THE PHILIPPINE POTENTIAL

Transcription

1 THE PHILIPPINE POTENTIAL

2 Q. So where are we? It s never been this GOOD The real estate sector is BIGGER than ever There are RISKS outside of our control But in the LONG-term, we re good 2

3 About me. Living Working Education 0% 20% 40% 60% 80% 100% 3

4 IT S NEVER BEEN THIS GOOD

5 Asian Tiger 16 th Biggest Economy by 2050 A Breakout Nation An economic bright spot in Asia Improved Competitiveness & Economic Freedom Improved RE Transparency 5

6 TREND #1 Consumer Bank Rate Borrowing has never been this cheap and easy for consumers Source: National Statistics Office Source: 2008, Dr. Jean-Paul Rodrigue, Department of Economics & Geography, Hofstra University 6

7 1/1/1987 8/1/1987 3/1/ /1/1988 5/1/ /1/1989 7/1/1990 2/1/1991 9/1/1991 4/1/ /1/1992 6/1/1993 1/1/1994 8/1/1994 3/1/ /1/1995 5/1/ /1/1996 7/1/1997 2/1/1998 9/1/1998 4/1/ /1/1999 6/1/2000 1/1/2001 8/1/2001 3/1/ /1/2002 5/1/ /1/2003 7/1/2004 2/1/2005 9/1/2005 4/1/ /1/2006 6/1/2007 1/1/2008 8/1/2008 3/1/ /1/2009 5/1/ /1/2010 7/1/2011 2/1/2012 9/1/2012 TREND #2 91-day T-Bill Rates as well as for the government Source: Bangko Sentral ng Pilipinas 7

8 TREND #3 Total Loans Outstanding 4,000, ,500,000.0 The banking sector is rapidly expanding CAGR: 14.5% 3,000, ,500, ,000, CAGR: 36.2% CAGR: -0.2% CAGR: 5.2% 1,500, ,000, , Source: Bangko Sentral ng Pilipinas 8

9 TREND #4 NPL as % of Total Loans with the healthiest balance sheets we ve seen since Source: bancofilipinofailure.com infographic, 9

10 TREND #5 PSEi 8,000 Our stock market is booming 7,000 6,000 2/09 5/ % 5,000 11/07-1/ % 4,000 3,000 2,000 1/00 10/ % 11/01-10/ % 1,000 - Source: Philippine Stock Exchange 10

11 TREND #6 Debt to GDP while the government continually pays down its debt Source: Department of Finance; 11

12 1/1/01 5/1/01 9/1/01 1/1/02 5/1/02 9/1/02 1/1/03 5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 1/1/10 5/1/10 9/1/10 1/1/11 5/1/11 9/1/11 1/1/12 5/1/12 9/1/12 TREND #7 Inflation Rate..all within a steady price environment Headline Inflation Core Inflation Source: Bangko Sentral ng Pilipinas 12

13 TREND #8 Competitiveness All these trends leads to making the country more competitive Source: World Economic Forum; National Competitive Council Philippines 13

14 TREND #8 Competitiveness one of the best improvers in Asia Source: World Economic Forum; National Competitive Council Philippines 14

15 TREND #9 Manila as a RE Destination improving our ranking in investment surveys Ranking Higher the lower the number Source: Urban Land Institute Emerging Trend reports 15

16 TREND #10 Investment Grade with more potential as we hit investor s radars. Source: Rappler.com infographic; with Author manipulating the S&P line to incorporate recent upgrade 16

17 TREND #11 Capital Freeze Index Safe from sudden stops in capital inflows Source: The Economist 17

18 REAL ESTATE IS BIGGER THAN EVER

19 TREND #1 It s no longer just Makati and BGC New central business districts are rising Source: National Statistics Office Source: JLL Research & Consulting 19

20 TREND #2 Increase in Office Supply leading developers to build offices, mainly for the BPO sector Source: National Statistics Office Source: JLL Research & Consulting a/o March

21 TREND #3 Concentration of Office Development but mainly in Bonifacio Global City. Source: National Statistics Office Source: JLL Research & Consulting a/o March

22 TREND #4 The Condo Boom As cities develop, vertical developments become key. Source: HLURB; Issued Licenses to Sell (units) 22

23 TREND #5 The Condo Boom: Manila Edition The residential developments are consistently in the same areas Source: National Statistics Office Source: JLL Research & Consulting a/o March

24 TREND #6 Vertical Housing for the Masses also consistently in the mid-end price range. Source: National Statistics Office Source: JLL Research & Consulting a/o March

25 TREND #7 It s More Fun in the Philippines Hotels are the new asset class thanks to foreign & local tourism 1,800,000 % change (y-o-y) South Korea US Japan China Australia Taiwan Others 25% 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 20% 15% 10% 5% 0% -5% -10% F -15% Source: National Statistics Office Source: Department of Tourism 25

26 TREND #8 Move over Macau especially in gaming & casinos in Bay City / Entertainment City Source: JLL Research & Consulting a/o March 2013 Source: National Statistics Office 26

27 TREND #9 Move over Manila as well as quality and affordable hotels all across the country. Source: JLL Research & Consulting a/o March 2013; Selected provincial hotels only. Source: National Statistics Office 27

28 TREND #10 Everyone Wants to Build Overall, the # of building projects are increasing 140, , ,000 Additions, Alterations, Repair Non-Residential Residential Residential YoY Growth Non-Residential YoY Growth 40.0% 30.0% 20.0% 80, % 60, % 40, % 20, % 0 Source: NSO % Source: National Statistics Office 28

29 3/1/03 7/1/03 11/1/03 3/1/04 7/1/04 11/1/04 3/1/05 7/1/05 11/1/05 3/1/06 7/1/06 11/1/06 3/1/07 7/1/07 11/1/07 3/1/08 7/1/08 11/1/08 3/1/09 7/1/09 11/1/09 3/1/10 7/1/10 11/1/10 3/1/11 7/1/11 11/1/11 3/1/12 7/1/12 11/1/12 TREND #11 Construction Values and so are the value per project. 9,000,000 PHP 29.2M PHP 13.8M 8,000,000 7,000,000 6,000,000 Residential Commercial 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Source: NSO Source: National Statistics Office 29

30 THERE ARE RISKS ARE OUTSIDE OF OUR CONTROL

31 Small-scale war between China & Philippines Worsening poverty & income equality The spectre of populism in Philippine politics and society: artista, masa, Eraption! Current low interest rates may lead to a RE bubble Global Banking Sector Collapses 31

32 1/1/2000 7/1/2000 1/1/2001 7/1/2001 1/1/2002 7/1/2002 1/1/2003 7/1/2003 1/1/2004 7/1/2004 1/1/2005 7/1/2005 1/1/2006 7/1/2006 1/1/2007 7/1/2007 1/1/2008 7/1/2008 1/1/2009 7/1/2009 1/1/2010 7/1/2010 1/1/2011 7/1/2011 1/1/2012 Index (1985 = 100) TREND #1 Wholesale Prices It costs more and more to build. All Items Sand, stone and gravel Cement Wood products Fuels and lubricants Reinforcing steel Structural steel All Items CAGR 7.3% Reinforcing Steel CAGR 14.5% Source: NSO 32

33 TREND #2 The Peso Appreciation A good economy eventually strengthens the currency. Source: Bangko Sentral ng Pilipinas; Peso per currency noted Source: National Statistics Office 33

34 TREND #3 OFW Remittances Still increasing, but at a much slower rate. CAGR: 6.6% CAGR: 13.3% Source: Bangko Sentral ng Pilipinas; Source: National Statistics Office 34

35 TREND #4 RE Loan as FAST Since the Lehman collapse, one of the fastest growing Source: Banko Sentral Ng Pilipinas 35

36 TREND #4 RE Loans as BIG also now the largest of all loans in the system. Manufacturing Wholesale and Retail Financial Intermediation Real Estate, Construction, Hotel Credit Card Auto Loans Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Source: Banko Sentral ng Pilipinas 36

37 TREND #5 A Slippery Target in Office Demand July 2010 Forecast Source: Jones Lang LaSalle 37

38 TREND #5 A Slippery Target (continued) October 2011 Forecast Source: Jones Lang LaSalle 38

39 TREND #5 A Slippery Target (continued) July 2012 Forecast Source: Jones Lang LaSalle 39

40 TREND #6 Which Offshore Location? {OVERALL} 40% Financial 30% People Skills 30% Business Environment India India India India India 1 2 China China China China China 2 3 Malaysia Malaysia Malaysia Malaysia Malaysia 3 4 Czech Republic Philippines Thailand Thailand Egypt 4 5 Singapore Singapore Brazil Indonesia Indonesia 5 6 Philippines Thailand Indonesia Egypt Mexico 6 7 Brazil Czech Republic Chile Philippines Thailand 7 8 Canada Chile Philippines Chile Vietnam 8 9 Chile Canada Bulgaria Jordan Philippines 9 10 Poland Brazil Mexico Vietnam Chile Hungary United States Singapore Mexico Estonia New Zealand Egypt Slovakia Brazil Brazil Thailand Indonesia Egypt Bulgaria Latvia Mexico Jordan Jordan United States Lithuania Argentina Bulgaria Estonia Ghana United Arab Emirates Costa Rica Slovakia Czech Republic Sri Lanka United Kingdom South Africa Mexico Latvia Tunisia Bulgaria Australia Poland Poland Estonia United States Portugal Hungary Vietnam Romania Costa Rica Vietnam United Arab Emirates United Arab Emirates Pakistan Russia 20 Source: A.T. Kearney's Global Services Location Index (GSLI) 40

41 TREND #6 Which Offshore Location? Based on Financial Attractiveness India Philippines Vietnam Ghana Vietnam 1 2 Vietnam Egypt Indonesia Indonesia Indonesia 2 3 Philippines Indonesia Philippines Vietnam Philippines 3 4 Thailand India India Philippines India 4 5 China Bulgaria Egypt India Egypt 5 6 Argentina Thailand Thailand Sri Lanka Thailand 6 7 Brazil China Bulgaria Pakistan Costa Rica 7 8 Mexico Jordan Jordan Egypt Bulgaria 8 9 Malaysia Malaysia China Thailand Malaysia 9 10 Costa Rica Brazil Malaysia Jordan Mexico Chile Mexico Slovakia Tunisia China Poland Chile United Arab Emirates Bulgaria Latvia South Africa Slovakia Chile Malaysia Lithuania Hungary Poland Brazil Romania Russia Czech Republic United Arab Emirates Latvia China Chile Portugal Hungary Mexico Mexico United Arab Emirates New Zealand Czech Republic Poland Chile Estonia Singapore Singapore Estonia Brazil Brazil Australia Canada Czech Republic Estonia United Kingdom Canada United States Singapore United States United States 20 Source: A.T. Kearney's Global Services Location Index (GSLI); countries based on Top 20 (Overall Score) 41

42 TREND #6 Which Offshore Location? Based on People Skills & Availability India United States India United States United States 1 2 Canada India China India India 2 3 Australia Canada Brazil China China 3 4 New Zealand China Singapore Brazil United Kingdom 4 5 China Singapore Mexico Mexico Brazil 5 6 Singapore Brazil Indonesia Indonesia Russia 6 7 Philippines Philippines Malaysia Thailand Mexico 7 8 South Africa Mexico Philippines Malaysia Indonesia 8 9 Czech Republic Malaysia Thailand Egypt Thailand 9 10 Hungary Czech Republic Chile Chile Malaysia Poland Indonesia Poland Philippines Egypt Portugal Poland Egypt Pakistan Philippines Brazil Chile Czech Republic Vietnam Chile Argentina Slovakia Bulgaria Sri Lanka Vietnam Mexico Egypt Slovakia Estonia Estonia Malaysia Thailand Vietnam Jordan Costa Rica Chile Jordan Jordan Tunisia United Arab Emirates Costa Rica Hungary Estonia Romania Latvia Thailand Bulgaria Latvia Bulgaria Lithuania Vietnam United Arab Emirates United Arab Emirates Ghana Bulgaria 20 Source: A.T. Kearney's Global Services Location Index (GSLI); countries based on Top 20 (Overall Score) 42

43 TREND #6 Which Offshore Location? Based on Business Environment Singapore Singapore Singapore Estonia Estonia 1 2 Canada Canada Estonia United States United Kingdom 2 3 New Zealand United States Czech Republic Malaysia United Arab Emirates 3 4 Australia Malaysia Malaysia Chile Latvia 4 5 Czech Republic Czech Republic Latvia Bulgaria United States 5 6 Portugal Chile Chile Jordan Lithuania 6 7 Malaysia United Arab Emirates United Arab Emirates Romania Malaysia 7 8 Hungary Hungary Poland Mexico Chile 8 9 Chile Slovakia Slovakia Tunisia Bulgaria 9 10 Poland Thailand Thailand Thailand Costa Rica Brazil Poland Mexico China Mexico Costa Rica Jordan Bulgaria Egypt Brazil India India Jordan Brazil Egypt Mexico Brazil Brazil Ghana China South Africa Mexico India India Thailand Thailand China China Philippines Vietnam Argentina Bulgaria Philippines Vietnam Philippines China Philippines Egypt Sri Lanka India Philippines Egypt Vietnam Indonesia Russia Vietnam Indonesia Indonesia Pakistan Indonesia 20 Source: A.T. Kearney's Global Services Location Index (GSLI); countries based on Top 20 (Overall Score) 43

44 TREND #6 Which Offshore Location? If cost is not the issue 2005 (Original %) 2005 (25%/25%/50%) India Singapore China Canada Malaysia United States Philippines Malaysia Singapore United Kingdom Thailand India Czech Republic Australia Chile Germany Canada Czech Republic Brazil Chile United States New Zealand Egypt France Indonesia China Jordan Thailand Bulgaria United Arab Emirates Slovakia Ireland Mexico Slovakia Poland Hungary Hungary Jordan United Arab Emirates Brazil Business Environment Business & Political Environment FDI Confidence Index Security Risk Regulatory Burden Employment Rigidity Infrastructure Quality Cultural Exposure Security of Intellectual Property Source: A.T. Kearney's Global Services Location Index (GSLI); countries based on Top 20 (Overall Score) 44

45 TREND #7 Philippine Competitiveness Improving, but ways to go. Out of 148 countries #59 Overall #117 Hiring & Firing Practices #130 Burden of Customs Procedures #118 No. of Days to Start a Business #130 Tuberculosis Cases #124 Business Costs of Terrorism #145 No. of Procedures to Start a Business Source: World Economic Forum 45

46 TREND #8 Natural Disaster Risk 7,107 islands & the Pacific Rim, leads to vulnerability #3 Philippines Source: United Nations 46

47 BUT IN THE LONG-TERM WE RE GOOD

48 TREND #1 Urbanization People need houses, places to shop, work, and have fun Source: Census 48

49 TREND #2 Concentration of City Dwellers and Manila will no longer be the only city. World (Total Pop.) Philippines (Total Pop.) Manila (share of Urban Pop.) World (Urban Pop.) Philippines (Urban Pop.) 2, , ,500.0 Philippines (Urban) 20x Philippines (Total) 8.5x World (Urban) 8.5x World (Total) 3.7x Manila (as a share).7x , Source: Census; CIA Factbook Source: National Statistics Office 49

50 TREND #2 Young and Ambitious The future consumers and office workers Population Cumulative % 12,000, % 10,000,000 8,000,000 6,000,000 48% 57% 65% 72% 78% 84% 88% 92% 94% 96% 98% 99% 99%100% 100% 80% 60% 4,000,000 25% 37% 40% 2,000,000 13% 20% 3% 0 Under 1 Source: Census '1-4 '5-9 ' and over 0% 50

51 TREND #3 Household Consumption who will drive our economy. 4, , , , , , , Philippines World European Union North America China China 35x Philippines 32x EU 21x World 20x North America 16x Source: Census; CIA Factbook Source: National Statistics Office 51

52 TREND #4 Philippine Competitiveness Out of 148 countries #59 Overall #27 Financing thru Local Equity Market #36 Soundness of Banks #42 FDI & Technology Transfer #31 GDP (PPP) #11 HIV Prevalence #48 Capacity for Innovation Source: World Economic Forum 52

53 TREND #5 Go AZKALS! The highest ever ranking Source: FIFA 53

54 TREND #5 Thank You Efren Bata Reyes Our champions Source: World Pool-Billiard Association 54

55 TREND #5 Thank You Manny Flyweight Division Source: World Pool-Billiard Association 55

56 Where Are We Headed? 56

57 WHO WE ARE

58 We are committed to providing highly focused and tailored advisory work for each client. Our team has unique skills in independent financial and research advisory, equipped to develop and deliver comprehensive strategies and solutions to any financial undertaking or transaction. We set the standard in investment advisory services. Our approach is deeply rooted in macro- and microeconomic research, looking at both the physical and financial aspects of the project. Investment Advisory Strategy Financial & Research Analysis