THE FUTURE OF CLARK: THE PHILIPPINES NEXT TOP INVESTMENT AND BPO DESTINATION May 2014
About CBRE
CBRE GROUP INC. Largest and Fully Integrated Commercial Real Estate Services Firm. GLOBAL LEADERSHIP WITH BROAD CAPABILITIES #1 leasing #1 investment sales #1 outsourcing #1 appraisal and valuation #1 commercial mortgage brokerage and servicing firm #1 commercial real estate investment manager LEADING GLOBAL BRAND S&P 500 Only commercial real estate services company in the index FORTUNE Only commercial real estate services company in the Fortune 500 The Lipsey Company #1 brand for 12 consecutive years IAOP #1 real estate outsourcing firm for four consecutive years Newsweek #1 real estate company in green rankings FORTUNE most admired real estate services firm Euromoney global real estate advisor of the year two consecutive years 3 SCALE AND DIVERSITY 400+ offices in over 60 countries 1 Serves approximately 80% of the Fortune 100 $189.8billion of transaction activity in 2012 3.3 billion square feet of property and corporate facilities managed 1 $87.6 billion of real estate investment assets under management 2 $6.8 billion of development projects in process/pipeline 2 1. Includes affiliate offices as of December 31, 2012. 2. As of September 30, 2013. CBRE PHILIPPINES
CBRE PHILIPPINES An Affiliate of the CBRE Global Network No. 1 in the Philippines CBRE Philippines Established in 1994, headquartered in Manila with satellite office in Cebu 20 years of proven track record 750 + staff nationally Awards & Certifications Only company to have won the Worlds Best Lettings/Leasing Agency Award from the prestigious International Property Awards for 2 consecutive years Most recognized real estate services firm in the country Only commercial real estate services firm with ISO-certified business lines: Corporate Agency & Brokerage, Investment Properties & Capital Markets, Asset Services Awards: total of 16 from 2012-2014 Best International Lettings Agency Best Lettings Agency Asia Pacific & Philippines Best International Property Consultancy Website Best Property Consultancy Website Asia Pacific and Philippines Best Property Consultancy Marketing Best Real Estate Agency Marketing Best Property Consultancy Best Real Estate Marketing CLARK 4 CBRE PHILIPPINES
NATIONWIDE REACH CBRE PHILIPPINES 5 CBRE PHILIPPINES
CBRE PHILIPPINES An Affiliate of the CBRE Global Network No. 1 in the Philippines 20 YEARS OF PROVEN TRACK RECORD CBRE PHILIPPINES SALES & LEASING TRANSACTION VALUE 2013 PHP 8.3 Billion CAPITAL MARKETS INVESTOR ADVISORY OF OVER USD 20 Billion 6 CBRE PHILIPPINES
Market View
REGIONAL DEVELOPMENT OF CLARK Robust Growth of Central Luzon REGIONAL CONTRIBUTION TO GDP (%) Source: PSA On a regional level, Central Luzon ranks 3 rd on the top contributors to the entire country s economic growth. 8 CBRE PHILIPPINES
ECONOMIC OVERVIEW Industry and Manufacturing REGIONAL DISTRIBUTION OF MANUFACTURING ZONES 8% 2% 12% Bulk of the economic growth came from the Industry Sector which composes 42%. The same sector grew at rate of 5.4% in 2012. SHARE TO THE REGION S GDP 78% 17% Industry 42% Services Region III Region VII Region IV Others 41% 9 CBRE PHILIPPINES
ECONOMIC OVERVIEW Agriculture and Tourism FOREIGN VISITOR ARRIVAL PROFILE BY PROVINCE The agriculture sector grew at a strong rate of 9.1% well beyond the Industry and Service Sectors. 57% Clark Subic Aurora Bataan Bulacan Nueva Ecija Pampanga Tarlac Zambales Central Luzon has been continuously on the upswing in terms of visitor arrivals making this sector a catalyst of growth. 10 CBRE PHILIPPINES
ECONOMIC OVERVIEW Services and the BPO Industry The young and educated demographic profile draws more BPO companies to locate in the area. TALENT POOL (Pampanga) Literacy Rate: 93.94% Number of graduates (2012-2013): 9,869 Discipline groups with the highest number of graduates: Business Administration and Related 32.20% Medical and Allied 20.54% IT-Related Disciplines 17.49% Engineering and Technology 11.46% Number of Higher Education Institutions: 2,883 (Region 3) IT-BPO COMPANIES iqor/ Cyber City Teleservices Sutherland Global Services Stream NCO/EGS Wallem Innovative Solutions Startek Source HOV 11 CBRE PHILIPPINES
STRATEGIC LOCATION High Accessibility and Connectivity from Land, Air, and Sea Multi-point land accessibility from NLEX SCTEX TPLEX 12 CBRE PHILIPPINES
CENTRAL TO NORTHERN LUZON POPULATION MARKET SNAPSHOT Laoag City 104,904 Tarlac 1,273,240 Baguio 318,676 Pangasinan 2,776,862 Cabanatuan 272,676 Zambales 534,443 Pampanga 2,014,019 Bulacan 2,924,433 Source: 2010 Census 13 CBRE PHILIPPINES
HISTORICAL OFFICE TIMELINE Highest Achieved Rents in Makati 2009 Rental Decline Build-to-Suit Developments 2011 Rental Recovery Declining Vacancy Green Buildings Flight to Quality 2007 2013 2007 Peaking Rents 2008 Falling Occupancy Campus-type Developments 2010 Stable Rents Rising Demand 2011 Rising Development in Fringes 2012 Supply Pressures BPO Expansion to the countryside 14 CBRE PHILIPPINES
OFFICE MARKETVIEW PRIME RENTAL RATES ACROSS ASIA (IN US$/SF/ANNUM) Beijing CBD: 184 Seoul CBD: 73 MAKATI: MOST COST EFFECTIVE OUTSOURCING DESTINATION IN ASIA Rank Business District Rate New Delhi CBD: 115 Bangkok: 33 Hong Kong Core Central: 208 1 Makati 26 2 Bangkok 31 3 Bangalore 33 4 New Delhi Gurgaon 38 5 Kuala Lumpur 51 6 Hanoi 54 7 Ho Chi Minh City 54 Bangalore: 33 Ho Chi Minh: 54 Kuala Lumpur: 51 Taipei: 60 Singapore: 100 Makati: 26 8 Taipei 60 9 Guangzhou 66 10 Mumbai Nariman Point 67 11 Jakarta 72 12 Seoul CBD 73 13 Mumbai BKC 95 14 Singapore 100 Jakarta: 72 15 Shanghai Puxi 103 16 New Delhi CBD 115 17 Tokyo 125 18 Beijing CBD 184 19 Hong Kong Core Central 208 15 CBRE PHILIPPINES
OFFICE MARKETVIEW OCCUPANCY RATE PER BUSINESS DISTRICT 1,000,000 800,000 600,000 400,000 200,000 0 1.79% 2.23% 98.21% 97.77% 94.91% 5.09% 3.04% 0.72% 96.96% 99.28% 100% LEASE RATE PER BUSINESS DISTRICT GRADE AVERAGE ASKING LEASE RATES (PHP/SQM/MONTH) 1,200 1,000 800 600 400 200 0 LEASE RATES OUTSIDE METRO MANILA (PHP/SQM/MONTH) 800 700 600 500 400 300 200 100 0 Region 3 Region 4A Region 7 Dwindling Supply & Competitive Leasing activity pushing rental growth upward MNCs & BPO absorbing Prime & Grade A Office Space Attractive Currency & Business Climate bolster Office Market Expansion of BPO locators outside Metro Manila has driven rents to be competitive. Lifting of PEZA incentives inside Metro Manila has given advantage developers to build outside NCR 16 CBRE PHILIPPINES
IT-BPM INDUSTRY Source: BPAP 17 CBRE PHILIPPINES
IT-BPM INDUSTRY Sectors and Services Sector Services Estimated FTEs (2012) FTES %Growth from 2011 Revenues (2012) Revenue %Growth from 2011 Voice BPO Non-voice/KPO Healthcare Information Management Outsourcing ITO/Software Development Engineering Software Outsourcing (ESO) Animation Game Development Source: ADB Inbound and outbound services, technical support, customer services Global in-house centers, corporate services, Backoffice services Clinical data management, legal/medical transcription Programming and software development analysis and design Designs for civil works, buildings, electronics, etc. The process of giving illusion of movement to cinematographic drawings or models thru 2D, 3D Outsourced services combined with IT and creative work 497,000 19% $8.7 Billion 18% 154,380 20% $2.5 Billion 20% 45,000 80% $460 Million 66% 57,078 14% $1.16 Billion 17% 10,836 20% $206 Million 20% 9,000 4% $132 Million 3% 3,500 40% $50 M 257% 18 CBRE PHILIPPINES
BPO INDUSTRY STATISTICS 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 National Capital Region 485,600 Current FTEs 1,400,000 787,000 Theoretical Capacity 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Central Luzon/ Northern Luzon Hub Metro Clark Metro Subic Baguio Tarlac Malolos 461,529 38,882 133,000 Current FTEs Absoptive Capacity 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 CALABARZON Hub Santa Rosa Bacoor/ Imus/ Dasma Lipa Cainta Lucena 792,000 21,300 219,000 Current FTEs Absoptive Capacity 250,000 200,000 150,000 100,000 50,000 0 Eastern Visayas Hub Cebu City Lapu-Lapu City Mandaue City Dumaguete Tagbilaran 162,000 47,700 44,000 Current FTEs Absoptive Capacity 200,000 150,000 100,000 50,000 0 Source: BPAP Davao-GenSan Hub 10,000 Current FTEs 117,000 42,000 Absoptive Capacity 200,000 150,000 100,000 50,000 0 Western Visayas Hub Iloilo City Bacolod City 108,000 24,900 39,000 Current FTEs Absoptive Capacity 19 CBRE PHILIPPINES
IT-BPM INDUSTRY IT-BPM operations in the Philippines continue to grow. Some of the firms choosing the country for their Shared Services Centers are: 1. JP Morgan Chase 2. HSBC 3. Shell 4. Thomson Reuters 5. Dell 6. Manulife 7. Deutsche Knowledge Services 8. Chevron 9. Citigroup 10. ANZ Bank 11. Capital One 12. HP 13. AIG 849,150 SF 363,400 SF 304,450 SF 246,900 SF 126,800 SF 113,220 SF 304,650 SF 148,550 SF 139,000 SF 163,800 SF 161,400 SF 577,000 SF 245,000 SF Major outsourcing firms in the Philippines: 20 CBRE PHILIPPINES
THANK YOU 21 CBRE PHILIPPINES