Philippine Real Estate Market

Philippine Real Estate Market
Contents
1
Contents
• Global View: Stars are aligned for the Philippines and Clark
• Property Overview
• Growth Prospects
• Challenges
• Who We Are, What We Do
2
Global View
3
Stars are aligned for the Philippines
Philippines is benefitting from a convergence of events:
- Unprecedented Amount of liquidity flowing through the global economy
- Global Economic Recovery
- Strong credibility of the National Government
- High regard of the Philippines by the global community
- Fiscal prudence and Governance
- Increasing dollar inflows from Remittances, BPO’s, Tourism
and other Foreign Direct Investment sources
- Recognized globally as a necessary Hub for Shared Services, and
Back Office operations.
- Upcoming infrastructure construction and tourism boom
Philippines should take advantage of the favorable climate to effect Structural,
Economic, and Constitutional reforms that will lead to sustainable long term growth
4
Total Commercial Real Estate Investments
Top 30 cities
>$30B – SUPER CITIES
$15 – 30B
$7 – 15B
JLL Research, 2014
5
Asia Pacific is now on par with the US as a global market
Asia Pacific and US and EU nominal GDP
IH5 Global Insight, January 2014
6
Philippines RE to grow 50% to a USD 300B Market
Market size by country
Size of the Asia-Pacific real estate markets: 2011-2031
Country
2011
2021
2031
Japan
China
Australia
South Korea
India
Singapore
Hong Kong
Taiwan
Indonesia
Thailand
Malaysia
New Zealand
US$
$2,678B
$1,864B
$656B
$467B
$350B
$241B
$211B
$198B
$189B
$89B
$84B
$73B
Global %
10.1%
7.0%
2.5%
1.8%
1.3%
0.9%
0.8%
0.7%
0.7%
0.3%
0.3%
0.3%
US$
$3,073B
$9,741B
$892B
$933B
$1,630B
$546B
$353B
$378B
$752B
$230B
$246B
$113B
Global %
6.3%
20.0%
1.8%
1.9%
3.3%
1.1%
0.7%
0.8%
1.5%
0.5%
0.5%
0.2%
US$
$4,037B
$26,395B
$1,304B
$1,662B
$5,556B
$1,128B
$623B
$561B
$1,967B
$563B
$465B
$206B
Global %
4.4%
28.7%
1.4%
1.8%
6.0%
1.2%
0.7%
0.6%
2.1%
0.6%
0.5%
0.2%
Philippines
$48B
0.2%
$134B
0.3%
$300B
0.3%
Vietnam
Asia-Pacific
$21B
$7,169B
0.1%
27.0%
$65B
$19,085B
0.1%
39.2%
$171B
$44,937B
0.2%
48.8%
Global
$26,559B
100.0%
$48,723B
100.0%
$92,065B
100.0%
APREA, Pramerica Real Estate Investors
7
Asia Pacific Rental Rates
6,000
PHP/ square meter per month
USD/ square foot per annum
5,000
140
120
4,000
100
3,000
80
USD/sqft per annum
PHP/sqm per month
160
60
2,000
40
1,000
20
0
0
* 1 USD = 44.71 PHP as of March 4, 2014
8
Asia Pacific Capital Values
PHP/ square meter
USD/ square foot
2,500,000
2,000,000
1,000,000
500,000
0
USD/sqft
PHP/sqm
1,500,000
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
* 1 USD = 44.71 PHP as of March 4, 2014
9
Philippines
Key Economic Facts
GROWTH 1.8%
Median
Age: 23.4
Average Age:
25 to 54 y/o
268.3B
58.5B
Sources: BOT ,SWS, BSP, PSA, 2013
10
Doing Business in the Philippines
INVESTMENT MOST
COMPETITIVE
RANKED UPGRADE
COUNTRY
out
75
of 145
ECONOMIES
to INVEST IN
FREE
M AR K E T
ECONOMY
“From BBBto BBB”
May 9,
May
9, 2014
2014
- S&P’s
THE
FILIPINO
PEOPLE
among
7
- Japan External Trade Organization
INVESTOR
FRIENDLY
ENGLISH PROFICIENT
With Private and Public Partnerships
for Infrastructure Developments
CULTURALLY ADAPTABLE,
DEPENDABLE, DEDICATED
WORLD CLASS SERVICE.
*Established Government Agencies
with a comprehensive list of benefits
for investors
Source: 2012 Global Competitiveness Report, Moody’s, S&P’s,
Japan External Trade organization (JETRO)
11
Philippines: Property Overview
12
Central and Emerging Business Districts
Metro Manila
Business districts (Developed and Developing)
with approximately 5,200 Hectares of land area.
West Sector
PASAY
Newport City
SM Mall of Asia complex
Metropolitan Business Park
PARANAQUE
Asiaworld City
Aseana Business Park
MANILA
CityPlace
North Sector
QUEZON CITY
UP Techno Hub
UP Town Center
Eastwood City
Eton Cyberpod Centris
Araneta Cyberpark
Fairview Terraces
Vertis North
PASIG
Rockwell BPO Complex
MANDALUYONG
Edsa Central
Pioneer
Central Business Sector
South Sector
MUNTINLUPA
Filinvest Corporate City
Madrigal Business Park
MAKATI
Makati CBD
Rockwell Center
Century City
Circuit Makati
PASIG
Ortigas Center
Capitol Commons
Frontera Verde
LAGUNA
Greenfield City
Eton City
Nuvali
Southwoods City
TAGUIG
Bonifacio Global City
McKinley Hill
TAGUIG
Arca South
Emerging Business Districts
Source: JLL Research & Consulting
* Includes those that are geographically-located outside Metro Manila.
13
Emerging Business Districts
Outside Metro Manila
Baguio
Tarlac
Baguio – Ayala Land Technohub
SM Baguio Cyberzone Building
Luisita Business Park
Pampanga
Clark Special Economic Zone
Philexcel Business Park
Bertaphil Business Park
SM City Clark
Clark Green City
Alvierra
GGLC
Capilion
Iloilo
Iloilo Business Park
Atria Park District
Iloilo City Center
Bacolod
Centrale Bacolod
Dumaguete
Dumaguete Business Park
LUZON
Bulacan
PDC Technopark
Altaraza
Cebu
Cebu Business Park
Cebu IT Park
Mactan Newtown
AbotizLand Cebu
Citta De Mare
South Reclamation Properties
Davao
Camella Northpoint
Abreeza
Lanang IT Park
Matina IT Park
Zamboanga
Megaland Mall
CityMall Zamboanga
Emerging Business Districts
14
Pipeline vs. Current Supply
Metro Manila
Total of 8.83 Mn sqm. supply
across districts (current – 2017F)
Current Supply = 7.06 Mn
Future Supply = 1.77
Mn
15
Vacant vs. Pre-Committed Office Space
Metro Manila (2014-2016)
Total of 1.63Mn sqm. supply
across districts (2014 – 2016)
800,000
700,000
600,000
500,000
Office space demand is expected to be at
480K – 500K sqm per annum in Metro Manila
Vacancy
PreCommitted*
400,000
300,000
200,000
100,000
-
2014
2015
2016
*Note: 27% of the total supply already pre-committed
“Healthy equilibrium between demand and supply with vacancy percentage at an all time low”
16
Office Demand-Supply Take-up and Pre-commitments
Metro Manila
Total space committed as of end of 2013:
470,750 sqm
Office space leased as of end of 2013
Pre-commitments signed as of end of 2013
185,520 sqm
285,230 sqm
17
17
Philippines: Major Growth Driver
IT-BPO Industry
“The Philippines has an Advantage over India due to its large pool of “Well-Educated, English-Speaking,
Talented, and Employable Graduates” – Secretary General D.S. Rawat, ASSOCHAM (Associated Chambers of Commerce and
Industry of India); 2014
“The Philippines is the most Attractive Provider of IT-BPO services in Asia” – According to the Survey results
conducted by the Economist Corporate Network (Economist); 2010
18
Growth Drivers
Business Process Outsoursing
PPP
CAGR:
~19%
Philippine BPO industry
In US$ bn
25.0
20.0
15.0
13.4
CAGR:
~28%
10.9
8.9
7.1
3.2
2006
2009
2010
2011
2012
Low-end 2016
Baseline 2016
Road Map 2016
% of GDP
2.6%
4.2%
4.5%
5.2%
5.9%
5.0%
6.7%
8.3%
Direct
Employment
240K
423K
525K
638K
772K
680K
900K
1.3M
Indirect
Employment
600K
1.1M
1.3M
1.6M
1.9M
1.7M
2.2M
3.2M
19
Graduates and Full-Time BPO Employees (FTEs)
45% of total PH graduates located in Metro Manila and in its adjacent provinces (1 hour
North or South of Metro)
3%
3%
6%
3%
3%
25%
75%
960,000 total BPO FTEs
4%
8% 8%
10%
9%
522,617 total graduates (2012 -2013)
Source: Department of Labor and Employment
20
Population and BPO Seats Outside Manila
Pampanga population relatively untapped
Pampanga: 4%
10% 11%
24%
18%
Location
Population (2010)
Cebu
2,619,362
Davao City
1,449,296
Bacolod and IloIlo
936,439
Laguna and Cavite
5,760,538
Pampanga
2,340,355
Source: National Statistics Office
• Approximately 153,397 total BPO seats outside Metro Manila
• 24% of office space taken up outside NCR located in Cebu, only 4% in Pampanga
despite similar populations
21
Notable Transactions in Selected Provincial Locations
140,000
Cavite & Laguna
15,770 Sqm
120,000
6,770
Cebu
100,000
160,824 Sqm
80,000
Bacolod & IloIlo
26,100 Sqm
82,124
60,000
Davao
40,000
31,000 Sqm
29,600
35,100
9,000
20,000
14,100
2,300
19,700
9,000
Pampanga
14,000
10,100
9,000
8,600
3,000
6,000
2009-2011
2012
2013
2014 Pipeline
0
24,700 Sqm
22
Typical BPO Behavior
Why Clark is Next
95%
“BPOs have already saturated most of
the core markets such as Quezon City,
Of the demand outside Alabang, Cebu, and Clark is ideally
Metro Manila are BPOs suited to be the next BPO HUB”
Robust growth in BPO industry in the next 4-5
will result to expansion of companies looking
for larger requirements.
Development of the next master planned community
or ‘lifestyle centers’ outside Metro Manila will attract
BPO locators to continue their expansion in the
Philippines
23
Tourism
24
Asia and the Pacific Tourism Overview
International Tourist Arrivals
(1000)
DESTINATIONS
2010
2011
2012
1
China
55,665
57,581
57,725
2
Malaysia
24,577
24,714
25,033
3
Hong Kong (China)
20,085
22,316
23,770
4
Thailand
15,936
19,230
22,354
5
Singapore
11,641
13,171
14,491
6
Macao (China)
11,926
12,925
13,577
7
Korea, Republic of
8,798
9,795
11,140
8
Japan
8,611
6,219
8,368
9
Indonesia
7,003
7,650
8,044
10
Taiwan (pr. Of China)
5,567
6,087
7,311
11
Vietnam
5,050
6,014
6,848
12
India
5,776
6,309
6,649
13
Philippines
3,520
3,917
4,273
14
Cambodia
2,508
2,882
3,584
15
Sri Lanka
654
856
1,006
Sources: UNTWO Tourism Highlights 2013 Edition
25
Tourism Overview
Top 10 Source Markets in 2013
COUNTRY
Tourist Arrivals
Korea
1,160,000
USA
412,474
Japan
426,352
China
213,023
Australia
175034
Singapore
139,099
Taiwan
131,381
Canada
126,008
Hong Kong
122,759
United Kingdom
96,648
4.7 million foreign
nationals arrived in the
Philippines in 2013
Sources: Department of Tourism
26
Tourism Overview
International Destinations from Clark International Airport (2013)
Carriers
International Destinations
Asiana Air
Jin Air
Cebu Pacific
Dragon Air
Tiger Air
Cebu Pacific
Tiger Air
Total Travellers
(By Country)
Total PH Arrivals
Percentage of
PH Arrivals
Incheon, Korea
14,303,000
1,160,000
8%
China (Including HK and
Macau)
97,000,000
560,004*
0.6%
Singapore
3,739,542**
175,034
5%
6,000,000
47,874
0.8%
N/A
3,724
N/A
Tiger Air
Thailand
Qatar Airways
Qatar
* Including 126,008 arrivals from Hong Kong and 7,644 arrivals from Macau
** Total Number of departures
Sources: Department of Statistics Singapore
World Travel Organization
27
Tourism Overview
Tourism relative to Number of Hotel Rooms
Northern Luzon
Central Luzon
Pampanga
Angeles
Metro Manila
Southern Luzon
Visayas
Cebu
Mindanao
Davao
Total
Total Domestic
Tourists (in 000)
2,036.8
1,557.7
83.6
22.0
815.6
3,000.0
1,548.5
47.6
193.6
598.6
9,904.0
Total Foreign
# of Hotel Rooms
Tourists (in 000)
(in 000)
140.7
21.0
147
15.6
250.7
4.1
46.7
1.5
1,859
32.9
1,174
13.0
3,789.4
50.2
231.9
18.0
4,227.1
30.6
889.7
9.9
9,278.8
196.8
Source: Department of Tourism
NSO 2010 Census of Population and Housing
28
Retail
29
World’s Largest Malls
Position of Philippine Malls in the World (according to Forbes Magazine)
Rank
Retail Development
Location
Year of
Completion
Country
Estimated
GFA (in sqm)
1
South China Mall
Dongguan
China
2005
660,000
2
Jin Yuan
Beijing
China
2004
560,000
3
SM City North EDSA
Quezon City
Philippines
1985
425,000
4
SM Mall of Asia
Pasay City
Philippines
2006
407,000
5
SM Megamall
Mandaluyong
Philippines
1991
361,000
6
Dubai Mall
Dubai
U.A.E.
2008
350,000
7
West Edmonton Mall
Alberta
Canada
1981
350,000
8
Cevahir Istanbul
Istanbul
Turkey
2005
348,000
9
Berjaya Times Square
Kuala Lumpur
Malaysia
2005
320,000
10
Beijing Mall
Beijing
China
2005
320,000
11
SM City Cebu
Cebu City
Philippines
1993
265,000
Several Philippine malls are among the largest in the world; however, this ranking may change with the
addition of new malls.
Source: Forbes Magazine Website (Forbes.com) as of 2010, JLL Research & Consulting
Note: *GFA means “Gross Floor Area”
30
Philippine Retail Market
8,000
524
7,000
Shopping Mall Supply (in thousand sqm)
Existing Supply (as of 1H13) = 12.9 milion sqm
6,000
Future Supply (2H13-2015E) = 1.4 million sqm
5,000
Approximately 134,377 square
meters of retail space located
within Clark Freeport Zone
4,000
6,842
3,000
10
2,000
575
45
1,000
0
1,915
74
347
1,266
118
35
938
564
Metro Manila Northern Luzon Central Luzon Southern Luzon
Western
Visayas
Existing Supply
223
Central Visayas
Northern
Mindanao
674
Davao
61
180
Other Mindanao
Future Supply
Notes: (1) Figures on the graph are in thousand sqm.
(2) Central Visayas figures include supply figures for Eastern Visayas; Northern Luzon includes Ilocos, CAR, Cagayan
Valley regions; Southern Luzon includes CALABARZON, MIMAROPA and Bicol regions; Other Mindanao includes
Zamboanga, SOCCSKSARGEN, CARAGA, and ARMM.
31
Growth Prospects
32
Growth Drivers
33
Challenges
34
Land Ownership by Foreigners
SOUTH KOREA
Foreigners can
own Land (100%)
UNITED STATES
OF AMERICA
UNITED
KINGDOM
AUSTRALIA
INDIA
JAPAN
CHINA
HONG KONG
MALAYSIA
INDONESIA
SINGAPORE
PHILIPPINES
TAIWAN
THAILAND
Foreigners
cannot own
Land; but may
acquire long
property lease
terms
VIETNAM
Foreigners can own land, but are subject to special procedures,
requirements, or government consent
JLL Asia Pacific Property Investment Guide, 2014
35
Corporate Ownership and Foreign Direct Investment
Challenges
Foreign Direct investment
300
FDI in Billions (USD)
250
200
150
100
50
Countries that allows
100% Foreign Corporate
Ownership
Countries that allows
40% to 60% Foreign
Corporate Ownership
$2.8B worth of Foreign
Direct Investment in the
Philippines
0
36
Foreign Ownership and Land Leasehold Terms
COUNTRY
Foreign Property ownership restrictions
Land Leasehold terms in years
Real Estate Market Size
(USD – 2011)
FDI
Australia
Able to own land, subject to consent by the
FIRB
No general practice, but limit of 99 year lease term.
656 Billion
56.6 Billion
China
Unable to own Land.
40 – 70 years. Minimum lease of 40 years is granted to commercial, while highest
term of 70 is granted to residential
1,864 Billion
253.5 Billion
Hong Kong
Unable to own Land
50, 75, 99, and 999 years
211 Billion
74.6 Billion
India
Able to own Land, subject to the approval of
the Reserve bank of India
30 to 999 years, most of the leases were granted during pre-british era. But today, a
maximum of 30 years lease is practiced.
350 Billion
24.0 Billion
Indonesia
Unable to own Land
Maximum of 25 years
189 Billion
19.6 Billion
Japan
Able to own land, but must, in writing, inform
the minister of finance about the purchase
within 20 days
Maximum of 30 years, but if agreement states a longer lease term, the longer shall
apply. s
2,678 Billion
2.5 Billion
Malaysia
Able to own land, but property amounting to
more than 6.3M USD would need consent from
the economic planning unit of the Prime
Minister
Lease term not exceeding 99 years
84 Billion
9.8 Billion
Philippines
Unable to own Land.
In general not exceeding 50 years, with an option to renew for
another 25 years as stated in RA 7916
48 Biliion
2.8 Billion
Singapore
Able to own land, but must seek approval from
the land dealings unit to purchase restricted
property
30, 60,99, and 999 years. 999 years were granted during colonial time, but today,
the state only issues up to a maximum of 99 years, which conforms to restrictive
covenants and special conditions
241 Billion
56.6 Billion
South Korea
Able to own Land
10 years max, with 10 year extension
467 Billion
5.0 Billion
Taiwan
Able to own Land, but subject to approval of
government
Not more than 20 years, but sometimes can have 35, 50, 70 years lease term
198 Billion
4.0 Billion
Thailand
Unable to own Land
50 years, with 50 year renewal option
89 Billion
10.7 Billion
United
Kingdom
Able to own Land
No fixed term, but generally 99, or 125 years lease terms
56.1 Billion
United States
of America
Able to own Land
No fixed years, but can be upto 99 years
203.8 Billion
Vietnam
Unable to own Land
50 – 70 years, renewal at lessor’s discretion
21 Billion
8.4 Billion
*General Rule applies. Some countries may have sectors and/or industrial restriction to foreigners in terms of owning property.
Real Estate Market Size is defined as the total investible real estate assets - aggregate of REITs, Property funds, listed property companies (property assets), and others.
Source: JLL Asia Pacific Property Investment Guide, APREA, World Bank
Country Risk
Three Sectors unfazed by Global Financial Crisis and Country “Issues”: BPO Revenue, OF Remittance, Tourist Arrivals
2001
2004
Philippine general Elections
Dos Palmas kidnapping
9-11
Edsa Dos
Edsa Tres
Gracia and Martin Bumham
kidnapping
2002
Zamboanga Bombing
Captured Jemaah Islamiyah
Sentenced Jemaah Islamiyah
2008
Cotabato Bus Station
Bombing
Erap Conviction
ZTE Scandal
Glorietta 2 Bombing
Congress Bombing
Manila Peninsula Incident
2006
State of Emergency Declaration
Milenyo
Southern Leyte Mud Slide
2011
Makati Bus Explosion
Tropical Storm Juaning
Typhoon Sendgong
2013
Super typhoon Haiyan
5.4 magnitude Cebu and Bohol
Earthquakes
Senate pork barrel scam hearing
Cebu ferry tragedy
Killing of Taiwanese fisherman
2012
2010
Philippine national Elections
Noynoy Factor
Manila Hostage Crisis
DLSU explosion during Bar Exams
Typhoon Megi
Vizconde massacre suspects acquited
Corona Impeachment Trial
Tropical dispute with China
Typhoon Pablo
6.9 magnitude Negros and Cebu Earthquake
Cebu Governor Suspension
8.00
7.00
6.00
5.00
4.00
10.00
3.00
2.00
5.00
1.00
0.00
0.00
2001
2002
2003
2004
2005
BPO Revenue
2006
2007
2008
OF Remittance
2009
2010
2011
2012
2013
2014E
Visitor Arrival
38
38
Total Tourist Arrivals
15.00
2005
H1N1 outbreak
Death of Corazon Aquino
Typhoon Marakot
Superferry sank in
Zamboanga
Typhoon Ondoy
Typhoon Pepeng
Greenbelt 5 robbing
Maguindanao Massacre
(in Millions)
BPO Revenue / OF Remittances
(in USD Billions)
20.00
SARS outbreak
Davao airport Bombing
Jemaah Islamiyah escape
Jose Pidal Plunder case
Oakwood Mutiny
“In the presence of my
Enemies
2009
Cotabato Bus Station
Bombing
Erap Conviction
ZTE Scandal
Glorietta 2 Bombing
Congress Bombing
Manila Peninsula Incident
Davao Bus terminal
General Santos City mall bombing
Hello “Garci” scandal
“To Fly Again”
Valentine’s Day bombing
V-day Bombing Mastermind’s death
sentence
2003
25.00
2007
Philippine General Elections
Infanta Mud Slide
Superferry Bombing
General Santos Christmas bombing
Who We Are, What We Do
JLL is the leading real estate
services firm in the Philippines
Sales and Leasing
Project and Construction Management
Facilities & Property Management
Research, Consultancy and Valuation
Secured
“Forefront of the BPO industry”
Servicing 8 of the top 10
BPOs in the Philippines
26 new sole agency appointments for commercial
buildings,
75% share of the appointments in the Philippines
Advised on 17 commercial disposition
with a combined value of Php 34B worth
of properties as of 2013.
Handled over 380,000 sqm of office space in 2013 on
behalf of landlords and occupiers accounting for
60%
Serviced
of all office space
occupied by BPO
Industry.
60% market share in the Philippines.
39
Thank you
COPYRIGHT © JONES LANG LASALLE 2014