6%), Construction (+4.0%),
Real Estate, Renting, & Business Activities (+5.9%). Furthermore, positive economic indicators are expected to fuel growth by 5%-6% in the
succeeding quarters, and thus to offset some potential ill effects from the recent overseas crises.
Remittances remained high, which helps to bolster consumption spending, despite rising consumer prices. Inflows in the first half of this year
grew by 6.3% to $9.6 billion compared to the same period a year ago. Moreover, the robust BPO industry, pulled in some $2.65B in foreign
exchange transactions, while, private investments continuously improve with double-digit annual growth to 37.6% in the first quarter.
However, there is still continuing concern on the rising inflation rate, which registered at 4.6% in June, the highest in 26 months. Upward price
pressures continue to build, as global oil prices surge caused by the impact of the political unrest in the Middle East. The International Monetary
Fund (IMF) has maintained its outlook on the Philippine economy at 5% in full year 2011.

2011

2010

3Q

2009

2006

2Q

2008

2005

1Q

2007

2004

2003

2002

2001

20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
2000

In Million US Dollars

OFW Remittances

4Q

Source: Bangko Sentral ng Pilipinas

* As of May 2011

p. 2

| Colliers International

PHILIPPINES | 2Q 2011 | THE KNOWLEDGE

LAND VALUES
Implied land values in Makati CBD and Ortigas Center adjusted minimally this quarter. Makati CBD land value is currently at an average of
P268,900 per sq m, with an accommodation value of 16,800 per developable area. With interest in Makati properties still high, land values are
expected to grow by more than 3% in the second half. On the other hand, Ortigas Center land values are generally stable at the current P125,100
per sq m, while in BGC price per developable area increased by 7% to P15,000 compared to the same period last year.

Makati CBD and Ortigas Average Land Values

pesos per square meter

400,000
300,000
200,000
100,000

Makati CBD

1Q12F

1Q11

1Q10

1Q09

1Q08

1Q07

1Q06

1Q05

1Q04

1Q03

Ortigas Ctr

Source: Colliers International Philippines Research

COMPARATIVE LAND VALUES

2Q11

1Q11

% CHANGE (QoQ)

2Q12F

% CHANGE (YoY)

MAKATI CBD

25,125-280,731

256,989-279,414

0.27%

269,984-283,646

3.40%

ORTIGAS CENTER

93,747-156,590

92,828-155,055

1.00%

98,434-164,420

5.00%

PESO / SQUARE METER

Source: Colliers International Philippines Research

LICENSES TO SELL
As of April, issued Licences-to-Sell (LTS) continued to decline but at a much lower rate of 12% YoY - half the decline recorded in December
of last year. Latest government data shows that the total residential LTS reached 55,426 units, which dipped short by some 2,500 units from
the same period a year ago. However, on a monthly basis, it grew by an average of 55% since January a positive outlook, considering the
numerous upcoming projects set to launch this year.
Almost twice that of last year, the issued licences under the high-rise housing segment grew significantly by 83% to 20,698 units, the
highest YoY change traced since 2009. Some of the approved high-rise projects include Asya Enclaves Alabang (Phinma Property),
Princeton Residences and Field Residences, Phase 1 (SMDC), The Grove by Rockwell Towers E & F (Rockwell), Pine Crest Bldg 1, 2 & 3
(Vista Residences), and Signa Residences (RLC).
Continuing to lag behind are the licences issued across the socialized and economic segments, which dropped, though at a lesser magnitude,
by 34% and 27%, respectively. The same was seen through the mid-income segment, where the total LTS decreased to 10,539 units
compared to the 11,958 units issued in the same period last year.

p. 3

| Colliers International

PHILIPPINES | 2Q 2011 | THE KNOWLEDGE

HLURB LICENSE TO SELL
Jan-Apr
2011

Jan-Apr
2010

% CHANGE
YOY

Socialized Housing

9,823

14,967

-34.4%

Low Cost Housing

14,336

19,746

-27.4%

Mid Income Housing

10,539

11,958

-11.9%

High Rise Residential

20,698

11,283

83.4%

Commercial Condominium

318

285

11.6%

Farmlot

225

283

-20.5%

Memorial Park

60

172

-65.1%

52

136

-61.8%

56,054

58,830

-4.7%

UNITS

Industrial Subdivision
Commercial Subdivision

Total (Philippines)

Source: Housing and Land Use Regulatory Board

HLURB Licenses
160,000

140,000

140,000

120,000

120,000

units

80,000

80,000

units

100,000

100,000

60,000

60,000

40,000

40,000

20,000

20,000

Quarterly Approvals

1Q11

1Q10

1Q09

1Q08

1Q07

1Q06

1Q05

1Q04

1Q03

1Q02

1Q01

1Q00

1Q99

Moving 12-Month Average (RHS)

Source: Housing and Land Use Regulatory Board

OFFICE SECTOR

Makati CBD vs. Metro Manila Office Stock

7,000,000

600,000

6,000,000

500,000

5,000,000
in sq.m.

Currently, construction activity across Metro Manila remains

robust, with more than 30 office buildings expected to complete
from this year to end-2012. In 2Q11, 40% of this years
projected supply stock has already been delivered. This
comprises about 145,800 sq m in NUA, with some 213,500 sq
m more in the pipeline.

400,000

4,000,000
300,000
3,000,000
200,000

2,000,000

100,000

1,000,000
-

Metro Manila Stock

Makati CBD

2012F

2010

2011F

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

0
1990

While Bonifacio Global City represents the majority of this

years supply, Makati CBD on the other hand continues to run
out of developed land, having had unchanged stock of around
2.7M sq m NUA for the last two years, with only a few upcoming
projects expected: Zuellig Tower (57,000 sq m) in early 2012,
and Alphaland Makati Tower (38,000 sq m) in 2013. In other
areas, recent building completions include JELP Business
Solution Center (5,900 sq m) in Mandaluyong and Trade &
Financial Tower (23,800 sq m) and Sun Life Office Building
(23,500 sq m) in Bonifacio Global City.

in sq.m.

Supply

YoY Change (RHS)

Source: Colliers International Philippines Research

p. 4

| Colliers International

PHILIPPINES | 2Q 2011 | THE KNOWLEDGE | OFFICE

OFFICE SECTOR

Makati CBD Office Supply and Demand

Demand

20%

270,000
220,000

15%

170,000
in sq.m.

10%

120,000
70,000

5%

20,000
0%

(30,000)
(80,000)

New Supply During Year

Take-Up During Year

2012F

2010

2011F

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

-5%
1989

The impact of a high net take-up of some

40,000 sq m in Makati during the previous
quarter suggests moderate take-up rates at
an average of 8,400 sq m in each succeeding
quarters in the second half. In 2Q11, vacancy
rates slightly increased to 4.15% due to the
increase in grade A vacancy of 6.17% driven
by the relocation of Mitsubishi Heavy
Industries from BPI Buendia to Robinsons
Cybergate Plaza, downsizing of Pfizer Inc. in
Ayala Life FGU, and the closure of Atkins
Philippines in 6750 Ayala Avenue. However,
Premium building remains preferred, as its
vacancy rates ease to 3.17%, at its 15-month
low while grade B vacancy is generally stable
at 3%. Over-all, vacancies are still expected to
taper-off at the 3% level in the succeeding
months.

Vacancy at Year End (RHS)

Source: Colliers International Philippines Research

MAKATI CBD COMPARATIVE OFFICE VACANCY RATES

2Q11

1Q11

PREMIUM

3.17%

5.15%

GRADE A

6.17%

4.87%

GRADE B & BELOW

3.69%

3.15%

ALL GRADES

4.15%

3.74%

2Q12F

3.40%

Source: Colliers International Philippines Research

FORECAST OFFICE NEW SUPPLY
LOCATION

End-2010

2011

2012

2013

MAKATI CBD

2,699,696

57,353

38,400

ORTIGAS

1,126,018

12,480

37,930

5,720

FORT BONIFACIO

485,693

158,973

115,805

99,397

EASTWOOD

252,979

75,605

ALABANG

234,305

31,247

1,760

OTHER LOCATIONS*

685,362

81,007

7,000

23,000

4,499,053

395,131

218,088

168,277

TOTAL

Source: Colliers International Philippines Research

*Manila, Pasay, Mandaluyong, and Quezon City
Rents
QoQ, the Makati CBD premium rates experienced a slight uptick of 1.8% to an average of P835 per sq m monthly (per net useable area). While
Grade A decelerated to 0.2% at P682 per sq m monthly, Grade B rates continue to pitch at P465 per sq m monthly up slightly over by 3% in
the past two quarters.
In the next twelve months, Grade A and B rental rates are expected to hike by 10% as with the premium rental rates, albeit at a slower pace, to
reach at P865 per sq m monthly.
Despite tenants keeping up with the increase in rents levelled by the limited office space, inquiries still lead to Makati followed by Bonifacio Global
City, as a preferred location during the first half of this year. In alternative business locations, Manila and Pasay is starting to pick up as a soughtafter location, notably for BPOs.
p. 5

| Colliers International

PHILIPPINES |

2Q 2011 | OFFICE
Makati CBD Office Rents
COMPARATIVE OFFICE RENTAL RATES
MAKATI CBD (BASED ON NET USEABLE AREA)

PESO/SQ M/MONTH

2Q11

1Q11

%CHANGE (QOQ)

2Q12F

%CHANGE (YOY)

PREMIUM

770-900

752-889

1.8%

807-924

3.7%

GRADE A

475-889

472-889

0.2%

528-976

10.3%

GRADE B

435-495

422-480

3.1%

485-542

10.4%

Source: Colliers International Philippines Research

NOTABLE LEASING DEALS
Building
MDC 100

Area

Size (sq m)

Eastwood

14,639.93

Q.C.

9,513.83

McKinley

7,488.00

U.P. Ayala Technohub Bldg K

8 Campus Place Tower 1

Source: Colliers International Philippines Research

Capital Values

Makati CBD Office Capital Values

130,000
120,000
110,000
in peso per sq.m.

100,000
90,000
80,000
70,000
60,000
50,000

By 2Q12, capital values are pegged to

appreciate by 8%-10% for Grade A and
Premium buildings, and 2.5% for Grade B
buildings. Capitalization rates remain at 9%10% as rental rates and capital values
marginally correct at a reasonable rate.

40,000

Premium

Grade A

1Q12F

3Q10

2Q11F

4Q09

1Q09

2Q08

3Q07

4Q06

1Q06

2Q05

3Q04

4Q03

1Q03

2Q02

3Q01

1Q00

30,000
4Q00

Average capital values for premium grade

buildings in the Makati CBD remain generally
stable at P104,656 per sq m, an increase of a
little over 1%, similar to that of the previous
quarter. Grade B buildings escalated much
higher by almost 2% to P54,050 sq m, while
Grade A buildings slightly increased to 1.80%.

Grade B/B-

Source: Colliers International Philippines Research

COMPARATIVE OFFICE CAPITAL VALUES

MAKATI CBD (BASED ON NET USEABLE AREA)
PESO/SQ M
PREMIUM

2Q11

1Q11

%CHANGE (QOQ)

2Q12F

%CHANGE (YOY)

96,657-112,655

94,484-111,540

1.6%

105,752-124,578

10.0%

GRADE A

68,151-91,869

67,210-89,979

1.8%

73,045-100,167

8.2%

GRADE B

46,000-62,100

45,000-61,050

1.9%

47,295-62,541

2.5%

Source: Colliers International Philippines Research

p. 6

| Colliers International

PHILIPPINES | 2Q 2011 | OFFICE | RESIDENTIAL

RESIDENTIAL SECTOR
Supply
The boost in residential stock across mixed-use developments, together with an array of individual projects, surged within major CBDs this year,
with over 17 condominiums under way. From this, some 2,175 units were completed this quarter. These includes recent projects such as One
Rockwell West (504 units), The Columns Legaspi Tower 1 (390 units), Grand Emerald Tower (1,064 units), and The Fort Residences (217 units).
To date, residential stock in Makati CBD delivered more than 30% of the overall supply among major business locations, and is currently lodging
over 13,836 units. The stock may expand by an extra 10% with the turnover of six new projects by year-end.
Supply pipeline in Bonifacio Global City is very high, delivering some 8,000 units by the end of 2013. In the next two years, the inventory of
residential units between Makati CBD and Bonifaco Global City is forecast to even out within the 19,000-unit range.

Makati CBD Residential Stock

25%

18,000
16,000

20%

14,000

15%

in units

12,000
10,000

10%

8,000

5%

6,000
4,000

0%

2,000

-5%

Residential Stock

4Q11F

1Q11

2Q10

3Q09

4Q08

1Q08

2Q07

3Q06

4Q05

1Q05

2Q04

3Q03

4Q02

1Q02

2Q01

3Q00

4Q99

1Q99

YoY Change (RHS)

Source: Colliers International Philippines Research

FORECAST
RESIDENTIAL NEW SUPPLY
LOCATION

(cumulative) 2010

2011

2012

2013

TOTAL

MAKATI CBD

13,076

2,181

2,171

1,895

19,323

ROCKWELL

2,382

1,336

3,718

FORT BONIFACIO

10,709

3,052

2,417

2,397

18,575

7,481

2,389

934

1,579

12,383

ORTIGAS
EASTWOOD

5,735

558

977

7,270

TOTAL

39,383

8,958

6,080

6,848

61,269

Source: Colliers International Philippines Research

Demand
In the Makati CBD, despite the rise in occupancy across luxury residential units, overall rates sustained at the 9% level, due to the rise in
vacancies among other condominium grades with over 5% more from the previous quarter. Overall vacancy is expected to further increase to
as high as 12% by mid-year 2012 driven by the continuous surge in supply.
In Rockwell and Eastwood, vacancies tends to decrease by single digits, while supply stock becomes limited, with a current 3% vacancy rate
from the previously 4%. By contrast, Bonifacio Global City and Ortigas Center may experience higher vacancies, to peak at 12% from the
completion of a considerable number of new projects in the near term.

p. 7

| Colliers International

PHILIPPINES | 2Q 2011 | RESIDENTIAL

Makati CBD Residential Vacancy
18%
16%
14%
12%
10%
8%
6%
4%
2Q12F

3Q11F

4Q10

1Q10

2Q09

3Q08

4Q07

1Q07

2Q06

3Q05

4Q04

1Q04

2Q03

3Q02

4Q01

1Q01

2Q00

3Q99

4Q98

1Q98

2%

Source: Colliers International Philippines Research

MAKATI CBD
COMPARATIVE RESIDENTIAL VACANCY RATES
Rents

1Q11

LUXURY

6.7%

9.9%

OTHERS

19.9%

15.0%

ALL GRADES

9.5%

9.4%

Across major residential hubs in Metro

Manila, rents in Rockwell Center, remained
the highest. However, luxury 3BR rental rates
barely moved this quarter to P743 per sq m
monthly, and no upward pressures are
observed to cause a significant rise in rents in
the near future.

12.0%

Makati CBD, Rockwell, Bonifacio Global City

Prime 3BR Units Residential Rents
900
800
700
600
500
400
300
200
100

Makati CBD

Rockwell

1Q12F

1Q11

3Q11F

3Q10

1Q10

3Q09

1Q09

3Q08

1Q08

3Q07

1Q07

3Q06

1Q06

3Q05

1Q05

3Q04

1Q04

3Q03

1Q03

3Q02

1Q02

3Q01

in peso per sq.m. per month

YoY, luxury 3BR rental rates in Bonifacio

Global City rose by 6% to P653 sq m monthly.
This translates to P163,000 per month for a
250-sq m unit. The influx of BPO companies
in this business district may strengthen
expatriate demand which tempers rental rate
in the medium term.

2Q12F

Source: Colliers International Philippines Research

1Q01

Luxury 3BR rental rates in Makati CBD

increased by 1.6% to P569 per sq m monthly,
and are expected to break the P600 per sq
level in the next 13 months due to a notable
increase in occupancy rates. Currently, rental
rate for a 290-sq m unit translates to
P165,000 per month.

2Q11

Bonifacio Global City

Source: Colliers International Philippines Research

p. 8

| Colliers International

PHILIPPINES | 2Q 2011 | RESIDENTIAL

METRO MANILA RESIDENTIAL CONDOMINIUM
COMPARATIVE LUXURY 3BR RENTAL RATES
PESO/SQ M/MONTH

2Q11

1Q11

%CHANGE (QOQ)

2Q12F

%CHANGE (YOY)

MAKATI CBD

369-768

360-759

1.6%

376-790

4.2%

ROCKWELL

645-840

642-830

0.8%

682-888

5.7%

BONIFACIO GLOBAL CITTY

540-765

528-744

2.6%

566-807

5.2%

Source: Colliers International Philippines Research

COMPARATIVE RESIDENTIAL LEASE RATES

THREE-BEDROOM PREMIUM, SEMI-FURNISHED
MINIMUM

AVERAGE

MAXIMUM

Rental Range

60,000

155,000

250,000

Average Size

250

300

350

Rental Range

55,000

92,500

130,000

Average Size

150

225

300

Rental Range

75,000

162,500

250,000

Average Size

180

228

276

Rental Range

120,000

160,000

200,000

Average Size

197

242

286

Rental Range

80,000

157,500

235,000

Average Size

158

234

309

Apartment Ridge/Roxas Triangle

Salcedo Village

Legaspi Village

Rockwell

Fort Bonifacio

Source: Colliers International Philippines Research

Capital Values
The bigger unit sizes in the Makati CBD outweigh the higher rents in Bonifacio Global City, pushing capital values of the former to surpass the
latter. Currently, secondary market prices for both CBDs are virtually equal at an average of P106,000 per sq m, although a faster upward rate
is seen in the Makati CBD.
In Rockwell Center, the completion of One Rockwell East pushed capital values to rise at an average of P125,300 per sq m from the formerly
stable rate manifested in the last five quarters. Secondary market prices are expected to rebound at a minimal rate until the completion of
Edades in 2014.

Makati CBD Residential Capital Values

120,000

100,000
90,000
80,000
70,000

Makati CBD

Rockwell

1Q12F

1Q11

3Q11F

3Q10

1Q10

3Q09

1Q09

3Q08

1Q08

3Q07

1Q07

3Q06

1Q06

3Q05

1Q05

3Q04

1Q04

3Q03

1Q03

3Q02

1Q02

3Q01

60,000
1Q01

in peso per sq.m.

110,000

Bonifacio Global City

Source: Colliers International Philippines Research

p. 9

| Colliers International

PHILIPPINES | 2Q 2011 | RESIDENTIAL | HOTEL & LEISURE

METRO MANILA RESIDENTIAL CONDOMINIUM
COMPARATIVE LUXURY 3BR CAPITAL VALUES
PESO/SQ M

2Q11

1Q11

%CHANGE (QOQ)

2Q12F

%CHANGE (YOY)

MAKATI CBD

71,621-140,512

71,535-134,954

2.7%

73,793-150,876

5.9%

ROCKWELL

92,956-125,337

92,000-122,500

1.8%

95,015-131,201

3.6%

BONIFACIO GLOBAL CITY

87,889-123,866

86,287-121,557

1.9%

89,669-129,658

3.6%

Source: Colliers International Philippines Research

HOTEL & LEISURE

Supply
Investments in the hotel and leisure industry are seen to build up this year in reflection to the increasing tourist arrivals in the country.
Government data shows that international tourist visitors increased by 12% YoY to 1.6 million for the first five months while domestic passengers
increased by 15.8% to 9.72M in the first half of this year.
The Department of Tourism aims to surpass its 3.74 million target of international tourists arrivals in 2011 which brings the construction activity
for new hotel rooms to further heighten. In Metro Manila alone, hotel rooms are expected to reach to 16,113 units this year with 30% more of
new supply from the 729 units completed in 2010. Hotels targeted to complete this year include Acacia Grove Hotel (262 rooms) in Alabang,
Tune Hotels (167 rooms) in Manila, Remington Hotel (300 rooms) in Pasay, and F1 City Center Hotel (240 hotels) in Taguig,
Currently, Deluxe rooms continues to dominate the hotel room inventory, with around 8,363 units in 2010, while the number of Standard rooms
grew 11% to 4,247 units, and the First Class rooms which remained at 1,824.

Metro Manila Retail Hotel Room Stock

16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000

De Luxe

First Class

Standard

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

Economy

Source: Department of Tourism

Forecast Hotel Room Supply

3500
2893

3000
2500
2000

1588
1500
1000

1247
969
729

500
0
2010

2011

2012

2013

2014

Source: 7107 Insider

p. 10

| Colliers International

PHILIPPINES | 2Q 2011 | HOTEL & LEISURE

HOTEL & LEISURE
Demand
Towards the end of 2010, occupancy rates in Metro Manila peaked at almost 70% from a low base in 2009. An upward trend in the visitor
arrivals suggest vacancies will gradually decrease, attributable to favorable key market conditions.
In 4Q10, occupancy rates in the de luxe and First Class categories increased by 5%, to 73% and 63%, respectively, while vacancy rates across
Standard and Economy categories remain at 35% and 45%, respectively. However, the growing interest in eco-tourism and the expansion of
hotel/gaming establishments suggest further improvement in the occupancy rates in the long term.
While business activity is dispersing to the suburbs and provinces, higher demand follows through major destinations in the Vis-Min regions.
Government data show in 2010, Camarines Sur tops Metro Manila as the most popular destination, gaining over 2.33M visitors. The same trend
will be expected in the areas like Davao and Cebu in succeeding years.

Visitor Arrivals vs. Metro Manila Occupancy Rate

Source: Department of Tourism

Rates
Standard room rates in Metro Manila remained unchanged during the first half of this year. Average rates of both 5- and 4-star hotels are the
same at 255US$ per night, while 3-star hotels recorded a much lower rate of 129US$ per night. However, corporate rates for both 5- and 4-star
hotels differ at US$180 and US$158, respectively. Standard room rates are expected to increase minimally in the next two quarters in anticipation
of the increasing number of foreign and domestic visitors.

MM AVERAGE STANDARD ROOM RATES 1H11

Published Rates
(US$)

Corporate Rates
(US$)

5-Star

256

180

4-Star

255

158

3-Star

129

112

Source: Colliers International Philippines Research

INDUSTRIAL
Supply
Under the manufacturing line registered with PEZA, there are 64 economic zones accredited to date. This generates over 38,600 ha across the
country. Region III, (including Zambales, Pamapanga and Clark), dominates the supply stock, while Region IV, particularly the CALABA area,
carries only 8% of the total.
In Region IV, which is slowly surfacing as a residential district, the number of heavy industrial plants continues to weaken, as it is easily being
replaced by the light to medium manufacturing economic zones. In the latest data provided by NEDA, the countrys export receipt grew by 19%
in April, with manufactured goods one of the main source of contributors; thus the industry is emerging.
Based on PEZA data, newly approved applications listed under manufacturing economic zones reached 26 as of this year, while some of the
proclaimed economic zones are 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).

p. 11

| Colliers International

PHILIPPINES | 2Q 2011 | INDUSTRIAL

*Philippine Industrial Supply Stock (Manufacturing)
R-VII, 2%

R-XII ,
2%

* INDUSTRIAL SUPPLY STOCK (MANUFACTURING)

R-X , 8%
R-IV, 7%

Region IV

Hectares

Batangas

1,004.63

Cavite

800.24

Laguna

1,023.43

Total

2,828.30

R-III,
78%

*PEZA accredited economic zones

Source: Philippine Economic Zone Authority

Demand
Due to the growing demand for manufactured goods, companies require more facility providers for warehouses/factory buildings as an alternative
to land acquisition, which has continued to soften across economic zones for the last few years. As of the 1H11, Region IV average occupancy
rate was stable at approximately 88%, with some 330 ha still being offered either for sale or for lease. Currently, land values in the region grew
7% YoY, to an average of 3,600 per sq m, and is expected to be generally even by the remainder of the year.

* INDUSTRIAL VACANCY RATES 1H11 (MANUFACTURING)

Region IV
Batangas

3%

Cavite

7%

Laguna

25%

Total

12%
*PEZA accredited economic zones

Region IV Industrial Land Value

4,000
3,500
3,000
2,500
2,000
1,500

Calabarzon

1,000
500
-

Source: Colliers International Research

p. 12

| Colliers International

PHILIPPINES | 2Q 2011 | INDUSTRIAL

Rates
Lease rates during the 1H11 barely moved at P22 per sq m for leasehold land, and P163.00 per sq m for factory buildings and warehouses. Rates
have remained passive over the last few years and movements are generally slow, with 2%-3% annual change. However, the improved sales
trend on manufactured goods may indicate a modest uptick on the lease rates in the short term.

INDUSTRIAL LEASE RATES 1H11 (MANUFACTURING)

Region IV

(Php/sq m/month)

Leasehold (Land)

22.24

Lease Rates (SFB)

162.93
*PEZA accredited economic zones

Spending Indicators
Recorded car sales picked up slowly during the early part of the second quarter. Total car sales fell short by 1,353 units in May, from the 12,266
units sold a year ago. Latest month-on-month sales records show a drop of 8% in both passenger and commercial vehicles. Passenger cars
sold in May totalled 3,274 units, with some 7,639 units for commercial vehicles. The slewed growth is still attributed to the recent incident in
Japan, which jolted the countrys auto industry, disrupting the supply inflow of some essential auto parts. However, the Association of Vehicle
Importers and Distributors, Inc. remains positive on the economic outlook of the industry as Japan quickly recovers to its full capacity towards
the end of the year.

Quarterly Vehicle Sales

50%

50,000
45,000

40%

40,000

30%

35,000
30,000

20%

25,000
10%

20,000
15,000

0%

10,000

-10%

5,000
-

-20%
1Q00

1Q01

1Q02

1Q03

1Q04
Car Sales

1Q05

1Q06

1Q07

1Q08

1Q09

1Q10

1Q11

YoY Change (RHS)

Source: Chamber of Automotive Manufacturers of the Philippines

p. 13

| Colliers International

PHILIPPINES | 2Q 2011

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Managing Director, Philippines

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Email David.a.Young@colliers.com
Copyright 2011 Colliers International.
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from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we
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