09 26 2013 THE PHILIPPINE POTENTIAL
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
About me. Living Working Education 0% 20% 40% 60% 80% 100% 3
IT S NEVER BEEN THIS GOOD
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
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
1/1/1987 8/1/1987 3/1/1988 10/1/1988 5/1/1989 12/1/1989 7/1/1990 2/1/1991 9/1/1991 4/1/1992 11/1/1992 6/1/1993 1/1/1994 8/1/1994 3/1/1995 10/1/1995 5/1/1996 12/1/1996 7/1/1997 2/1/1998 9/1/1998 4/1/1999 11/1/1999 6/1/2000 1/1/2001 8/1/2001 3/1/2002 10/1/2002 5/1/2003 12/1/2003 7/1/2004 2/1/2005 9/1/2005 4/1/2006 11/1/2006 6/1/2007 1/1/2008 8/1/2008 3/1/2009 10/1/2009 5/1/2010 12/1/2010 7/1/2011 2/1/2012 9/1/2012 TREND #2 91-day T-Bill Rates as well as for the government. 30 25 20 15 10 5 0 Source: Bangko Sentral ng Pilipinas 7
TREND #3 Total Loans Outstanding 4,000,000.0 3,500,000.0 The banking sector is rapidly expanding 2008-2012 CAGR: 14.5% 3,000,000.0 2,500,000.0 2,000,000.0 1993-1997 CAGR: 36.2% 1998-2002 CAGR: -0.2% 2003-2007 CAGR: 5.2% 1,500,000.0 1,000,000.0 500,000.0-92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: Bangko Sentral ng Pilipinas 8
TREND #4 NPL as % of Total Loans with the healthiest balance sheets we ve seen since 1996. Source: bancofilipinofailure.com infographic, 9
TREND #5 PSEi 8,000 Our stock market is booming 7,000 6,000 2/09 5/13 277.7% 5,000 11/07-1/09-49.0% 4,000 3,000 2,000 1/00 10/01-50.1% 11/01-10/07 233.1% 1,000 - Source: Philippine Stock Exchange 10
TREND #6 Debt to GDP while the government continually pays down its debt 80.0 75.0 74.9 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 40.40 30.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Department of Finance; www.tradingeconomics.com 11
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. 12 10 8 Headline Inflation Core Inflation 6 4 2 0 Source: Bangko Sentral ng Pilipinas 12
TREND #8 Competitiveness All these trends leads to making the country more competitive Source: World Economic Forum; National Competitive Council Philippines 13
TREND #8 Competitiveness one of the best improvers in Asia Source: World Economic Forum; National Competitive Council Philippines 14
TREND #9 Manila as a RE Destination improving our ranking in investment surveys 22 20 18 16 14 12 10 8 6 4 2 0 Ranking Higher the lower the number 2007 2008 2009 2010 2011 2012 2013 Source: Urban Land Institute Emerging Trend reports 15
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
TREND #11 Capital Freeze Index Safe from sudden stops in capital inflows Source: The Economist 17
REAL ESTATE IS BIGGER THAN EVER
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
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 2013 20
TREND #3 Concentration of Office Development but mainly in Bonifacio Global City. Source: National Statistics Office Source: JLL Research & Consulting a/o March 2013 21
TREND #4 The Condo Boom As cities develop, vertical developments become key. Source: HLURB; Issued Licenses to Sell (units) 22
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 2013 23
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 2013 24
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 1,000,000 800,000 600,000 400,000 200,000 20% 15% 10% 5% 0% -5% -10% 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F -15% Source: National Statistics Office Source: Department of Tourism 25
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
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
TREND #10 Everyone Wants to Build Overall, the # of building projects are increasing 140,000 120,000 100,000 Additions, Alterations, Repair Non-Residential Residential Residential YoY Growth Non-Residential YoY Growth 40.0% 30.0% 20.0% 80,000 10.0% 60,000 0.0% 40,000-10.0% 20,000-20.0% 0 Source: NSO 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-30.0% Source: National Statistics Office 28
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 NCR @ PHP 29.2M NCR @ 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
THERE ARE RISKS ARE OUTSIDE OF OUR CONTROL
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
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 850 750 650 All Items CAGR 7.3% Reinforcing Steel CAGR 14.5% 550 450 350 250 150 Source: NSO 32
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
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
TREND #4 RE Loan as FAST Since the Lehman collapse, one of the fastest growing Source: Banko Sentral Ng Pilipinas 35
TREND #4 RE Loans as BIG 35 30 25 also now the largest of all loans in the system. Manufacturing Wholesale and Retail Financial Intermediation Real Estate, Construction, Hotel Credit Card Auto Loans 20 15 10 5 0 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
TREND #5 A Slippery Target in Office Demand July 2010 Forecast Source: Jones Lang LaSalle 37
TREND #5 A Slippery Target (continued) October 2011 Forecast Source: Jones Lang LaSalle 38
TREND #5 A Slippery Target (continued) July 2012 Forecast Source: Jones Lang LaSalle 39
TREND #6 Which Offshore Location? {OVERALL} 40% Financial 30% People Skills 30% Business Environment 2004 2005 2007 2009 2011 1 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 10 11 Hungary United States Singapore Mexico Estonia 11 12 New Zealand Egypt Slovakia Brazil Brazil 12 13 Thailand Indonesia Egypt Bulgaria Latvia 13 14 Mexico Jordan Jordan United States Lithuania 14 15 Argentina Bulgaria Estonia Ghana United Arab Emirates 15 16 Costa Rica Slovakia Czech Republic Sri Lanka United Kingdom 16 17 South Africa Mexico Latvia Tunisia Bulgaria 17 18 Australia Poland Poland Estonia United States 18 19 Portugal Hungary Vietnam Romania Costa Rica 19 20 Vietnam United Arab Emirates United Arab Emirates Pakistan Russia 20 Source: A.T. Kearney's Global Services Location Index (GSLI) 40
TREND #6 Which Offshore Location? Based on Financial Attractiveness 2004 2005 2007 2009 2011 1 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 10 11 Chile Mexico Slovakia Tunisia China 11 12 Poland Chile United Arab Emirates Bulgaria Latvia 12 13 South Africa Slovakia Chile Malaysia Lithuania 13 14 Hungary Poland Brazil Romania Russia 14 15 Czech Republic United Arab Emirates Latvia China Chile 15 16 Portugal Hungary Mexico Mexico United Arab Emirates 16 17 New Zealand Czech Republic Poland Chile Estonia 17 18 Singapore Singapore Estonia Brazil Brazil 18 19 Australia Canada Czech Republic Estonia United Kingdom 19 20 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
TREND #6 Which Offshore Location? Based on People Skills & Availability 2004 2005 2007 2009 2011 1 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 10 11 Poland Indonesia Poland Philippines Egypt 11 12 Portugal Poland Egypt Pakistan Philippines 12 13 Brazil Chile Czech Republic Vietnam Chile 13 14 Argentina Slovakia Bulgaria Sri Lanka Vietnam 14 15 Mexico Egypt Slovakia Estonia Estonia 15 16 Malaysia Thailand Vietnam Jordan Costa Rica 16 17 Chile Jordan Jordan Tunisia United Arab Emirates 17 18 Costa Rica Hungary Estonia Romania Latvia 18 19 Thailand Bulgaria Latvia Bulgaria Lithuania 19 20 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
TREND #6 Which Offshore Location? Based on Business Environment 2004 2005 2007 2009 2011 1 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 10 11 Brazil Poland Mexico China Mexico 11 12 Costa Rica Jordan Bulgaria Egypt Brazil 12 13 India India Jordan Brazil Egypt 13 14 Mexico Brazil Brazil Ghana China 14 15 South Africa Mexico India India Thailand 15 16 Thailand China China Philippines Vietnam 16 17 Argentina Bulgaria Philippines Vietnam Philippines 17 18 China Philippines Egypt Sri Lanka India 18 19 Philippines Egypt Vietnam Indonesia Russia 19 20 Vietnam Indonesia Indonesia Pakistan Indonesia 20 Source: A.T. Kearney's Global Services Location Index (GSLI); countries based on Top 20 (Overall Score) 43
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
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
TREND #8 Natural Disaster Risk 7,107 islands & the Pacific Rim, leads to vulnerability #3 Philippines Source: United Nations 46
BUT IN THE LONG-TERM WE RE GOOD
TREND #1 Urbanization People need houses, places to shop, work, and have fun Source: Census 48
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 2,000.0 1,500.0 Philippines (Urban) 20x Philippines (Total) 8.5x World (Urban) 8.5x World (Total) 3.7x Manila (as a share).7x 2036.3 1,000.0 842.2 500.0 0.0 100.0 70.0 367.5 Source: Census; CIA Factbook Source: National Statistics Office 49
TREND #2 Young and Ambitious The future consumers and office workers Population Cumulative % 12,000,000 120% 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 '10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80 and over 0% 50
TREND #3 Household Consumption who will drive our economy. 4,000.0 3,500.0 3,000.0 2,500.0 2,000.0 1,500.0 1,000.0 500.0 0.0 Philippines World European Union North America China 100.0 China 35x Philippines 32x EU 21x World 20x North America 16x 3501.7 3223.5 2116.2 1977.7 1601.8 Source: Census; CIA Factbook Source: National Statistics Office 51
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
TREND #5 Go AZKALS! The highest ever ranking Source: FIFA 53
TREND #5 Thank You Efren Bata Reyes Our champions Source: World Pool-Billiard Association 54
TREND #5 Thank You Manny Flyweight Division Source: World Pool-Billiard Association 55
Where Are We Headed? 56
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