Philippine Real Estate Outlook and Opportunities for Investment Market

Transcription

1 Real Estate : Outlook and for Investment CREBA AREAA Trade Mission Lindsay Orr, Chief Operating Officer March 2013

2 Outline of the Presentation Overview Overview Growth Areas and 2

3 Overview 3

4 Global Economic Continue to linger US Slow economic recovery Fiscal woes Massive government debt EU Very weak growth Sovereign debt crisis Government defaults Middle East Slowing growth Political and social unrest Government upheaval China Slowing economic growth Imbalanced growth Territorial disputes Japan Natural disaster risks High government debt Territorial disputes 4

5 commercial real estate markets buffeted by global headwinds: property market weathered global challenges in 2012 Overall commercial leasing activity slightly subdued Investment volumes remained stable throughout the year Rental rates improve in most cities while rents decline in a select few 5

6 Direct Investment into Real Estate 4Q 2012 Transactional activity in is stable, down only 3% from last year saw net outflows of capital from inter-regional investors $13.8 billion $2.0 billion $0.5 billion $0.4 billion $2.3 billion Global Sources of funds Inter-regional investment volume in totalled USD95bn for 2012 Source: Global Capital Flows 4Q12 6

7 Net Effective Rents (1Q07=100) Rental Rates Manila vis-a-vis Key markets rental growth* Manila Bangkok Jakarta Beijing Kuala Lumpur Mumbai Hong Kong Singapore Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 Manila Singapore Hong Kong Beijing Mumbai Bangkok Jakarta Kuala Lumpur Note: Figures relate to the major submarket (CBD) in each city. For Singapore, figures refer to Raffles Place only. *2012 rental growth refers to the annual change from 4Q11 to 4Q12. Sources: Jones Lang LaSalle (Real Estate Intelligence Service), 4Q 2012; The Office Rental Index, February

8 Rentals 4Q12 Average Grade A Rent (PHP/sqm/month) 5,071 Office rents in Manila continued to grow in 2012, at around 3.3% y-o-y. 3,571 3,421 2,648 2,536 2,143 Despite the rental growth, Manila remains one of the cheapest in the region. 1, Hong Kong Beijing Tokyo Shanghai Singapore Mumbai Ho Chih Minh Jakarta Manila Bangkok Kuala Lumpur Exchange rate used (average Dec 2012): PHP : USD 1 Note: (1) Manila refers to the Makati CBD and Bonifacio Global City Grade A office market. (2) Figures relate to the major submarket (CBD) in each city. For Singapore, figures refer to Raffles Place only. Sources: Jones Lang LaSalle (Real Estate Intelligence Service), 4Q 2012; The Office Rental Index, February

9 Supply Variations Across Region Projected % Additions to Office Stock in % Delhi 10.6% Mumbai 9.3% Jakarta 6.9% Beijing 0% Bangkok 33.5% Ho Chi Minh 10.2% Shanghai 0% Singapore 7.4% Seoul 0.9% Hong Kong 5% Kuala Lumpur 5.2% Tokyo 18.7% Manila 0% Sydney Note: (1) Manila refers to the Makati CBD and Bonifacio Global City Grade A office market. (2) Figures relate to the major submarket (CBD) in each city. For Singapore, figures refer to Raffles Place only. Sources: Jones Lang LaSalle (Real Estate Intelligence Service), 4Q

10 Overview 10

11 Direction Emerging Business Districts 25* emerging districts with approximately More than 1,300 hectares of developed land Makati CBD Ortigas CBD Bonifacio Global City 1 UP Techno Hub 2 Eton Cyberpod Centris 3 Eastwood City 4 Araneta Cyberpark 5 Greenhills Redevelopment 6 Rockwell BPO Complex 7 EDSA Central 8 Robinsons Cyberpark 9 Rockwell Center 10 Century City 11 McKinley Hill 12 SM Mall of Asia Complex 13 Metropolitan Business Park 14 Newport City 15 Aseana IT Business Park 16 Asiaworld City 17 Madrigal Business Park 18 Filinvest Corporate City 19 Greenfield City 20 Eton City 21 Nuvali Canlubang 22 Arca South (FTI) 23 Vertis North 24 Fairview Terraces 25 Circuit Makati Note: *Includes those that are geographically-located outside Metro Manila. Source: JLL Research & Consulting 11

12 in Millions Office Supply (In million sqm) Office Metro Manila Current vs Pipeline Supply Total of 8M sqm. supply across districts (current 2016F) 2.50 Current Supply = 6.4M Future Supply = 1.6M Makati Ortigas Center Bonifacio Global City Alabang Quezon City McKinley Hill Eastwood City Bay City Mandaluyong Araneta Center 12

13 Office Metro Manila Supply Take-up and Pre-commitments Total space committed as of end of 2012: 482,000 sqm Newport City 1% McKinley Hill 1% Manila 1% Office space leased as of end of 2012 Mandaluyong 9% 365,000 sqm Ortigas 4% San Juan 2% Alabang 3% Araneta Cyberpark 10% Pre-commitments signed as of end of ,000 sqm Quezon City 15% Alabang 12% Makati 19% Bay City 14% Ortigas 26% Bonifacio Global City 31% Eastwood 5% Bonifacio Global City 31% Makati 16% Note: Estimated demand for was 300,000 sqm per year; and 2011 was 360,000 sqm 13

14 Residential Metro Manila Condominium Supply from 1999 to 2018E Existing ( )* High-End 3,930 units Future ( E)* High-End 5,100 units 3% 3% 135,650 units Mid-End 131,720 units 97% 149,000 units Mid-End 143,900 units 97% Selling Price Typical Price per sqm Unit Size High-End Php 15 M and above Php120,000 and above Above 160 sqm Mid-End Php1.5 M to Php15 M Php50,000 to Php110,000 Below 150 sqm Note: (1) Figures are as of Jan (2) Existing residential units are units completed from 1999 to 2012 while future residential units are new units that will be completed from 2013 to (3) Metro Manila refers to the following districts/cities: Makati CBD and its fringe areas (includes Rockwell Center, Century City, Chino Roces area), Bonifacio Global City and Taguig, McKinley Hill, Ortigas CBD and the nearby areas in Pasig City and Mandaluyong City, Quezon City, Bay City, Newport City, Manila and Pasay City, Alabang, and the cities of Parañaque and Muntinlupa (outside Alabang). Source: HLURB, Various brokers and developers, JLL Research & Consulting 14

15 Residential Supply Share Per District 1999 to 2018E Newport City 3% Bay City 3% Alabang 2% Manila/ Pasay 13% Parañaque / Muntinlupa 7% 135,650 units Makati CBD & Fringe 18% Bonifacio Global City / Taguig 14% Newport City 2% Bay City 5% Alabang 1% Manila/ Pasay 12% Parañaque / Muntinlupa 6% 149,000 units Makati CBD & Fringe 20% Bonifacio Global City / Taguig 11% Quezon City 19% Ortigas/ Pasig/ Mandaluyong 20% Quezon City 23% Ortigas/ Pasig/ Mandaluyong 18% Notes: McKinley Hill 1% Existing ( ) (1) Includes only mid-end and high-end residential condominium supply (2) Figures are rounded off to the nearest tens McKinley Hill 1% Future (2013E-2018E) Sources: HLURB, Various brokers and developers, JLL Research & Consulting 15

16 Residential Residential condominiums outside Metro Manila Low- to high-rise residential condominiums in regional urban centers, such as Metro Cebu Metro Davao Cagayan de Oro City Angeles City Baguio City Tagaytay City Iloilo City Condominium developers include: Major developers Local developers Source: JLL Research & Consulting 16

17 Retail Existing and Future Retail Shopping Mall Supply Existing Retail Supply (As of 2012) Future Retail Supply (2013E-2015E) Provincial 6.1 million sqm 48% Metro Manila 6.7 million sqm 52% Provincial 0.9 million sqm 57% Metro Manila 0.7 million sqm 43% Source: JLL Research & Consulting 17

18 Number of Hotel Rooms Hotel Supply of Hotel Developments in Metro Manila ( ) 5,000 4,500 4,700 4,240 4,170 4,000 3,500 3,000 2,500 Total Launched and Planned Hotel Rooms ( ): 14,830 rooms Total Proposed Hotel Rooms (with no target date yet): 1,250 rooms* 2,000 1,500 1,500 1,370 1,720 1, E 2014E 2015E 2016E Makati CBD Bonifacio Global City Manila Bay Area Newport City Quezon City Alabang Ortigas CBD Bay City / Entertainment City Note: Total proposed hotel rooms with unconfirmed target completion dates are mostly located within Entertainment City in Parañaque City. Cebu Source: JLL Research & Consulting 18

19 Hotel Future Hotels in the Provinces New hotel brands entering the provinces - Park Inn by Radisson - Richmonde Hotel - Lotte Hotel - Courtyard by Marriott Boutique/ budget hotel chains expanding - Seda Hotels - Go Hotels - Islands Stay Hotels - Tune Hotels Select Future Hotels in the Provinces Source: JLL Research & Consulting 19

20 Trends Weather Forecast Office Metro Manila Supply Demand Rent/Price Residential Retail Hotel LEGEND Robust growth Moderate growth Minimal growth Minimal decline Moderate decline Significant decline 20

21 Growth Areas and 21

22 1) Offshoring and outsourcing 25.0 O&O industry In US$ bn 15.0 CAGR: 20% 20.0 CAGR: 30% 7.2 CAGR: 25% 9.0 CAGR: 15% 3.2 CAGR: 9% Low-end 2016 Baseline 2016 Road Map 2016 Direct Employment Additional Office Demand 240K 440K 530K 680K 900K 1.3M 517K 1.3M 2.6M Source: Business Processing Association of the s 22

23 OF Remittances (in USD billions) 2) Overseas Filipinos Remittances OF Remittances (2012): USD21.4 billion **OF remittances refer to cash remittances by Overseas Filipinos Sources: Bangko Sentral ng Pilipinas, JLL Research & Consulting 23

24 3) Transportation/Infrastructure Development Private-Public Partnership Select PPP Projects Roads Rail Airports Ports Cebu Trans-Axial Highway* LRT 1 Cavite Extension Mactan-Cebu International Airport Passenger Terminal Central Roro Spine NAIA Expressway LRT 2 Masinag Extension Puerto Princesa Airport (upgrade) Davao Sasa Port (rehabilitation) NLEX-SLEX Connector Road NAIA-Clark Express Rail Link New Bohol (Panglao) Airport New Cebu Port CALA Expressway South Line Modernization NAIA Upgrade Central Luzon Expressway MRT Line 3 Maintenance Clark Airport (main airport fro Greater Capital Region) Daang-Hari SLEX Link Road MRT Line 3 Additional LRVs Kalibo Airport upgrade Note: List of projects include ongoing PPP projects and potential projects under PPP. * Included by the PPP in the list of projects for possible funding by the Project Development and Monitoring Facility (PDMF) Source: JLLL Research & Consulting 24

25 Tourist Arrivals Tourism Receipts (in USD millions) 4) Tourism Foreign Tourist Arrivals and Tourist Receipts 4,000,000 6,000 3,500,000 3,000,000 Tourist Arrivals (2011): 3.9 million visitors Tourist Arrivals (2012): 4.3 million visitors 5,000 2,500,000 4,000 2,000,000 3,000 1,500,000 2,000 1,000, ,000 1, Tourist Arrivals Tourism Receipts 0 Sources: Department of Tourism (DOT), UNWTO 25

26 USA 5) Real Estate Investment Trust (REIT) Evolution of the Global REIT Netherlands 1970 s 1990 s Japan South Korea Singapore South Africa France Greece Taiwan Brazil Thailand Hong Kong Bulgaria Malaysia Israel Germany UK Italy Present 1960 s 1980 s 2000 s Australia Canada Belgium Turkey New Zealand The s India China Mexico Source: The Association for Real Estate Securitization and CFA Institute 26

27 Business Optimism s to become one of the fast-growing economies IMF : raised 2013 economic growth forecast for the s to 6.0% Tholons : Metro Manila and Cebu are the top 3 and top 8 global outsourcing destinations, respectively Moody s Investors Service : October 2012 Moody s upgraded the s credit rating to Ba1, just one notch below investment grade S&P : July 2012 S&P raised the s debt rating to BB+, the highest level since 2003 Deutsche Bank : touted the s as the strongest performing economy in Asia today. Its 6.4% growth in 1Q12 made it the best performing economy in the region next to China. CNBC : considers the s as the top country for long term growth prospects due to the rapid population growth HSBC : s will leapfrog 27 places to become the 16 th largest economy in the world by 2050 Goldman Sachs : the s can be one of the top 10 growth countries, or economies that account for at least 1% of global GDP, within the decade. Morgan Stanley : included s in the overweight group together with China, Russia, Brazil and South Africa in their Global Emerging s list. s could become a breakout nation BofA : expects s outsourcing industry to generate as much as $25 billion in revenue by 2016, providing employment opportunities to as many as 1.3 million individuals Sources: CNBC, HSBC, MSCI, Bank of America (BofA), Goldman Sachs 27

28 No. of Employees Total Tourist Arrivals Country Risk: BPO Employees vs. Tourist Arrivals Growth in Office Demand Despite Country Issues 800,000 5,000, ,000 Est. No. of Employees Visitor Arrival 4,500,000 4,000, ,000 3,500, ,000 3,000, ,000 2,500, ,000 2,000,000 1,500, ,000 1,000, , ,000 s General Elections Dos Palmas Kidnapping EDSA Dos EDSA Tres F Gracia and Martin Burnham Kidnapping Zamboanga Bombing Captured Jemaah Islamiyah Sentenced Jemaah Islamiyah SARS Outbreak Davao Airport Bombing Jemaah Islamiyah escape Jose Pidal Plunder Case Oakwood Mutiny "In The Presence of my Enemies" General Elections 2004 Infanta Mud Slide SuperFerry bombing General Santos Christmas Bombing Davao Bus Terminal General Santos City Mall Bombing Hello "Garci" scandal 2005 "To Fly Again" Valentine's Day Bombing V-Day Bombing Masterminds deathn sentence State of Emergency Declaration 2006 Milenyo Southern Leyte Mud Slide Cotabato Bus Station Bombing 2007 ERAP Conviction ZTE Scandal Glorietta 2 Bombing Congress Bombing Manila Peninsula Incident Cotabato City Bombing ZTE-NBN Irregularities 2008 Meralco Stockholders Meeting Ces Drilon Kidnapping MV Princess of the Star sank 2009 H1N1 Outbreak Death of Corazon C. Aquino Typhoon Morakot SuperFerry sank in Zamboanga Typhoon Ondoy Typhon Pepeng Greenbelt 5 Robbing Maguindanao Masacre National Elections 2010 NoyNoy Factor? Manila Hostage Crisis DLSU Explosion during Bar Exams Typhoon Megi Vizconde massacre suspects acquitted 2011 Makati Bus Explosion Tropical Storm Juaning 2012 Corona Impeachment Trial Negros and Cebu Earthquake Territory Dispute with China - 28

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30 : Can the Country sustain its strong macroeconomic fundamentals. Will the reforms undertaken by the Aquino government be sustainable after 2016 when the President steps down. Will the strengthening Peso have a negative impact on BPO s and the export industry generally. Will the level of overseas worker remittances ($ 21 Billion last year) be sustainable. Need to prevent a bubble from forming in the real estate sector. Supply must be matched by end user demand. Speculation and price spikes should be avoided. 30

31 Jones Lang LaSalle Who We Are, What We Do JLL is the leading real estate services firm in the country - Sales and Leasing - Project and Construction Management - Facilities & Management - Research, Consultancy and Valuation Forefront of the BPO industry - servicing 10 of the top 12 BPOs in the s, handled more than 50 contact center clients, and acquired over 130 sites for these clients. Serviced around 50% of all office space occupied by the outsourcing industry Negotiated about 110,000 sqm of build-to-suit buildings, and about 90% of BPO office lease transactions outside Metro Manila. Handled over 350,000 sqm of office space in 2012 (renewal, expansions and new leases). Transacted approximately 92% of office space in Bonifacio Global City. Managed 14 buildings and around 400,000 sqm in facilities management Sold over Php25B worth of properties in

32 Thank you Lindsay Orr Chief Operating Officer Lindsay.orr@ap.jll.com Jones Lang LaSalle. All rights reserved This presentation has been produced solely as a general guide and does not constitute advice. Jones Lang LaSalle (JLL) has used and relied upon information from sources generally regarded authoritative and reputable, but the information obtained from these sources may not have been independently verified by JLL. Whilst the material contained in the presentation has been prepared in good faith and with due care, no representation is made for the accuracy of the whole or any part of the presentation. No liability for negligence or otherwise is assumed by JLL for any loss or damage suffered by any party resulting from their use of this presentation. The whole or any part of this presentation must not be reproduced or copied without the JLL s written consent. 32