Philippine Real Estate Market

Transcription

1 Philippine Real Estate Market

2 Contents 1

3 Contents Global View: Stars are aligned for the Philippines and Clark Property Overview Growth Prospects Challenges Who We Are, What We Do 2

4 Global View 3

5 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

6 Total Commercial Real Estate Investments Top 30 cities >$30B SUPER CITIES $15 30B $7 15B JLL Research,

7 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

8 Philippines RE to grow 50% to a USD 300B Market Market size by country Size of the Asia-Pacific real estate markets: Country US$ Global % US$ Global % US$ Global % Japan $2,678B 10.1% $3,073B 6.3% $4,037B 4.4% China $1,864B 7.0% $9,741B 20.0% $26,395B 28.7% Australia $656B 2.5% $892B 1.8% $1,304B 1.4% South Korea $467B 1.8% $933B 1.9% $1,662B 1.8% India $350B 1.3% $1,630B 3.3% $5,556B 6.0% Singapore $241B 0.9% $546B 1.1% $1,128B 1.2% Hong Kong $211B 0.8% $353B 0.7% $623B 0.7% Taiwan $198B 0.7% $378B 0.8% $561B 0.6% Indonesia $189B 0.7% $752B 1.5% $1,967B 2.1% Thailand $89B 0.3% $230B 0.5% $563B 0.6% Malaysia $84B 0.3% $246B 0.5% $465B 0.5% New Zealand $73B 0.3% $113B 0.2% $206B 0.2% Philippines $48B 0.2% $134B 0.3% $300B 0.3% Vietnam $21B 0.1% $65B 0.1% $171B 0.2% Asia-Pacific $7,169B 27.0% $19,085B 39.2% $44,937B 48.8% Global $26,559B 100.0% $48,723B 100.0% $92,065B 100.0% APREA, Pramerica Real Estate Investors 7

9 PHP/sqm per month Asia Pacific Rental Rates 6,000 5,000 4,000 3,000 2,000 1,000 0 PHP/ square meter per month USD/ square foot per annum USD/sqft per annum * 1 USD = PHP as of March 4,

10 PHP/sqm Asia Pacific Capital Values 2,500,000 2,000,000 1,500,000 1,000, ,000 0 PHP/ square meter USD/ square foot 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, USD/sqft * 1 USD = PHP as of March 4,

11 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,

12 Doing Business in the Philippines RANKED 75 out of 145 ECONOMIES to INVEST IN FREE MARKET ECONOMY INVESTMENT UPGRADE From BBBto BBB May 9, S&P s THE FILIPINO PEOPLE MOST COMPETITIVE COUNTRY 7 among - INVESTOR FRIENDLY Japan External Trade Organization With Private and Public Partnerships for Infrastructure Developments ENGLISH PROFICIENT 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

13 Philippines: Property Overview 12

14 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 South Sector MUNTINLUPA Filinvest Corporate City Madrigal Business Park LAGUNA Greenfield City Eton City Nuvali Southwoods City TAGUIG Arca South Emerging Business Districts 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 MAKATI Makati CBD Rockwell Center Century City Circuit Makati PASIG Ortigas Center Capitol Commons Frontera Verde TAGUIG Bonifacio Global City McKinley Hill Source: JLL Research & Consulting * Includes those that are geographically-located outside Metro Manila. 13

15 Emerging Business Districts Outside Metro Manila Tarlac 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 Baguio Baguio Ayala Land Technohub SM Baguio Cyberzone Building 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

16 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

17 Vacant vs. Pre-Committed Office Space Metro Manila ( ) 800,000 Total of 1.63Mn sqm. supply across districts ( ) 700, , , ,000 Office space demand is expected to be at 480K 500K sqm per annum in Metro Manila Vacancy PreCommitted* 300, , , *Note: 27% of the total supply already pre-committed Healthy equilibrium between demand and supply with vacancy percentage at an all time low 16

18 Office Demand-Supply Take-up and Pre-commitments Metro Manila Office space leased as of end of ,520 sqm Total space committed as of end of 2013: 470,750 sqm Pre-commitments signed as of end of ,230 sqm 17

19 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);

20 Growth Drivers Business Process Outsoursing Philippine BPO industry In US$ bn PPP CAGR: ~19% CAGR: ~28% 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 Indirect Employment 240K 423K 525K 638K 772K 680K 900K 1.3M 600K 1.1M 1.3M 1.6M 1.9M 1.7M 2.2M 3.2M 19

21 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% 10% 4% 8% 8% 9% 960,000 total BPO FTEs 522,617 total graduates ( ) Source: Department of Labor and Employment 20

22 Population and BPO Seats Outside Manila Pampanga population relatively untapped Location Population (2010) Pampanga: 4% 24% Cebu 2,619,362 Davao City 1,449,296 10% 11% 18% 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

23 Notable Transactions in Selected Provincial Locations 140, , ,000 6,770 Cavite & Laguna 15,770 Sqm Cebu 160,824 Sqm 80,000 60,000 82,124 Bacolod & IloIlo 26,100 Sqm 40,000 29,600 35,100 Davao 31,000 Sqm 20, ,000 14,100 19,700 14,000 9,000 2,300 3,000 10,100 9,000 8,600 6, Pipeline Pampanga 24,700 Sqm 22

24 Typical BPO Behavior Why Clark is Next 95% Of the demand outside Metro Manila are BPOs BPOs have already saturated most of the core markets such as Quezon City, Alabang, Cebu, and Clark is ideally 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

25 Tourism 24

26 Asia and the Pacific Tourism Overview DESTINATIONS International Tourist Arrivals (1000) 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, Taiwan (pr. Of China) 5,567 6,087 7, Vietnam 5,050 6,014 6, India 5,776 6,309 6, Philippines 3,520 3,917 4, Cambodia 2,508 2,882 3, Sri Lanka ,006 Sources: UNTWO Tourism Highlights 2013 Edition 25

27 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 million foreign nationals arrived in the Philippines in 2013 Singapore 139,099 Taiwan 131,381 Canada 126,008 Hong Kong 122,759 United Kingdom 96,648 Sources: Department of Tourism 26

28 Tourism Overview International Destinations from Clark International Airport (2013) Carriers Asiana Air Jin Air Cebu Pacific Dragon Air Tiger Air Cebu Pacific Tiger Air International Destinations 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, ,004* 0.6% Singapore 3,739,542** 175,034 5% Tiger Air Thailand 6,000,000 47, % Qatar Airways Qatar N/A 3,724 N/A * 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

29 Tourism Overview Tourism relative to Number of Hotel Rooms Total Domestic Tourists (in 000) Total Foreign Tourists (in 000) # of Hotel Rooms (in 000) Northern Luzon 2, Central Luzon 1, Pampanga Angeles Metro Manila , Southern Luzon 3, , Visayas 1, , Cebu Mindanao , Davao Total 9, , Source: Department of Tourism NSO 2010 Census of Population and Housing 28

30 Retail 29

31 World s Largest Malls Position of Philippine Malls in the World (according to Forbes Magazine) Rank Retail Development Location Country Year of Completion Estimated GFA (in sqm) 1 South China Mall Dongguan China ,000 2 Jin Yuan Beijing China ,000 3 SM City North EDSA Quezon City Philippines ,000 4 SM Mall of Asia Pasay City Philippines ,000 5 SM Megamall Mandaluyong Philippines ,000 6 Dubai Mall Dubai U.A.E ,000 7 West Edmonton Mall Alberta Canada ,000 8 Cevahir Istanbul Istanbul Turkey ,000 9 Berjaya Times Square Kuala Lumpur Malaysia , Beijing Mall Beijing China , SM City Cebu Cebu City Philippines ,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

32 Shopping Mall Supply (in thousand sqm) Philippine Retail Market 8, ,000 6,000 5,000 4,000 3,000 6,842 Existing Supply (as of 1H13) = 12.9 milion sqm Future Supply (2H E) = 1.4 million sqm Approximately 134,377 square meters of retail space located within Clark Freeport Zone 2, , ,266 1,915 Metro Manila Northern Luzon Central Luzon Southern Luzon Western Visayas Central Visayas 223 Northern Mindanao Davao Other Mindanao Existing Supply 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

33 Growth Prospects 32

34 Growth Drivers 33

35 Challenges 34

36 Land Ownership by Foreigners SOUTH KOREA Foreigners can own Land (100%) UNITED STATES OF AMERICA UNITED KINGDOM AUSTRALIA INDIA JAPAN MALAYSIA SINGAPORE TAIWAN CHINA HONG KONG INDONESIA PHILIPPINES 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,

37 FDI in Billions (USD) Corporate Ownership and Foreign Direct Investment Challenges Foreign Direct investment 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

38 *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 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 years. Minimum lease of 40 years is granted to commercial, while highest term of 70 is granted to residential 1,864 Billion 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 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 Billion Vietnam Unable to own Land years, renewal at lessor s discretion 21 Billion 8.4 Billion

39 BPO Revenue / OF Remittances (in USD Billions) Country Risk Three Sectors unfazed by Global Financial Crisis and Country Issues : BPO Revenue, OF Remittance, Tourist Arrivals 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 2003 SARS outbreak Davao airport Bombing Jemaah Islamiyah escape Jose Pidal Plunder case Oakwood Mutiny In the presence of my Enemies 2004 Philippine General Elections Infanta Mud Slide Superferry Bombing General Santos Christmas bombing 2005 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 2006 State of Emergency Declaration Milenyo Southern Leyte Mud Slide 2007 Cotabato Bus Station Bombing Erap Conviction ZTE Scandal Glorietta 2 Bombing Congress Bombing Manila Peninsula Incident 2008 Cotabato Bus Station Bombing Erap Conviction ZTE Scandal Glorietta 2 Bombing Congress Bombing Manila Peninsula Incident 2009 H1N1 outbreak Death of Corazon Aquino Typhoon Marakot Superferry sank in Zamboanga Typhoon Ondoy Typhoon Pepeng Greenbelt 5 robbing Maguindanao Massacre 2010 Philippine national Elections Noynoy Factor Manila Hostage Crisis DLSU explosion during Bar Exams Typhoon Megi Vizconde massacre suspects acquited 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 Corona Impeachment Trial Tropical dispute with China Typhoon Pablo 6.9 magnitude Negros and Cebu Earthquake Cebu Governor Suspension (in Millions) Total Tourist Arrivals E BPO Revenue OF Remittance Visitor Arrival

40 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 Forefront of the BPO industry Servicing 8 of the top 10 BPOs in the Philippines Secured 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 Handled over 380,000 sqm of office space in 2013 on behalf of landlords and occupiers accounting for 60% market share in the Philippines. Serviced 60% of all office space occupied by BPO Industry. 39

41 Thank you COPYRIGHT JONES LANG LASALLE 2014