THE PHILIPPINES COUNTRY REPORT. Mr. Meneleo Albano, IPA President Institute of the Philippine Real Estate Appraisers (IPREA)

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1 THE PHILIPPINES COUNTRY REPORT Mr. Meneleo Albano, IPA President Institute of the Philippine Real Estate Appraisers (IPREA)

2 PRESENTATION ROAD MAP The Big Picture: The Macroeconomy The Real Estate Industry The Commercial Sector The Residential Sector The Agricultural Sector The Extractive Industries Q & A

3 The Big Picture: The Macroeconomy

4 The Philippine economy remains resilient amid crises Sources: NSCB, ADB, Author s estimates

5 due to a very strong service sector and remittances abroad.

6 Business outlook remains bright

7 Costs of doing business are conducive to investments

8 Population is growing Previous Latest Population 76.5M 88.57M (as of 01 May 2001) (as of 01 Aug 2007) Projected population 92.2 M 94 M (as of 2010) (as of 2011) Population growth rate 2.31% p.a. 2.05% p.a. ( ) ( )

9 with 61% in the productive age group.

10 Tourism is picking up

11 Foreign direct investments are increasing

12 Purchasing power is improving leading to a gradually declining poverty incidence Average Annual Family Income Previous PHP 148,616 (2003) Latest PHP 173,000 (2006) Average Annual Family Expenditures PHP 124,377 (2003) PHP 147,000 (2006) Poverty Incidence 21.1% of total families % of population % of total families % of population 2009

13 and consumer spending continue to pick up.

14 The Philippine real estate market is thus expected to benefit from these opportunities and further more from these

15 Increasing activities in the real estate 700, , , , , , ,000 0 GROSS VALUE ADDED IN REAL ESTATE, RENTING & BUSINESS ACTIVITIES (At constant 2000 prices) Value, constant Growth Rate, constant

16 BPO industry is the primary engine of growth for the real estate sector providing the necessary boost not only to the office subsector but to the residential sector and retail subsector as well. The BPO industry posted a compounded annual revenue growth rate of 65% per annum from 2001 to In 2010 alone, annual turnover stood at USD9B. The power behind: The business processes outsourcing (BPO) industry

17 A closer look

18 The Commercial Sector

19 Land values are expected to increase by 3% to 5% in 2011 in Makati and Ortigas CBDs. (Colliers International, 2011)

20 The Commercial Sector: The Office Market Segment

Demand for office space remain Demand for office spaces still come largely from BPOs. The Business Processes Association of the Philippines (BPAP) estimates an additional 0.

21 Demand for office space remain Demand for office spaces still come largely from BPOs. The Business Processes Association of the Philippines (BPAP) estimates an additional 0.8M workforce until 2016 which translates to some 3M sqm of office space requirements. Some BPO companies are starting to build their own buildings or are veering away from the traditional CBDs and are going to the regions. significant

22 4,000 3,500 Generally, office space supply will gradually taper off 3,000 2,500 2,000 1,500 1, Subd (Comml) Condo (Comml) LICENSES TO SELL ISSUED BY HLURB (In No. of Units) 2007 to

23 However, in Metro Manila, office space supply is expected to grow double this year by 385,000 sqm coming from new constructions in the Bonifacio Global City. On the other hand, stock will barely move in the Makati CBD. (Colliers International, 2011)

24 The Commercial Sector: The Retail Segment

25 Remittances from abroad and BPO earnings are being channeled largely to consumption

26 The 24/7 operation of BPOs has changed the buying, and rest and recreation patterns of the populace in areas where the BPO offices are located.

27 Changes in consumer habits triggered by the BPO industry have stirred the expansion of convenience stores alone targets to open 100 stores this 2011 and another 300 stores in the next two years.

28 For the bigger retails stores, the trend is to expand outside the metropolis where populations are increasing and disposable incomes, improving.

29 The Commercial Sector: The Hotel and Leisure Segment

30 The hotel and leisure sector has still room for improvement Source: CPBD, House of Representatives, 2008

31 The Commercial Sector: The Industrial Segment

32 Indicators are positive for the industrial sector

33 Indicators are positive for the industrial sector

34 but is hardly noticed

35 The Residential Sector: The Strata (Condominium) Segment

36 500, , , , , , , , ,000 High- to mid-end supply is tempered... LICENSES TO SELL ISSUED BY HLURB (In No. of Units) 2007 to 2010 Simple subd Condo-BP220 Compliance Socialized Economic Condo (PD 957) Med cost Open mkt 50,

37 Over the next 3 years, high-end condominium units will reach almost 62,000 Source: Colliers International, 2011

average sizes of 25 sqm to 35 sqm which are intended

38 Of the residential condominium units being built in Metro Manila, 70% are studio and one-bedroom units, with average sizes of 25 sqm to 35 sqm which are intended primarily to cater to the BPO segment. (Colliers International, 2011)

39 The Agricultural Sector

40 A situationer 13 Mn has or 47% of the Philippines 30 Mn hectares total land area is agricultural land located around the main urban and high population density areas. (FFTC, 2011)

67 Mn has Industrial crops: 0.59 Mn has Fruits: 0.

41 A situationer Food grains (4.01 Mn) Corn: 3.34 Mn Rice: 3.31 Mn has Food crops (8.33 Mn has) Coconut: 4.25 Man has Sugar cane: 0.67 Mn has Industrial crops: 0.59 Mn has Fruits: 0.15 Man has Vegetables and root crops: 0.27 Man has Pasture: 0.40 Mn has Cutflower: 0.13 Mn has. Non-food crops: 2.2 Mn has

42 The Extractive Industries

abundant and important metallic mineral deposits of gold, copper, iron, chromite, nickel,

43 The Philippines is located along a well-defined belt of volcanoes called the Circum-Pacific Rim of Fire where the process of volcanism and plate convergence resulted in the formation of abundant and important metallic mineral deposits of gold, copper, iron, chromite, nickel, cobalt and platinum. Retrieved on 05 Jul 2011.

44 A situationer Mineral reserves (as of 1996) Metallic: 6.67 BN MT Copper (70%) Nickel (16%) Non-metalic: MT 9 Mn hectares of potential mining land Only 1.4 has Mn are covered by mining permits Estimated Reserves as of 2002 (probably 5th of the largest in the world): Gold: 967,180,197 MT Copper: 5,301,507,657 MT. A study conducted by East-West Center in 1994 estimated that about 11 new deposits under a conservative estimate and 25 deposits under a most likely estimate might be developed during the period Retrieved on 05 Jul 2011.

45 Q & A

Property Market Overview 1st Quarter 2010

c o l l i e r s i n t e r n at i o n a l p h i l i p p i n e s m a r k e t ov e rv i e w A p r i l 2 0 1 0 Property Market Overview 1st Quarter 2010 Market Indicators EXECUTIVE SUMMARY Property Indicators: