THE PHILIPPINES COUNTRY REPORT Mr. Meneleo Albano, IPA President Institute of the Philippine Real Estate Appraisers (IPREA)
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
The Big Picture: The Macroeconomy
The Philippine economy remains resilient amid crises Sources: NSCB, ADB, Author s estimates
due to a very strong service sector and remittances abroad.
Business outlook remains bright
Costs of doing business are conducive to investments
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. (1990-2000) (2000-2005)
with 61% in the productive age group.
Tourism is picking up
Foreign direct investments are increasing
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 2006 26.4% of population 2006 20.9% of total families 2009 26.5% of population 2009
and consumer spending continue to pick up.
The Philippine real estate market is thus expected to benefit from these opportunities and further more from these
Increasing activities in the real estate 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 GROSS VALUE ADDED IN REAL ESTATE, RENTING & BUSINESS ACTIVITIES (At constant 2000 prices) 1998199920002001200220032004200520062007200820092010 Value, constant Growth Rate, constant 9.0 8.5 8.0 7.5 7.0 6.5
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 2010. In 2010 alone, annual turnover stood at USD9B. The power behind: The business processes outsourcing (BPO) industry
A closer look
The Commercial Sector
Land values are expected to increase by 3% to 5% in 2011 in Makati and Ortigas CBDs. (Colliers International, 2011)
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 0.8M 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
4,000 3,500 Generally, office space supply will gradually taper off 3,000 2,500 2,000 1,500 1,000 500 Subd (Comml) Condo (Comml) LICENSES TO SELL ISSUED BY HLURB (In No. of Units) 2007 to 2010 0 2007 2008 2009 2010
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)
The Commercial Sector: The Retail Segment
Remittances from abroad and BPO earnings are being channeled largely to consumption
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.
Changes in consumer habits triggered by the BPO industry have stirred the expansion of convenience stores. 7-11 alone targets to open 100 stores this 2011 and another 300 stores in the next two years.
For the bigger retails stores, the trend is to expand outside the metropolis where populations are increasing and disposable incomes, improving.
The Commercial Sector: The Hotel and Leisure Segment
The hotel and leisure sector has still room for improvement Source: CPBD, House of Representatives, 2008
The Commercial Sector: The Industrial Segment
Indicators are positive for the industrial sector
Indicators are positive for the industrial sector
but is hardly noticed
The Residential Sector: The Strata (Condominium) Segment
500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 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 50,000-2007 2008 2009 2010
Over the next 3 years, high-end condominium units will reach almost 62,000 Source: Colliers International, 2011
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)
The Agricultural Sector
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)
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
The Extractive Industries
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 http://bentleyfairview.com/mining-in-the-philippines on 05 Jul 2011.
A situationer Mineral reserves (as of 1996) Metallic: 6.67 BN MT Copper (70%) Nickel (16%) Non-metalic: 78.472 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 1995-2015. Retrieved http://bentleyfairview.com/mining-in-the-philippines on 05 Jul 2011.
Q & A