philippine real estate market

1Q 2013 | MARKET OVERVIEW
RESEARCH & FORECAST REPORT
PHILIPPINE REAL ESTATE MARKET
Executive Summary
ECONOMY
The Philippine economy is seeing momentous growth and could further expand following the
achievement of its first investment grade to BBB- by Fitch. Last year, the country gained a total
of US$2.03 billion from foreign direct inflows (FDIs), a growth of 9.8%, along with strong GDP
growth of 6.6%. Among all industries, real estate was one of the main channels for investment.
The recent credit rating upgrade suggests that activity in the property market will expand in the
long term.
OFFICE
Close to 200,000 sq m of new office space was introduced in 1Q 2013. This includes Glorietta 1
BPO (21,700 sq m) and Glorietta 2 BPO (23,900 sq m) in the Makati CBD. However, supply is still
seen to be muted in the business district with just a couple of buildings in the pipeline, namely
Alphaland Makati Tower (38,000 sq m) along Ayala Avenue and V-Corporate Tower (28,900 sq)
in Leviste Street, Salcedo Village. Both buildings are expected to complete in 2Q 2013 and 2Q
2014, respectively.
RESIDENTIAL
MARKET INDICATORS
OFFICE
RESIDENTIAL
RETAIL
www.colliers.com
Across the five submarkets tracked by Colliers, 18 new residential condominiums will be introduced
this year. Collectively, these condominiums consist of 7,181 new units, about 10% higher than the
new supply delivered in 2012. Still, the majority of units fall into the smaller-sized categories of
the studio and one-bedroom segments. Only about 21% are three- to four-bedrooms, which are
required by many expatriates.
RETAIL
Overall, developers are highly confident with their expansion plans due to strong local demand
backed by a robust economy. In Metro Manila alone, roughly over 800,000 sq m of retail space are
currently in the pipeline and are targeted to be delivered within the next three years. Furthermore,
retail developers are expected to introduce new formats and configurations, given the increasing
competition and expanding market size.
PHILIPPINES | 1Q 2013 | THE KNOWLEDGE
ECONOMIC INDICATORSa
2007
2008
6.10
6.00
Gross Domestic Product
6.60
4.20
Personal Consumption Expenditure
4.60
3.70
Gross National Product
2009
6.50
2010
2011
8.40
3.20
1.10
7.60
2.30
3.40
1Q 2012
2Q 2012
3Q 2012
4Q 2012
6.60
5.40
5.90
7.10
6.80
5.70
6.20
6.90
5.80
5.60
3.90
6.40
6.10
6.60
Gov’t Expenditure
6.90
0.30
10.90
4.00
1.00
24.00
5.90
12.00
9.10
Capital Formation
-0.50
23.40
-8.70
31.60
8.10
-23.50
2.30
4.30
-1.40
Exports
6.70
-2.70
-7.80
21.00
-4.20
7.90
8.30
6.90
9.10
Imports
1.70
1.60
-8.10
22.50
0.20
-2.60
4.40
8.30
4.60
AHFFb
4.70
3.20
-0.70
-0.20
2.70
1.00
0.70
4.10
4.70
Industry
5.80
4.80
-1.90
11.60
2.30
4.90
4.60
8.10
7.50
Services
7.60
4.00
3.40
7.20
5.10
8.50
7.60
7.00
6.90
Average Inflationc
Budget Deficit (Billion Pesos)
PHP:US$ (Average)
Average 91-Day T-Bill Rates
2.90
8.30
4.10
3.90
4.60
3.10
2.90
3.50
2.90
(P12.4)
(P68.1)
(P298.5)
(P314.4)
(P197.7)
(P33.9)
(P0.47)
(P69.56)
(P138.88)
P46.1
P44.7
P47.6
P45.10
P43.31
P43.30
P42.80
P41.89
P41.20
3.40
5.20
4.00
3.70
1.37
1.88
2.33
1.45
0.34
a At constant 2000 prices
b Agriculture, Hunting, Forestry, Fishing
c At constant 2006 prices
ECONOMY
OFW Remittances
The Philippine economy is seeing momentous growth and could
further expand following the achievement of its first investment grade
to BBB- by Fitch. Last year, the country gained a total of US$2.03
billion from foreign direct inflows (FDIs), a growth of 9.8%, along with
strong GDP growth of 6.6%. Among all industries, real estate was one
of the main channels for investment. Investments in construction
accelerated by 13.7% YoY in 2012, reversing 2011’s contraction.
25,000
15,000
10,000
5,000
1Q
2Q
3Q
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
In Million US Dollars
20,000
4Q
Source: Bangko Sentral ng Pilipinas
* as of January 2013
This year, overall, investors’ confidence is seen to increase backed by
the country’s robust macroeconomic fundamentals. The inflation rate
remained manageable at 3.40% in 1Q 2013, leading to generally low
mortgage lending rates of 5.6 to 7.9%. Meanwhile, OFW remittances
continues to bolster domestic consumption. Total OFW remittances
grew by 8% to US$1.68 billion in January of this year. A vital
contributor to the economy, the BPO sector also grew by 18% to
US$13 billion last year (IBPAP). It is projected to be a US$25-billion
industry by 2016.
The recent credit rating upgrade suggests that activity in the property
market will expand in the long term. This should translate to greater
demand for commercial offices and luxury residential spaces; and
stronger demand for industrial manufacturing facilities and hotel &
gaming establishments.
P. 2
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | THE KNOWLEDGE
Makati CBD, Ortigas & Fort Bonifacio
Average Land Values
LAND VALUES
Implied land values in the Makati CBD appreciated by 2.2% in 1Q 2013
to average PHP300,000 per sq m. This translates to an accommodation
value of PHP18,700 per sq m. In Ortigas, land values increased at a
marginal rate of 1.5%, pegged at an average of PHP136,000 per sq m.
Meanwhile, land values in BGC continually track with that of Makati
CBD, as growth is seen at 7.7% to average at PHP260,000 per sq m
by 1Q 2014.
400,000
pesos per square meter
300,000
200,000
100,000
Makati CBD
BGC
1Q13
1Q14F
1Q12
1Q11
1Q10
1Q09
1Q08
1Q07
1Q06
1Q05
1Q04
1Q03
1Q02
1Q01
1Q00
1Q99
1Q98
-
Ortigas Ctr
Source: Colliers International Philippines Research
COMPARATIVE LAND VALUES
1Q 2013
PHP / SQ M
MAKATI CBD
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
280,380-315,800
280,100-303,550
2.15%
284,035-358,880
7.84%
101,870-170,160
100,364-167,644
1.50%
113,540-177,070
6.80%
195,000- 290,000
195,000-278,000
2.00%
219,475-302,900
7.71%
ORTIGAS CENTER
BGC
4Q 2012
Source: Colliers International Philippines Research
HLURB Licenses
LICENSES TO SELL
160,000
140,000
140,000
120,000
units
120,000
100,000
100,000
80,000
80,000
60,000
60,000
40,000
40,000
20,000
20,000
-
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
4Q12
-
Quarterly Approvals (LHS)
Moving 12-Month Average (RHS)
Source: Housing and Land Use Regulatory Board
Overall residential licenses issued by the HLURB from November 2012
to January 2013 increased significantly by 157%. The latest figures
indicate that 70,566 units were licensed in this three-month period, up
by around 43,112 units compared from year-ago level. The increase
was mainly driven by the growth of licenses issued in the high-rise
segment which reached 36,140 units (+370%). Moreover, with a
growth of 104%, the number of socialized housing units has shown
signs of sustainability against its double digit contraction in 2011.
Meanwhile, the number of licenses in the middle-income housing
segment has consecutively dropped for the last two years, registering
a 9.7% decrease in 2012. Licenses in the same sector are expected to
continually decrease in number as more middle-income developments
are targeted to the high-rise residential segment.
HLURB LICENCES TO SELL
SEGMENT
NOV’12 - JAN’13
NOV’11 - JAN’12
% CHANGE YoY
Socialized Housing
12,022
5,904
103.6%
Low Cost Housing
13,600
9,121
49.1%
Mid Income Housing
8,804
4,742
85.7%
High Rise Residential
36,140
7,687
370.1%
862
164
425.6%
Commercial Condominium
Farmlot
Memorial Park
Industrial Subdivision
Commercial Subdivision
Total (Philippines)
786
-
-
31,104
36,514
-14.8%
0
0
0.0%
98
63
55.6%
103,416
64,195
61.1%
Source: Housing and Land Use Regulatory Board
P. 3
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | OFFICE
in square meters
Makati CBD vs. Metro Manila Office Stock
OFFICE SECTOR
8,000,000
16%
7,000,000
14%
6,000,000
12%
5,000,000
10%
4,000,000
8%
3,000,000
6%
2,000,000
4%
1,000,000
2%
Supply artificially grew in 2013 as some developers slipped their
project completions from 4Q 2012. As a result, a total of 31 new office
buildings will be introduced in Metro Manila this year translating to
over 560,000 sq m of new office space, a new record high. Nearly half
of the new inventory for this year will be in Fort Bonifacio, where the
majority of developments will be mainly BPO facilities. While the
demand from the O&O industry continues to be robust, developers are
geared towards delivering an additional 1.3 million sq m in the span of
three years.
0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013F
2014F
-
Supply
Metro Manila Stock (LHS)
Makati CBD (Stock) (LHS)
Total Stock YoY Change (RHS)
Source: Colliers International Philippines Research
Makati CBD Office Supply and Demand
270,000
20%
220,000
15%
in sq.m.
170,000
10%
120,000
70,000
Close to 200,000 sq m of new office space was introduced in 1Q 2013.
This includes Glorietta 1 BPO (21,700 sq m) and Glorietta 2 BPO
(23,900 sq m) in the Makati CBD. However, supply is still seen to be
muted in the business district with just a couple of buildings in the
pipeline, namely Alphaland Makati Tower (38,000 sq m) along Ayala
Avenue and V-Corporate Tower (28,900 sq) in Leviste Street, Salcedo
Village. Both buildings are expected to complete in 2Q 2013 and 2Q
2014, respectively. As supply grows in other areas, the Makati CBD’s
share of the total office space in Metro Manila will decline to 40% this
year, compared to around 70% over a decade ago.
5%
Demand
20,000
0%
(30,000)
-5%
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013F
2014F
(80,000)
New Supply During Year (LHS)
Take-Up During Year (LHS)
Vacancy at Year End (RHS)
Source: Colliers International Philippines Research
MAKATI CBD COMPARATIVE OFFICE VACANCY RATES (%)
CLASSIFICATION
PREMIUM
1Q 2013
4Q 2012
5.83
7.37
GRADE A
2.13
3.49
GRADE B & BELOW
3.25
2.69
3.38
3.48
ALL GRADES
1Q 2014F
3.43
Source: Colliers International Philippines Research
In 1Q 2013, the premium vacancy rate in the Makati CBD dropped to
5.8% from the 7.3% registered in the previous quarter. The decrease
was mainly due to the improved occupancy level in Zuellig Building,
the only office development introduced in Makati last year. Similarly,
vacancies across Grade A offices narrowed by 1.3%, but a slight
increase was seen in Grade B offices to 3.25% from 2.69% QoQ. The
overall vacancy rate in the CBD will remain at the sub-4% level, at
least before the completion of Alphaland Makati Tower.
Rents
Premium rental rates grew by a substantial 5.1% QoQ backed by
generally higher landlord confidence – a result of the recent higher
take-up rate at premium buildings coupled with the absence of
upcoming new supply. The average premium rental rate is currently
pegged at PHP980 per sq m monthly and is expected to grow by 7.1%
by 1Q 2014. Meanwhile, Grade A and Grade B rental rates slightly
increased by less than 1.0% to average at PHP740 and Php515 per sq
m monthly, respectively. Both grades are expected to grow by 6% in
the next 12 months.
FORECAST OFFICE NEW SUPPLY (NET USEABLE AREA)
LOCATION
END of 2012
2013F
2014F
2015F
TOTAL
MAKATI CBD
2,771,784
74,130
24,248
-
2,870,162
ORTIGAS
1,175,350
66,999
39,773
-
1,282,122
FORT BONIFACIO
747,116
226,497
149,069
154,214
1,276,896
EASTWOOD
313,864
-
-
-
313,864
303,866
31,131
59,106
51,797
445,900
872,983
161,407
132,507
274,284
1,441,181
6,184,963
560,164
404,703
480,295
7,630,125
ALABANG
OTHER LOCATIONS
a
TOTAL
Source: Colliers International Philippines Research
a
Manila, Pasay, Mandaluyong and Quezon City
P. 4
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | OFFICE
COMPARATIVE OFFICE RENTAL RATES (PESOS/SQ M/MONTH)
MAKATI CBD (BASED ON NET USEABLE AREA)
CLASSIFICATION
1Q 2013
4Q 2012
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
PREMIUM
860 - 1,100
860 - 970
5.1
880 - 1,220
7.1
GRADE A
575 - 900
570 - 900
0.3
620 - 950
6.7
GRADE B
450 - 575
450 - 565
0.9
470 - 620
6.3
Source: Colliers International Philippines Research
Makati CBD Office Capital Values
Capital Values
As with rental rates, average capital values for premium buildings in
the Makati CBD grew by 4.3% QoQ to PHP125,000 per sq m, and will
reach PHP134,350 per sq m by 1Q 2014. Meanwhile, Grades A and B
capital values are currently at an average of PHP85,310 and 58,400
per sq m, respectively. Both grades will increase at between 5 and 6%
in the next 12 months.
150,000
in peso per sq.m.
130,000
110,000
90,000
70,000
50,000
Premium
Grade A
1Q14F
1Q13
3Q13F
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
3Q08
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
3Q02
1Q02
3Q01
1Q01
30,000
Grade B/B-
Source: Colliers International Philippines Research
COMPARATIVE OFFICE CAPITAL VALUES (PESOS / SQ M)
MAKATI CBD (BASED ON NET USEABLE AREA)
CLASSIFICATION
1Q 2013
4Q 2012
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
PREMIUM
120,000 - 131,600
GRADE A
71,725 - 98,890
118,500 - 130,100
4.3
124,870 - 143,830
6.8
71,015 - 98,400
0.2
78,400 - 102,805
6.1
GRADE B
49,500 - 67,300
49,500 - 67,205
0.7
52,000 - 70,725
5.1
Source: Colliers International Philippines Research
Makati CBD Residential Stock
RESIDENTIAL SECTOR
Supply
20,000
25%
18,000
20%
16,000
15%
12,000
10,000
10%
8,000
5%
6,000
4,000
0%
2,000
-
-5%
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13F
1Q14F
units
14,000
Residential Stock (LHS)
YoY Change (RHS)
Source: Colliers International Philippines Research
Across the five submarkets tracked by Colliers, 18 new residential
condominiums will be introduced this year. Collectively, these
condominiums consist of 7,181 new units, about 10% higher than the
new supply delivered in 2012. Still, the majority of units fall into the
smaller-sized categories of the studio and one-bedroom segments.
Only about 21% are three- to four-bedrooms, which are required by
many expatriates.
Furthermore, the availability of premium condominiums remains
limited with only three new projects slated to be completed this year.
These developments are Discovery Primea (90 units) in the Makati
CBD and Beaufort East & West Towers (276 units) in Bonifacio Global
City. Besides Discovery Primea, over 1,900 more units are targeted to
be turned over in the Makati CBD. These are all classified as Grade A
condominiums with most of the unit sizes relatively compressed to 21
to 55 sq m.
P. 5
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | RESIDENTIAL
FORECAST
RESIDENTIAL NEW SUPPLY
LOCATION
END-2012
MAKATI CBD
2013
2014
2015
2016
TOTAL
16,288
2,081
1,596
2,476
779
23,220
3,718
-
441
-
-
4,159
FORT BONIFACIO
15,491
3,726
1,276
2,977
3,616
27,086
ORTIGAS
10,987
934
792
1,560
405
14,678
ROCKWELL
EASTWOOD
TOTAL
6,830
440
278
-
988
8,536
53,314
7,181
4,383
7,013
5,788
77,679
Source: Colliers International Philippines Research
Makati CBD Residential Vacancy
Demand
In 1Q 2013, residential vacancy in the Makati CBD slightly decreased by
0.24% QoQ to 9.7%. The vacancy has been on a downward trend
since 3Q 2012. However, the substantial upcoming new supply in the
second half suggests that vacancies may increase to the sub-11% level
towards the end of the year. Despite the increase, demand for premium
condominiums will remain the strongest with a vacancy rate of below
5% by 1Q 2014.
18%
16%
14%
12%
10%
8%
6%
4%
1Q14F
1Q13
3Q13F
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
3Q08
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
3Q02
1Q02
2%
Source: Colliers International Philippines Research
Besides the three-bedroom premium units, expatriate demand for
larger unit sizes of one- to two bedroom units has also increased
based on the latest Colliers inquiries. These requirements came mostly
from the international schools and institutions, the gaming and hotel
industry, and from among the BPO firms. While demand for leasable
properties remains high in Rockwell, Makati and BGC, the PasayManila area has also become a preferred destination for expatriates
engaged particularly in the Pagcor Entertainment City.
Makati CBD, Rockwell, Bonifacio Global City
Prime 3BR Units Residential Rents
COMPARATIVE RESIDENTIAL VACANCY RATES (%)
1,000
900
CLASSIFICATION
800
700
600
500
400
300
200
1Q 2013
4Q 2012
LUXURY
4.7
4.8
OTHERS
10.4
10.7
ALL GRADES
9.8
10.0
100
1Q 2014F
10.0
Source: Colliers International Philippines Research
Makati CBD
Rockwell
1Q14F
3Q13F
1Q13
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
3Q08
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
3Q02
-
1Q02
in peso per square meter per month
MAKATI CBD
Bonifacio Global City
Source: Colliers International Philippines Research
Rents
Premium three-bedroom rental rates in the Makati CBD grew by 2.3%
QoQ and are pegged at PHP737 per sq m on average. This translates
to a monthly rate of PHP184,250 for a 250 sq m unit. Premium rates
for both the Makati CBD and BGC remain at parity and will improve by
8 to 9% in the next 12 months. In Rockwell, where supply is limited,
premium rental rates grew 2.0% QoQ and have started to exceed the
PHP800 level. Annual rent growth in Rockwell is projected at 9%.
P. 6
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | RESIDENTIAL
METRO MANILA RESIDENTIAL CONDOMINIUM
COMPARATIVE LUXURY 3BR RENTAL RATES
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
MAKATI CBD
LOCATION
540 - 930
1Q 2013
4Q 2012
525 - 915
2.3
550 - 1,040
7.9
ROCKWELL
700 - 930
686 - 912
2.0
760 - 1,015
9.0
BONIFACIO GLOBAL CITY
580 - 890
570 - 865
2.5
610 - 985
8.5
Source: Colliers International Philippines Research
COMPARATIVE RESIDENTIAL LEASE RATES
THREE-BEDROOM, SEMI-FURNISHED TO FULLY FURNISHED
LOCATION
MINIMUM
AVERAGE
MAXIMUM
Apartment Ridge / Roxas Triangle
Rental Rangea
190,000
200,000
250,000
210
280
330
Rental Range
80,000
100,000
110,000
Average Size
170
190
330
Rental Range
80,000
190,000
250,000
Average Size
120
210
280
Rental Range
150,000
200,000
300,000
Average Size
200
260
330
Rental Range
85,000
200,000
300,000
Average Size
130
200
300
Average Size
b
Salcedo Village
Legaspi Village
Rockwell
Fort Bonifacio
Source: Colliers International Philippines Research
in PHP per month
in square meters
a
b
Capital Values
Premium secondary capital values in BGC slightly edged out those of
the Makati CBD in the last two consecutive quarters. Premium threebedroom units in BGC were PHP121,500 per sq m in 1Q 2013, higher
by over PHP1,100 than in the Makati CBD. Secondary prices in both
districts will increase by over 7% in the next 12 months. Meanwhile, in
Rockwell Center, the average capital value was PHP128,160 per sq m
and is expected to grow by 8.7% in 1Q 2014.
Makati CBD Residential Capital Values
150,000
Source: Colliers International Philippines Research
130,000
120,000
110,000
100,000
90,000
80,000
70,000
Makati CBD
Rockwell
1Q14F
1Q13
3Q13F
3Q12
1Q12
3Q11
1Q11
3Q10
1Q10
3Q09
1Q09
3Q08
1Q08
3Q07
1Q07
3Q06
1Q06
3Q05
1Q05
3Q04
1Q04
3Q03
1Q03
60,000
3Q02
in peso per sq.m.
140,000
1Q02
COMPARATIVE RESIDENTIAL LEASE RATES
(EXCLUSIVE VILLAGES)
3BR - 4BR, UNFURNISHED TO SEMI-FURNISHED
VILLAGES
LOW
HIGH
FORBES PARK
260,000
550,000
DASMARIÑAS VILLAGE
200,000
450,000
URDANETA VILLAGE
200,000
450,000
BEL-AIR VILLAGE
100,000
300,000
AYALA ALABANG VILLAGE
85,000
300,000
SAN LORENZO VILLAGE
90,000
280,000
Bonifacio Global City
Source: Colliers International Philippines Research
P. 7
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | HOTEL & LEISURE
METRO MANILA RESIDENTIAL CONDOMINIUMS
COMPARATIVE LUXURY 3BR CAPITAL VALUES (PESOS / SQ M)
LOCATION
1Q 2013
MAKATI CBD
ROCKWELL
4Q 2012
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
81,650 - 165,870
80,050 - 155,850
2.00
89,250 - 170,000
7.32
103,020 -153,300
101,000 - 150,440
1.94
115,865 - 162,695
8.68
93,585 - 149,415
91,750 - 145,630
2.37
103,280 - 157,020
7.12
BONIFACIO GLOBAL CITY
Source: Colliers International Philippines Research
Ayala Center Retail Rent
RETAIL
1,450
8%
7%
Php/ sq m/ month
6%
1,150
5%
4%
3%
850
2%
1%
(Makati) Monthly Rent
1Q14F
4Q13F
3Q13F
2Q13F
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
0%
1Q10
550
(Makati) YoY Increase (RHS)
Source: Colliers International Philippines Research
Ortigas Center Retail Rent
4%
1,150
Php/ sq m/ month
3%
950
2%
750
Supply
Metro Manila retail stock is unchanged in 1Q 2013 at 5.3 million sq m.
However, over the remainder of the year, 300,000 sq m will be
completed, the highest level of new construction since 2006. Moving
forward, retail developers are expected to introduce new formats and
configurations, given the increasing competition and expanding market
size.
SM Megamall and Venice Piazza are currently undergoing expansion
with the aim of attracting heavier foot traffic. Both are set to open in
the second half of the year. Meanwhile, BPO-retail integrated facilities
continue to surface, such as Anonas LRT City Center in Quezon City
which is slated for completion in 2Q 2013. Other major developments
such as SM Aura (133,800 sq m GLA) and Century City Mall (17,000
sq m GLA) have been positioned to cater to broader profiles across
residential and commercial communities. These retail formats have
served as major components in integrated developments, a trend that
will most likely continue.
Overall, developers are highly confident with their expansion plans due
to strong local demand backed by a robust economy. In Metro Manila
alone, roughly over 800,000 sq m of retail space are currently in the
pipeline and are targeted to be delivered within the next three years.
1%
Demand
(Ortigas) Monthly Rent
1Q14F
4Q13F
3Q13F
2Q13F
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
4Q10
3Q10
2Q10
0%
1Q10
550
(Ortigas) YoY Increase (RHS)
Source: Colliers International Philippines Research
METRO MANILA
COMPARATIVE RETAIL VACANCY RATES (%)
CLASSIFICATION
Vacancy rates in both super-regional and regional malls decreased to
2.15% in 1Q 2013 with an occupancy rate of 97.8% from the 97.4% in
the previous quarter. However, compared to 1Q 2012, occupancy rates
have been slightly down by 1.14%, an outcome of the recent mall
expansions.
With the delivery of over 300,000 sq m of new retail space this year,
vacancy rates in all of Metro Manila will increase to over 10%. The
increase however is seen to be temporary as these new retail shopping
centers stabilize, backed by the expected strong consumer spending
driving higher occupancy levels. Higher retail occupancy levels are
also supported by the growing BPO and tourism industries, which
drive the purchase of consumer goods.
1Q 2013
4Q 2012
SUPER-REGIONAL
2.06
2.54
Rates
REGIONAL
2.41
2.77
Rental rates in Ayala Center increased by a marginal rate of 0.6% to
an average of PHP1,278 per sq m. Meanwhile, rental rates in Ortigas
Center improved by 0.5% to average PHP1,100 per sq m. Rental rates
in both districts are projected to grow between 5 and 6% in the next
12 months.
Source: Colliers International Philippines Research
P. 8
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | RETAIL
RETAIL STOCK
METRO MANILA (SQ M)
CLASSIFICATION
SUPER-REGIONAL
1Q 2013
4Q 2012
3,080,544
3,080,544
0.00
3,338,414
8.37
1,030,100
1,030,100
0.00
1,030,100
0.00
1,188,289
1,188,289
0.00
1,230,984
3.59
5,298,933
5,298,933
0.00
5,599,498
5.67
REGIONAL
DISTRICT / NEIGHBOURHOOD
ALL LEVELS
% CHANGE (QoQ)
1Q 2014F
% CHANGE (YoY)
Source: Colliers International Philippines Research
Consumer Spending Growth Rate (%)
Spending Indicators
8
7
6
5
4
3
2
1
4Q12
2Q12
4Q11
2Q11
4Q10
2Q10
4Q09
2Q09
4Q08
2Q08
4Q07
2Q07
4Q06
2Q06
4Q05
2Q05
4Q04
2Q04
4Q03
2Q03
4Q02
2Q02
4Q01
2Q01
0
Owing to a robust economy and increase in purchasing capacity,
Household Final Consumption Expenditure (HCFE) grew 6.1% in 2012
versus the previous year. Nearly half of the expenditures were allotted
to food and non-alcoholic beverages. Major growth contributors were
the spending used for Health (+11.7%); Recreation & Culture (+10.9%);
and Restaurant & Hotels (+10.5%). With the sustained increase in the
level of remittances backed by strong consumer confidence, spending
will likewise expand moving forward. Based on the latest consumer
expectations survey conducted by the Bangko Sentral ng Pilipinas,
outlook on consumer index is to improve in the second quarter and the
year ahead to 7.8% and 18.5%, respectively.
Source: National Statistical Coordination Board
P. 9
| COLLIERS INTERNATIONAL
PHILIPPINES | 1Q 2013 | THE KNOWLEDGE
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