office sector drives property · 2 colliers quarterly market report | 1q 2016 | colliers...
Post on 19-Aug-2020
3 Views
Preview:
TRANSCRIPT
Colliers Quarterly Property Market Report
Manila
1Q 2016 May 2016
Copyright © 2015 Colliers International.
The information contained herein has been obtained from sources
deemed reliable. While every reasonable effort has been made to
ensure its accuracy, we cannot guarantee it. No responsibility is
assumed for any inaccuracies. Readers are encouraged to consult
their professional advisors prior to acting on any of the material
contained in this report.
FOR MORE INFORMATION:
Market Contact Name
Title | Market
+1 00 000 0000
Name.Name@colliers.com
Market Contact Name
Title | Market
+1 00 000 0000
Name.Name@colliers.com
CONTRIBUTORS:
Market Contact Name
Title | Market
Market Contact Name
Title | Market
Market Contact Name
Title | Market
Market Contact Name
Title | Market
Strong macroeconomic fundamentals continue to support
the growth of the real estate sector, with continuously
robust demand from the BPO market tempering the effects
of high levels of office space completions. The retail
property sector remains stable on the back of steadily
improving purchasing power and consumer confidence.
Meanwhile the residential condominium sector begins to
show some strain in the face of a deluge of new condo
stock.
Forecast at a glance
Demand BPO demand to continue rising at double digit rates, while residential condo demand will grow steadily in step with a growing economy. Retail may become more challenging as a sharp increase in new shopping center space is anticipated in 2016.
Supply Office supply forecasted by the end of 2016 has slipped, but 2016 will still see an all-time high in new supply. Residential condo and retail stock will also rise at elevated rates.
Vacancy rate
Significant delays in office completions for 2016 will keep vacancies at low levels. On the other hand, Colliers sees residential condominium and retail vacancy rates climbing gradually in the next twelve months.
Rent Colliers projects office rents to increase at the same historical growth rates given the pace of demand. Retail rents are also seen to grow steadily. However, condo rents have begun to slide amid a record number of completions this year.
The Philippine economy grew by 6.9% in the first quarter
of 2016. The growth was primarily driven by increased
investments and household expenditures, as well as a rise
in public infrastructure spending. Major credit rating firms
and multilateral aid agencies are projecting GDP growth
between 6% and 6.4% this year.
Office
Vacancies fell further despite the completion of seven
buildings during the first quarter of 2016, which added
some 156,000 sq m of office space in Metro Manila. With
an estimated 640,000 sq m of new office space expected
to be completed this year, a slight increase in office space
vacancy across the major business districts of Metro
Manila is anticipated. The increase, however, will be
tempered by steady demand for office space fueled by
BPO companies.
Residential Only three residential projects were completed in Metro
Manila during the first three months of the year, all located
in Fort Bonifacio. For the rest of the year, Colliers expects
that an additional 11,700 units will be delivered in the
major CBDs, with half of the new units located in Fort
Bonifacio. With the delivery of these new units over the
next 12 months, rental rates in the major districts are
expected to decline.
Retail Metro Manila retail stock reached a total of 6.12 million as
of the first quarter of 2016. Retail projects completed
during the past six months include Circuit Lane Makati, SM
Center Sagandaan, Uptown Parade Mall, Uptown Mall,
and the retail podium of Shangri-La at the Fort. Rising
household incomes due to expanding Business Process
Outsourcing (BPO) and manufacturing sectors, robust
OFW remittances, a low inflationary environment,
increasing employment opportunities, and stable political
conditions all point to a positive medium term outlook for
the Philippine retail sector.
Office sector drives property market growth
Julius Guevara | Director | Research & Advisory
2 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Economy up 6.9% in 1Q 2016 The Philippine economy grew by 6.9% in the first quarter
of 2016, faster than the 5% growth recorded in the same
period last year. The growth was primarily driven by
increased investments and household expenditures; and
ramped up public infrastructure spending. Fixed capital
formation, which represents combined domestic and
foreign investments, soared by 23.8% YoY. Household
consumption, which accounts for three-fourths of the
country’s GDP, rose by 7%; while public construction,
mainly driven by election-related spending, posted an
outstanding growth of 40%, a huge turnaround from a
23% contraction recorded in the same period in 2015.
The industry sector grew at a faster rate of 8.7% on the
back of robust mining (+11.3%), construction (+10.8%),
and manufacturing (+8.1%) subsectors. The services
sector posted a 7.9% growth while agriculture declined
by 4.4% due to the adverse effects of El Niño
phenomenon.
Inflation rose to 1.1% for the first three months of the
year from 1% in 4Q 2015. Despite this, the inflation rate
for the period under review is still below the low end of
the government’s announced annual inflation target of 2-
4% for 2016-2018.
The country’s employment rate has been improving
given the increase in the number of jobs created due to
the resurgence of the manufacturing sector; continual
demand for BPO employees as existing firms expand
while more companies establish operations in the
country; and ramped-up infrastructure spending partly
fueled by election-related expenditures. Results of the
Philippine Statistics Authority’s (PSA) January 2016
Labor Force Survey (LFS) showed that the number of
employed Filipinos rose from 38.4 million in January
2015 to 39.2 million in January 2016. The number of
manufacturing and construction-related jobs rose by
800,000 YoY to 6.43 million while the wholesale and
retail trade subsector employed 7.55 million workers in
2015 from 7.06 million in the previous year.
Meanwhile, the total employees under the
accommodation and food service activities group
reached 1.79 million from 1.70 million a year ago. The
demand for additional jobs in the latter was partly driven
by increased spending from both foreign and local
tourists and the Filipinos’ rising preference for dining out
which is greatly influenced by their evolving working
practices.
Major economic growth drivers for 2016 include the
implementation of major infrastructure projects
particularly those under the public-private partnership
(PPP) program; new manufacturing projects from China,
Japan, and other Southeast Asian economies; continued
remittance and BPO revenue growth; lower fuel prices;
and election-related spending.
Economic Indicators
Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q 2016
Gross National Product 6.10 6.00 6.50 8.40 3.20 6.40 7.50 5.80 5.80 7.60
Gross Domestic Product a 6.60 4.20 1.10 7.60 3.90 6.80 7.20 6.10 5.90 6.90
Household Final Consumption Expenditure 4.60 3.70 2.30 3.40 6.10 6.60 5.70 5.40 6.30 7.00
Government Final Consumption Expenditure 6.90 0.30 10.90 4.00 1.00 15.50 7.70 1.70 7.80 10.00
Capital Formation -0.50 23.40 -8.70 31.60 8.10 -5.30 29.90 5.40 15.10 23.80
Exports 6.70 -2.70 -7.80 21.00 -4.20 8.50 -1.10 11.30 9.00 6.60
Imports 1.70 1.60 -8.10 22.50 0.20 4.90 5.40 8.70 14.00 16.20
AHFF b 4.70 3.20 -0.70 -0.20 2.70 2.80 1.10 1.60 0.10 -4.40
Industry 5.80 4.80 -1.90 11.60 2.30 7.30 9.30 7.90 6.00 8.70
Services 7.60 4.00 3.40 7.20 5.10 7.40 7.20 5.90 6.80 7.90
Average Inflation c 2.90 8.30 4.10 3.90 4.60 3.20 3.00 4.10 1.40 1.10
Budget Surplus/Deficit (PHP Bn) -12.40 -68.10 -298.50 -314.40 -197.70 -242.80 -164.10 -73.09 -121.70 -3.47 d
PHP:US$ (Average) 46.10 44.70 47.60 45.10 43.31 42.09 42.45 44.40 45.40 47.29
Average 91-Day T-Bill Rates (%) 3.40 5.20 4.00 3.70 1.37 1.58 0.32 1.24 1.80 1.56
Source: Philippine Statistics Authority, Bangko Sentral ng Pilipinas, Bureau of the Treasury
aat constant 2000 prices
bAgriculture, Hunting, Forestry, Fishing
cat constant 2006 prices
das of January 2016
*revised figures
3 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
OFW remittances for the first two months of the year
reached USD 4.6 billion, up 6.1% from USD 4.3 billion
recorded in the same period last year. Analysts are
confident that OFW remittances will weather the adverse
effects of the oil price reductions on the Gulf economies.
The central bank is projecting a 4% growth in
remittances for this year.
Major credit rating firms, foreign banks and multilateral
aid agencies are projecting a GDP growth of between
6% and 6.4% this year. Under the Aquino presidency
GDP growth was at 6.2% per annum, the fastest
recorded in the past 40 years. Despite this the economic
growth has not been inclusive, with the Philippines
having the highest unemployment and poverty rates
amongst ASEAN-6.
The Philippine peso (PHP) continued to depreciate
against the U.S. dollar (USD) during the first three
months of the year, reaching PHP47.3 from PHP45.5 at
the end of 2015. Consensus forecasts put exchange
rates at a higher PHP46 to PHP47 range by end-2016.
Among the factors seen to temper depreciation
pressures this year are foreign exchange inflows from
OFW remittances, BPO revenues, tourism receipts, and
foreign direct investments.
In 2015, Filipinos working abroad remitted a total of
USD28.5 billion, up 4.4% than the previous year’s level
and exceeding the central bank’s projection of 4%
growth for 2015. For this year the central bank is also
expecting OFW remittances to grow by 4% on the back
of steady deployment of Filipino workers, greater
diversification of country destinations, and shift to higher-
skilled types of work. OFW remittances are expected to
weather the adverse effects of the oil price slowdown.
OFW Remittances*
Source: Bangko Sentral ng Pilipinas *as of February 2016
Strong macroeconomic fundamentals continue to
support the increased appetite for real estate loans,
which grew by 26% from PHP1.04 trillion in December
2014 to PHP1.31 trillion at the end of December 2015.
The proportion of non-performing real estate loans
declined to 2.08% as of the fourth quarter of 2015 from
2.47% in December 2014. By end-2015, real estate
loans for commercial use represented two-thirds of the
total or PHP860.49 billion while residential loans covered
the remaining 33% or PHP446.12 billion.
Land values to grow between 5%
and 7% in the next twelve months Land Values
Source: Colliers International Philippines Research
Land values in major business districts continue to
increase. Land values in Makati CBD averaged
PHP523,000 per sq m during the first quarter of 2016, up
by 4.6% QoQ. This is slower than the 7.9% growth
recorded in the fourth quarter of 2015. Land values also
accelerated in Alabang, Fort Bonifacio, and Ortigas.
The value of land in Fort Bonifacio averaged
PHP445,000 per sq m, up by 6.7% QoQ. The value of
Alabang lots recorded the fastest growth at 4.6% to
PHP123,000 per sq m from PHP117,946 in the previous
quarter. Prices in Ortigas Center averaged PHP189,000,
up by 5.3% QoQ, up from 4% growth posted in the
previous quarter. Land values in the major CBDs are
projected to grow between 5% and 7% over the next 12
months.
-
5
10
15
20
25
30
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
bill
ion
US
D
1Q 2Q 3Q 4Q
0
100,000
200,000
300,000
400,000
500,000
600,000
199
61
99
71
99
81
99
92
00
02
00
12
00
22
00
32
00
42
00
52
00
62
00
72
00
82
00
92
01
02
01
12
01
22
01
32
01
41
Q1
52
Q1
53
Q1
54
Q1
51
Q1
62
Q1
6F
3Q
16F
4Q
16F
1Q
17F
PH
P / s
q m
Makati CBD Fort Bonifacio Ortigas
4 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Comparative Land Values (PHP / sq m)
LOCATION 4Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F %CHANGE (YoY)
Makati CBD 363,000 - 637,000 378,000 - 668,000 4.59 404,000 - 715,000 6.93
Fort Bonifacio 292,000 - 542,000 315,000 - 575,000 6.70 336,000 - 612,000 6.49
Ortigas Center 135,200 - 223,700 141,000 - 237,000 5.25 150,000 - 252,000 6.36
Source: Colliers International Philippines Research
Compliance with balanced housing
requirement drives property license
applications
The total number of licenses to sell issued by the
Housing and Land Use Regulatory Board (HLURB) for
the first quarter of 2016 grew by 77% to 85,470 from
48,411 during the same period last year. Growth was
recorded across all segments, except for Farmlot and
Industrial Subdivision categories as no applications were
recorded during the period under review.
The number of units applied for by developers to comply
with the balanced housing unit requirement was a major
contributor to the growth, rising by 414% YoY to 9,104
from a mere 1,772 in the same period last year. This
indicates that developers of main subdivision projects
are now more aggressive in complying with the
government’s requirement of developing an area for
socialized housing equivalent to at least 20% of the total
subdivision area.
Other segments that registered robust growth include
Open Market Housing (+232%), Low-Cost Condominium
(+181%), and Commercial Subdivision (+124%).
Socialized Housing recorded an 81% growth YoY, with
the number of new applications for the first three months
doubled to 1,566 units from 795 while those in the
Economic housing grew by a modest 44% to 13,845
units. Applications under the Commercial Condominium
segment barely changed from 972 units to 991. This is
far from the growth recorded under the same segment in
the 1st quarter of 2015 where applications rose by
almost two-fold to 972 units from 336. The number of
new applications under memorial parks category soared
by 93% to 21,459 units from 11,097.
HLURB Licenses to Sell
Source: Housing and Land Use Regulatory Board
HLURB Licenses to Sell
SEGMENT JAN – MAR '15 JAN - MAR '16 % CHANGE (YoY)
Balanced Housing Compliance Units 01,772 09,104 414
Socialized Housing 03,763 06,816 081
Economic Housing 09,637 13,845 044
Mid-Income Housing 00,795 01,566 097
Open Market Housing 03,589 11,904 232
Low-Cost Condominium 00,486 01,365 181
Mid- and High-End Condominium 10,820 12,805 018
Commercial Condominium 00,972 00,991 002
Farmlot 00,040 - -100
Memorial Park 11,097 21,459 093
Industrial Subdivision 00,019 - -100
Commercial Subdivision 00,063 00,141 124
TOTAL (Philippines) 48,411 85,470 077
Source: Housing and Land Use Regulatory Board
-60%
-40%
-20%
0%
20%
40%
60%
80%
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
nu
mb
er
of
un
its
1Q 2Q 3Q 4Q YoY Change (RHS)
5 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Office Fort Bonifacio accounts for bulk of
new office supply
Seven buildings were completed during the first quarter
of 2016, adding some 156,000 sq m of office space in
Metro Manila. Three buildings were completed in Fort
Bonifacio that delivered an additional 81,700 sq m of
office space, accounting for more than half of the total
amount of net usable area completed during the period.
These buildings are BGC Corporate Center (22,600 sq
m), Bonifacio Stopover (31,400 sq m), and Uptown Place
Tower Two (27,700 sq m). Two buildings were
completed in the North EDSA Triangle area that
delivered a combined 57,700 sq m of additional office
space, raising North EDSA Triangle’s office stock by
17% QoQ. Other buildings that went online during the
period include AO United Life Building (5,100 sq m) in
Makati and Southkey Building (11,700 sq m) in Alabang.
Substantial office supply tempered
by strong demand
Overall vacancy in the Makati CBD decreased to 1.7% in
the first quarter of the year from 2% in 4Q 2015.
Premium office space vacancy was stable at 0.31% as
vacancy rise in the Philamlife Tower was offset by the
additional take-up in Enterprise Centre. Grade A
vacancy improved to 4.6% from 6.1% due to strong
leasing in Ayala Life-FGU Insurance Center and Petron
Megaplaza. Vacancy rate in Grade B buildings was
practically unchanged at 1.05%.
Other major business districts also recorded strong
occupancy during the first quarter of the year. Fort
Bonifacio’s vacancy level improved significantly to 2.6%
from 6.1% in the previous quarter due to strong leasing
in Grade A buildings such as One World Place and Net
Park. Vacancy in Grade B buildings dropped to 1.4%
from 3.8% in the previous quarter. Ortigas Center also
registered a lower vacancy rate of 1.1% from 1.5% in the
last three months of 2015.The improvement is attributed
to robust take up in both Grade A and Grade B buildings.
Makati CBD vs. Metro Manila Office Stock
Source: Colliers International Philippines Research
Makati CBD Comparative Office Vacancy Rates (%)
GRADE 4Q 2015 1Q 2016 1Q 2017F
Premium 0.30 0.31 1.06
Grade A 6.07 4.58 5.50
Grade B & Below 1.06 1.05 1.50
All Grades 1.99 1.68 2.00
Source: Colliers International Philippines Research
Forecast New Residential Supply (in sq m Net Usable Area)
LOCATION AS OF 2014* 2015 2016F 2017F 2018F 2019F TOTAL
Makati CBD 2,862,118 0(9,084) 005,143 019,900 040,300 012,240 02,930,618
Ortigas Center 1,298,773 081,509 059,353 015,767 047,068 174,500 01,676,969
Fort Bonifacio 0,984,802 185,701 318,967 404,097 200,797 038,066 02,132,431
Eastwood 0,300,264 - - - 028,220 - 00,328,484
Alabang 0,378,271 018,270 035,562 086,156 058,271 - 00,576,530
Mandaluyong 0,284,550 - - 114,576 - 072,900 00,472,026
North EDSA-Triangle 0,336,546 005,681 101,414 134,587 091,230 080,240 00,749,699
Pasay City Reclamation 0,186,203 071,219 081,898 025,385 064,590 072,900 00,502,195
Other locations** 0,399,886 126,867 038,030 117,720 228,907 039,245 00,950,656
TOTAL 7,031,413 480,164 640,367 918,189 759,383 490,092 10,319,608
Source: Colliers International Philippines Research
*Revised figures **Manila, Pasay, Quezon City, and other fringe locations
0%
2%
4%
6%
8%
10%
12%
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6F
201
7F
201
8F
201
9F
NU
A (
sq
m)
Makati CBD Stock (LHS) Metro Manila Stock (LHS)
Total Stock YoY Change (RHS)
6 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Slower office rental rate growth across major business districts
Rental rates in premium buildings in the Makati CBD
recorded a slower growth during the first quarter of
the year, at 0.79% to PHP1,280 per sq m a month,
from a 1.6% increase in the previous quarter. Rental
rates in Grade A buildings grew by 0.2% to PHP 915
per sq m while rents in Grade B buildings increased
by 0.3% to PHP719 per sq m. In Fort Bonifacio,
rental rates for Grade A buildings rose to PHP 894
per sq m, up 1.2% QoQ. Rents in Grade B buildings
grew by 1% from PHP761 per sq m to PHP768 per
sq m a month. Ortigas Center Grade A buildings
commanded a rental rate of PHP663 per sq m from
PHP660 in the previous quarter while Grade B
buildings’ rates rose by 0.3% to PHP581 from
PHP579.
Makati CBD Office Supply and Demand
Source: Colliers International Philippines Research
Comparative Office Rental Rates (PHP / sq m / month)
Makati CBD (based on net useable area)
GRADE 4Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F %CHANGE (YoY)
Premium 1,120 - 1,420 1,130 - 1,430 0.79 1,190 - 1,520 5.95
Grade A 720 - 1,100 730 - 1,110 0.22 760 - 1,160 4.58
Grade B 595 - 839 597 - 840 0.34 630 - 890 5.75
Source: Colliers International Philippines Research
Office capital value growth
outpaces rental rate increase
For the first quarter of the year, average capital
values for Premium Makati buildings reached
PHP174,779, up 4.8% QoQ. Grade A office values
rose by 5.6% to PHP135,232 from the average value
of PHP128,079 in the fourth quarter of 2015. Makati
Grade B buildings posted a growth rate of 5% to end
up with an average value of PHP84,667. Grade A
capital values in Fort Bonifacio averaged
PHP131,352, up 4.6% QoQ. On the other hand,
Grade B capital values reached PHP100,393, a
4.4% increase from the previous quarter. Ortigas
Center Grade A office space capital values
increased by 3.6% to PHP84,032 while Grade B
capital values averaged PHP68,229, a 3.7%
increase QoQ. Capital values for Premium and
Grade B Makati buildings are projected to grow
Makati CBD Office Capital Values
Source: Colliers International Philippines Research
between 8% and 10% over the next 12 months while
those for Grade A segment are seen to rise by 1%.
Office prices in Fort Bonifacio for both Grades A and
B are seen to grow by 8.5%. Meanwhile, Ortigas
Center capital values are expected to increase by a
tenth over the next 12 months.
Comparative Office Capital Values (PHP / sq m / month)
Makati CBD (based on net useable area)
GRADE 4Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F %CHANGE (YoY)
Premium 154,300 - 179,100 161,400 - 188,100 4.81 175,700 - 204,700 8.83
Grade A 89,700 - 128,100 94,800 - 135,200 5.58 104,100 - 148,600 1.01
Grade B 65,600 - 95,700 68,900 - 100,400 4.98 75,800 - 110,300 9.89
Source: Colliers International Philippines Research
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
(100,000)
(50,000)
-
50,000
100,000
150,000
200,000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6F
201
7F
NU
A (
sq
m)
New Supply During Year (LHS) Take-up During Year (LHS)
Vacancy at Year-End (RHS)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
4Q
16F
1Q
17F
PH
P / s
q m
/ m
on
th
Premium Grade A Grade B/B-
7 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Residential Record condo completions
anticipated in 2016 In the five major districts in Metro Manila, only three
residential projects were completed during the first
three months of the year, with three projects (two in
Makati and one in Fort Bonifacio) sliding on their
completion dates. The completed projects are all
located in Fort Bonifacio – The Venice Luxury
Residences-Dominico Tower (330 units), The Venice
Luxury Residence-Carusso Tower (330 units), and
Viceroy McKinley Hill (320 units). The Dominico and
Carusso Towers are additional towers to the
Megaworld’s Venice Luxury Residences project that
was launched in the last quarter of 2014.
For the rest of the year, Colliers expects that an
additional 11,700 units will be delivered in the major
CBDs based on developer completion
announcements. Almost half of the new units will be
located in Fort Bonifacio, while about 30% will be in
Makati CBD.
Makati CBD Residential Stock
Source: Colliers International Philippines Research
Among the projects expected to be completed for the
remainder of the year include One Eastwood Avenue
Tower 1 in Eastwood City; Arya Residences Tower
2, Avida Towers BGC 34th Street Tower 1, and
Viceroy Mckinley Hill Tower 2 in Fort Bonifacio; The
Lerato Tower 2, Alphaland Makati Place, and Eton
Tower in Makati; and The Sonata Premier
Residences and Avant Garde Residences in Ortigas.
Forecast Residential New Supply
LOCATION AS OF 2014 2015 2016F 2017F 2018F 2019F TOTAL
Makati CBD 18,337 1,000 03,660 3,450 1,072 0,598 028,117
Rockwell 04,159 - - 0,346 0,492 0,269 005,266
Fort Bonifacio 19,427 2,779 06,730 4,125 3,129 2,482 038,672
Ortigas 13,820 2,430 01,355 0,899 0,422 0,570 019,496
Eastwood 07,548 - 00,988 - 0,632 - 009,168
TOTAL 63,291 6,209 12,733 8,820 5,747 3,919 100,719
Source: Colliers International Philippines Research
Makati CBD Comparative Residential Vacancy Rates (%)
GRADE 4Q 2015 1Q 2016 1Q 2017F
Luxury 5.95% 8.33% 8.98%
Others 9.36% 9.76% 10.51%
All Grades 8.93% 9.58% 10.84%
Source: Colliers International Philippines Research
Makati CBD Residential Vacancy
Source: Colliers International Philippines Research
0%
5%
10%
15%
20%
25%
-
5,000
10,000
15,000
20,000
25,000
30,000
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
4Q
16F
1Q
17F
nu
mb
er
of
un
its
Residential Stock (LHS) YoY Change (RHS)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
4Q
16F
1Q
17F
Makati CBD Residential Vacancy
8 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Makati CBD condo vacancy up due
to substantial additional supply in
neighboring areas
Residential condominium vacancies in Makati CBD
rose to 9.6% as take up slowed amid no additions in
the residential stock in the previous quarter. While
no new condominiums were completed in Makati
CBD, the newer inventory being introduced in other
areas such as Fort Bonifacio and Makati Fringe has
been leading to an increase in vacancies. Premium
buildings posted the highest increase in vacancy to
8.3% from 6%. Vacancy in Grade A buildings
increased to 7.4% from 6.7% while vacancy in Grade
B segment was unchanged at 13.6%. Makati CBD’s
vacancy is projected to rise to 10.8% over the next
12 months.
Fort Bonifacio’s overall vacancy was practically
stable at 8.6% as demand kept pace with the
increase in supply. Tenants also preferred the
condominium units offered in the area as they are
relatively larger compared to the units being
delivered in other business districts. However, Fort
Bonifacio’s vacancy is expected to increase to 9.6%
by end-2016 due to the completion of significant
amount of new condominium units. Meanwhile,
vacancies in Ortigas Center improved to 8.5% from
10.4% in the previous quarter. Vacancies in Ortigas
Center are projected to hover between 8.6% and
9.1% in the next 12 months.
An increase in vacant units in both Premium and
Grade A segments pushed Rockwell’s vacancy rate
to 3.9% in the first quarter of the year from 3.4%.
Residential rental rates soften
across CBDs, except Ortigas
Stable residential supply coupled with slow
absorption resulted in a slight softening in rental
rates in Rockwell. The business district’s rental rate
for the first 3 months of 2016 dropped by 0.5% to
PHP958 per sq m from PHP963 per sq m. Slower
take up in Makati CBD amid the additional supply
also resulted in rental rate decline. As such, rates in
the business district dropped by 1.6% to 869 per sq
m. A similar trend was recorded in Fort Bonifacio as
monthly rental rate dropped by 2% to PHP873 per sq
m from PHP891 per sq m. Rents in Fort Bonifacio
posted the biggest decline during the period under
review. Meanwhile, strong take up in Ortigas Center
put upward pressure on rental rates. From January
to March of this year, condominium units in the
business district commanded PHP516 per sq m, up
2% from PHP506 in the previous quarter.
With the delivery of additional condominium units
over the next 12 months, rental rates in Fort
Bonifacio are projected to decline by 2%. Rental
rates in Makati CBD, which will corner about 30% of
the additional units this year, will decline by 3.2%.
Meanwhile, Ortigas Center rents are projected to
drop by 2.7% over the next 12 months.
Makati CBD Comparative Residential Lease Rates for Exclusive Villages (PHP / mo)
3BR - 4BR, Unfurnished to Semi-Furnished
VILLAGE LOW HIGH
Forbes Park 250,000 650,000
Dasmarinas Village 230,000 600,000
Urdaneta Village 250,000 360,000
Bel-Air Village 230,000 350,000
San Lorenzo Village 140,000 250,000
Magallanes Village 150,000 250,000
Ayala Alabang Village 130,000 280,000
Source: Colliers International Philippines Research
Prime 3BR Units Residential Rents
Source: Colliers International Philippines Research
0
200
400
600
800
1000
1200
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
4Q
16F
1Q
17F
PH
P / s
q m
/ m
on
th
Makati CBD Rockwell Fort Bonifacio
9 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Metro Manila Residential Condominium
Comparative Luxury 3BR Rental Rates (PHP / sq m / month)
LOCATION 4Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F % CHANGE (YoY)
Makati CBD 600 - 1,200 590 - 1,100 -1.63 570 - 1,110 -3.22
Rockwell 814 - 1,112 810 - 1,106 -0.51 800 - 1,097 -0.84
Fort Bonifacio 690 - 1,094 670 - 1,073 -1.97 661 - 1,051 -1.99
Source: Colliers International Philippines Research
Residential capital value growth
declines Capital values for Makati CBD residential property
grew by 0.2% to PHP151,622 per sq m from an
average of PHP151,323 in the last quarter of 2015.
Rockwell values also rose by 0.2% to a range of
between PHP122,000 and PHP203,000 per sq m.
Premium units in the business district still command
the highest average prices and values are expected
to grow by 2% over the next 12 months. Fort
Bonifacio values posted the highest growth during
the period under review, rising by 2.6% to end up
with an average price of PHP150,000 per sq m.
Colliers expects values in Makati CBD and Ortigas to
grow between 2.4% and 3% over the next 12
months.
Prime 3BR Units Residential Capital Values
Source: Colliers International Philippines Research
Comparative Residential Lease Rates (High-Rise)
3BR, Semi-Furnished to Fully Furnished
LOCATION MINIMUM AVERAGE MAXIMUM
Apartment Ridge/Roxas Triangle
Rental Range (PHP / mo) 150,000 200,000 300,000
Average Size (sq m) 286 303 330
Salcedo Village
Rental Range (PHP / mo) 100,000 175,000 260,000
Average Size (sq m) 165 234 332
Legaspi Village
Rental Range (PHP / mo) 130,000 200,000 250,000
Average Size (sq m) 142 206 296
Rockwell
Rental Range (PHP / mo) 140,000 180,000 250,000
Average Size (sq m) 127 189 285
Fort Bonifacio
Rental Range (PHP / mo) 120,000 200,000 260,000
Average Size (sq m) 138 223 310
Source: Colliers International Philippines Research
Metro Manila Residential Condominium
Comparative Luxury 3BR Capital Values (PHP / sq m / month)
LOCATION 4Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F % CHANGE (YoY)
Makati CBD 106,400 - 196,200 106,600 - 196,600 0.20 109,100 - 201,100 2.35
Rockwell 121,700 - 202,100 121,700 - 202,100 0.19 124,300 - 206,500 1.97
Fort Bonifacio 114,700 - 185,400 114,700 - 185,400 0.00 117,900 - 190,700 2.83
Source: Colliers International Philippines Research
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
4Q
16F
1Q
17F
PH
P / s
q m
/ m
on
th
Makati CBD Rockwell Fort Bonifacio
10 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Retail
New compact malls raise stock,
convenience of retail shopping
Metro Manila total retail stock reached 6.12 million
as of the first quarter of 2016, increasing by about
107,000 sq m over the past six months. Retail
projects completed during the past six months
include Circuit Lane Makati, SM Center Sagandaan,
Uptown Parade Mall, Uptown Mall, and the retail
podium of Shangri-La at the Fort. The recently-
completed projects are all classified as
neighborhood and district centers. The opening of
neighborhood and district retails projects has been
the trend since 2014, with only one new regional
(Fairview Terraces) and one super-regional (Fisher
Mall) mall completed the past 27 months. This can
be attributed to the lack of developable land, with
much of the available land now being used to build
more office and residential buildings. The
development of smaller retail establishments has
also raised the level of convenience of retail
shopping, as neighborhood and district malls
primarily cater to a specific and immediate segment
of the population. The bias towards the
development of smaller retail spaces alongside
residential projects also reflects the changing
preferences of working Filipinos that is partly
influenced by their evolving lifestyles.
More than 700,000 sq m of retail space is expected
to be added to Metro Manila’s stock by the end of
the year. Among the major projects are the
expansion of SM Mall of Asia, Festival Supermall,
and SM Bicutan. Ayala Land is further raising its
retail footprint in the Metro with the completion of
five malls that will deliver close to 160,000 sq m of
additional retail space.
Metro Manila
Comparative Retail Vacancy Rates (%)
CLASSIFICATION 3Q 2015 1Q 2016
Super-regional 0.41 0.41
Regional 1.58 1.31
Source: Colliers International Philippines Research
Regional and super-regional malls
at near full occupancy
Super-regional malls in Metro Manila are at near full
occupancy, registering a vacancy rate of 0.41%,
unchanged from the vacancy rate posted during the
third quarter of 2015. Regional malls’ vacancy rate,
meanwhile, further decreased to 1.3% from 1.6% in the
third quarter of 2015. Regional malls’ vacancy rates
have significantly improved since the first quarter of
2015.
Occupancy will remain high over the next 12 months
given the urban population’s rising disposable incomes,
aggressive expansion of current retailers, and
continued influx of foreign retail brands.
Average rents in Ayala Center reached PHP1,505 per
sq m a month, up 1.3% from PHP1,485 per sq m
posted in the fourth quarter of 2015. Ortigas Center
rental rates averaged PHP1,353, an increase of 1.8%
from the fourth quarter of last year. Colliers is projecting
retail rents in Ayala Center and Ortigas Center to grow
by about 5% by the end of the year.
Retail Stock
Metro Manila
CLASSIFICATION 3Q 2015 1Q 2016 % CHANGE (QoQ) 1Q 2017F % CHANGE (YoY)
Super-regional 3,657,635 3,657,635 0.00% 3,961,435 8%
Regional 1,037,411 1,037,411 0.00% 1,172,942 13%
District/Neighborhood 1,317,087 1,387,776 5.37% 1,681,376 21%
All Levels 6,012,132 6,082,821 1.18% 6,815,752 12%
Source: Colliers International Philippines Research
11 Colliers Quarterly Market Report | 1Q 2016 | Colliers International | Manila
Makati Monthly Retail Rents
Source: Colliers International Philippines Research
Ortigas Monthly Retail Rents
Source: Colliers International Philippines Research
Consumer confidence at a record-
high
Consumer outlook over the next 12 months remains
positive. Consumer confidence is at a record-high, with
confidence index recorded in the first quarter of 2016
matching the all-time high posted in 2Q2013 since the
poll started in 2007. The central bank said the
respondents attribute their higher optimism to the
availability of more jobs; stable prices of commodities;
and influx of more investors in the country. The
confidence is also attributed to oil price rollback;
implementation of social protection programs such as
Pantawid Pamilyang Pilipino Program (4Ps); good
governance; improvements in infrastructure; peace and
order; and anticipated election of new government
officials.
The central bank poll noted that consumers generally
anticipate lesser household expenses as well as an
increase in household income and savings which could
translate to growth in real income and higher
purchasing power of the household.
Positive medium term outlook for
retail
Rising household incomes due to expanding
Business Process Outsourcing (BPO) and
manufacturing sectors; robust OFW remittances; a
low inflationary environment; increase in
employment opportunities; and stable political
conditions all point to a positive medium term
outlook for the Philippine retail sector.
Retail trade is expected to grow further over the
short-term given the robust consumer spending,
which represents more than 70% the country’s gross
domestic product (GDP). This is one of the largest in
the world compared to the global average of about
60%. The Economist Intelligence Unit (EIU) is
projecting retail spending in the country to grow by
about 10% per year from 2016 to 2019.
Retail spending will continue to be propelled by two
major growth drivers, OFW remittances and BPO
revenues. The central bank is projecting remittances
from Filipinos working abroad to grow by 4% to USD
29.6 billion in this year. Meanwhile, BPO revenues
are projected to reach about USD 24.5 billion this
year from a little less than USD 22 billion in 2015.
The sector’s full-time employees (FTEs) are
expected to reach 1.2 million from 1.1 million in
2015.
The two growth drivers will be complemented by low
inflation rate and increase in the number of jobs to
be created this year.
The sustained growth in retail spending has provided
the impetus for convenience store operators to
expand their reach and capture a larger fraction of
the urban population. According to the EIU’s latest
Retail Industry report the local franchisee of 7-
Eleven is planning to operate 2,000 branches by
end-2016 from about 1,340 stores as of the first
quarter of 2015. Family Mart, which opened its 100th
store in March last year, is planning to open between
600 and 700 additional branches in 3 years.
Meanwhile, Puregold has partnered with Japan’s
Lawson to open 75 convenience stores this year and
put up an additional 400 branches by 2020. The
retail sector remains an important part of the local
economy, accounting for an estimated 15% of GDP.
The current retail market is characterized by a shift
from traditional units such as sari-sari (village) stores
to more organized forms like supermarkets and
convenience stores. Sari-sari stores are expected to
-20%
-15%
-10%
-5%
0%
5%
10%
15%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
PH
P / s
q m
(Makati) Monthly Rent (LHS) (Makati) YoY Increase (RHS)
0%
2%
4%
6%
8%
10%
12%
0
200
400
600
800
1,000
1,200
1,400
1,600
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16F
3Q
16F
PH
P / s
q m
(Ortigas) Monthly Rent (Ortigas) YoY Increase (RHS)
Copyright © 2016 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
For more information:
Julius Guevara Director Research & Advisory +632 858 9050 julius.guevara@colliers.com
Joey Roi Bondoc Research Manager Research & Advisory +632 858 9057 joey.bondoc@colliers.com
Randolf Ilawan Research Assistant Research & Advisory +632 858 9068 randolf.ilawan@colliers.com
David Young Managing Director Philippines +632 888 9988 david.a.young@colliers.com
remain buoyant as they target a niche market (i.e.
small, local communities), but they will be facing
tighter competition from convenience stores as these
expand to more towns experiencing rapid
urbanization.
Consumer Spending Growth Rate (%)
Source: Philippine Statistics Authority
A number of areas where retailers could find
alternative growth include planned communities
where consumption-oriented young workers and
business process outsourcing (BPO) firms thrive.
The local retail sector will become more competitive
over the short-run as more foreign brands enter the
market as a result of the full implementation of the
ASEAN economic integration. This is also an
opportunity that local players could take advantage
of as they could acquire franchises or partner with
foreign brands using their familiarity of the domestic
market to their advantage. A stiffer competition
among retailers should also develop the productivity,
creativity and innovation of players, thus resulting in
further developments in brands, concepts and retail
trends. Moreover, relaxation of foreign ownership
restrictions in key economic sectors such as land
ownership and further liberalization of retail trade are
expected to sustain the local retail sector’s growth
over the medium term.
0%
1%
2%
3%
4%
5%
6%
7%
8%
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
top related