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Q1 2012 | the knowledge

research & forecast report

pHILIppINE pROpERTY MARKET

Executive Summary
economy
While the average GDp growth across the ASEAN countries slowed to 4,8% from 6.9%, the philippine economy manageably grew at 3.7% last year. Despite the fact that government spending on infrastructure was belatedly pushed last year, and while fishing production and exports have consistently declined, the resilient performance in the services sector, and the strong consumer spending, compensated for last years sluggish growth. Outlook by most multilateral institution on the philippine economy is to grow 3.5% to 4.0% this year.

office
Office space options are currently narrow across Metro Manila mainly due to the strong demand coming from the O&O industry. At present, IT-related and BPO firms, with immediate, sizeable requirements, have alternatively resorted to plug & play options either for normal operations or as an incubation space. In 1Q 2012, the vacancy rate in the Makati CBD grew slightly by 0.3% to 4.43%, yet remained within the sub-4% level over the last two quarters. The increase in vacancy is mainly attributed to Grade B offices which grew by around 1.02% to 4.83% breaching the 3% level of last year. market indicators
office residentiaL retaiL

residentiaL
In Metro Manila, supply remains considerably high across condominiums with some 33,000 units completed and over 50,000 units launched last year. Completion grew by over 48% annually while some 40,000 units more are expected towards the end of 2013. Premium vacancy rate in Makati consistently evened out at the sub-6% level since the second quarter of last year. Meanwhile, three-bedroom rental rates went up in the first quarter by over 4% to an average of p660 per sq m.

retaiL

At present, there is about 5.2 million sq m of leasable retail space, 2.11% higher than in the fourth quarter of last year. Vacancy rates, in both super-regional and regional malls across Metro Manila slightly increased by .07% yet occupancy rates remain at the 99% level. In an aim to further increase foot traffic and slacken competition, major mall developers are currently turning away from the traditional mall configuration, and are presently geared towards improving the shopping experience through the integration of new technologies, attractions and natural parks.

www.colliers.com

PhIlIPPIneS | 1Q 2012 | THE KNOWLEDGE

ECONOMIC INDICATORS
2005
Gross National product Gross Domestic product Personal Consumption Expenditure Government Expenditure Capital Formation Exports Imports Agriculture Industry Services Average Inflation (Full Year %) Budget Deficit (Billion Pesos) P: US$ (Average) % Average 91-Day T-Bill Rates %
* At constant prices (based on 2000 level) 3.5 4.8 4.4 2.1 2.96% 5.0 3.3 2.2 4.2 5.8 7.6 146.8 55.0 6.4%

2006
4.8 5.2 4.2 10.6 -15.12% 12.6 3.5 3.6 4.6 6.0 6.2 62.2 51.3 5.3%

2007
6.1 6.6 4.6 6.9 -0.47% 6.7 1.7 4.7 5.8 7.6 2.8 12.4 46.1 3.4%

2008
6.0 4.2 3.7 0.3 23.36% -2.7 1.6 3.2 4.8 4.0 9.3 68.1 44.7 5.2%

2009
6.5 1.1 2.3 10.9 -8.68% -7.8 -8.1 -0.7 -1.9 3.4 3.2 298.5 47.6 4.0%

2010
8.4 7.6 3.4 4.0 31.61% 21.0 22.5 -0.2 11.6 7.2 6.65 314.4 45.10 3.70%

2011
2.60 3.70 6.10 -0.70 11.10% -3.80 1.90 2.60 1.90 5.00 4.80 197.7 43.31 1.37

economy
While the average GDp growth across the ASEAN countries slowed to 4,8% from 6.9%, the philippine economy manageably grew at 3.7% last year. Though at a meagre growth rate, the country was able to withstand the weak global demand derived from external economic tribulations. Despite the fact that government spending on infrastructure was belatedly pushed last year, and while fishing production and exports have consistently declined, the resilient performance in the services sector, and the strong consumer spending, compensated for last years sluggish growth. Specifically, services under the Real Estate sub-sector grew annually by 17.0%, while Renting and Other Business Activities increased by 9.6%. Last year, the services sector contributed more than 40% of the countrys gross national income which reached over p7.7 trillion (+2.6%). Meanwhile, consumer spending increased by 6.1% in 4Q 2011. OFW remittances which posted over US$20.1 billion are expected to continually bolster consumption. The same increased over a billion in the last two years. Furthermore, inflation rate further contracted to 2.7% pushing lending rates at its lowest regime from 5%-8%. Outlook by most multilateral institution on the philippine economy is to grow 3.5% to 4.0% this year.

OFW Remittances
25,000 20,000 15,000 10,000 5,000 -

In Million US Dollars

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

1Q

2Q

3Q

4Q

Source: Bangko Sentral ng Pilipinas * As of January 2012

2012

p. 2

| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | THE KNOWLEDGE

Land VaLUes
As of 1Q 2012, implied land values in the Makati CBD appreciated by 2.26% to an average of P284,130 per sq m. This is expected to increase by 6% in the next twelve months and may reach P300,000 per sq m, higher than its historic peak in early 2009. In Ortigas Center, land values grew by 1.5% to P130,783 per sq m and are expected to grow by 4% by the end of the first quarter next year. The highest growth was registered in Fort Bonfiacio at 28% year-on-year (YoY) driven by the continuous interest in developable land and properties. Currently, it is pegged at P189,000 per sq m and is projected to grow by 17% over the next twelve months.

Makati CBD, Ortigas & Fort Bonifacio Average Land Values


500,000
pesos per square meter

400,000 300,000 200,000 100,000 -

1Q97

1Q98

1Q99

1Q00

1Q01

1Q02

1Q03

1Q04

1Q05

1Q06

1Q07

1Q08

1Q09

1Q10

1Q11

1Q12F

Makati CBD

Ortigas Ctr

BGC

Source: Colliers International Philippines Research

COMpARATIVE LAND VALUES pESO / SQ M MAKATI CBD ORTIGAS CENTER BGC 1Q 12 271,501 - 296,759 97,952 - 163,614 154,500 - 225,145 4Q 11 266,177 - 289,521 96,504 - 161,196 150,000 - 220,730 % chanGe (QoQ) 2.26 1.50 2.40 1Q 13f 290,218-315,800 101,870-170,519 191,215-253,200 % chanGe (yoy) 6.64 4.00 17.00

Source: Colliers International Philippines Research

Licenses to seLL
Overall residential licenses issued by the HLURB contracted for the third consecutive year. Last year, about 164,487 licenses were registered, 13% lower than in 2010. The socialised and economic housing segments consistently dropped by 32 and 30% to 35,682 and 45,207 units, respectively. On a lesser magnitude, issuances on mid-income housing numbered 32,300 units, slightly down by -0.7%. Meanwhile, across the high-rise residential sector, licences continually increased to about 51,298 units, a growth of over 30% compared to 2010. While developers continue to favour high-density projects, the presence of Grade B condominiums continues to augment the number of issued licenses. In 2011, over 50,000 units were launched in Metro Manila. This gives a major indication that licenses in this segment may continue to rise over the remainder of the year. As of February of this year, some of the projects which recently obtained licenses are The Chelsea Residences (704 units) in Alabang, Sorrento Oasis (690 units) in Pasig, 8 Adriatico (922 units) and One Archers Place (655 units) in Manila.

1Q13F

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| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | THE KNOWLEDGE


HLURB LICENCES TO SELL UNITS
Socialised Housing Low-Cost Housing Mid-Income Housing High-Rise Residential Commercial Condominium Farm Lot Memorial park Industrial Subdivision

JAN - DEC 2011 35,682 45,207 32,300 51,298 786 444 136,174 30 495 304,427

JAN - DEC 2010 52,602 64,537 32,541 38,936 2,622 225 116,645 35 374 310,527

% CHANGE YOY -32.2 -30.0 -0.7 31.7 -70.0 97.3 16.7 -14.3 32.4 -2.0

Commercial Subdivision Total (Philippines)

Source: Housing and Land Use Regulatory Board

HLURB Licenses
160,000 140,000 120,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 -

units

80,000 60,000 40,000 20,000

1Q99

4Q99

3Q00

2Q01

1Q02

4Q02

3Q03

2Q04

1Q05

4Q05

3Q06

2Q07

1Q08

4Q08

3Q09

2Q10

1Q11

Quarterly Approvals

Moving 12-Month Average (RHS)

Source: Housing and Land Use Regulatory Board

office sector
Supply Office space options are currently narrow across Metro Manila mainly due to the strong demand coming from the O&O industry. Consequently, developers continue to catch up by bringing in roughly over 1.2 million sq m of new office space in the span of two years. At present, IT-related and BPO firms, with immediate, sizeable requirements, have alternatively resorted to plug & play options either for normal operations or as an incubation space. Furthermore, based on inquiries recently received by Colliers, several interests in areas outside Metro Manila consistently surface. These particularly include Cebu, Davao and Ilo-ilo which subsequently are key expansion sites among major developers. Meanwhile in the Makati CBD, supply remains limited. Delayed for completion by over a quarter, Zuelling Building (57,000 sq m), the only office due for delivery in the Makati CBD this year, is set to be operational in the next couple of months. Alphaland Makati Tower (38,400 sq m), and the Glorietta 1 and 2 BPO buildings (27,800 sq m each) are the only new office spaces to become available in 2013. Furthermore, all over Metro Manila, supply stock in net usable space increased marginally in 1Q 2012 to 5.8 million sq m. This includes Science Hub 2 (19,000 sq m) in McKinley Hill and the SM Megamall Car Park Extension (13,000 sq m) in Mandaluyong. Techno Plaza Two (35,800 sq m) and A Place, previously named One Coral Way, (7,500 sq m), are expected to be available in the early part of the second quarter.

4Q11

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units
| coLLiers internationaL

100,000

PhIlIPPIneS | 1Q 2012 | OFFICE

Makati CBD vs. Metro Manila Office Stock


8,000,000 7,000,000 7,000,000 6,000,000 6,000,000 5,000,000 5,000,000 4,000,000 4,000,000 3,000,000 3,000,000 2,000,000 2,000,000
1,000,000 1,000,000 -

Makati Vs, Metro Manila Stock

600,000 600,000 500,000 500,000 400,000 400,000


300,000 300,000 200,000 200,000 100,000 100,000
in sq.m. in sq.m.

in sq.m. in sq.m.

office sector
Demand In 1Q 2012, the vacancy rate in the Makati CBD grew slightly by 0.3% to 4.43%, yet remained within the sub-4% level over the last two quarters. The increase is mainly attributed to Grade B offices which grew by around 1.02% to 4.83% breaching the 3% level of last year. On the other hand, vacancies contracted across the premium and Grade A segments, down by 2.14% and 0.52% to 3.38% and 3.63%, respectively. Take-up rates are expected to drop this year by 26% to 27,800 sq m, mainly attributed to the limited office space and a negligible increase in supply.

270,000 220,000 170,000

1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011F 2011 2012F 2012F 2013F 2013F
Metro Manila Stock
Metro Manila Stock

0 0

Makati CBD

Makati CBD

YoY Change (RHS)

YoY Change (RHS)

Source: Colliers International Philippines Research

Makati CBD Office Supply and Demand


20%

15%

in sq.m.

120,000 70,000 20,000 (30,000) (80,000)

10%

5%

0%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012F

New Supply During Year

Take-Up During Year

Vacancy at Year End (RHS)

Source: Colliers International Philippines Research

p. 5

2013F

-5%

| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | OFFICE

MAKATI CBD COMPARATIVE OFFICE VACANCY RATES (%) 1Q 12 pREMIUM GRADE A GRADE B & BELOW ALL GRADES 3.38 3.63 4.83 4.42 4Q 11 5.52 4.15 3.81 4.08 4.00 1Q 2013F

Source: Colliers International Philippines Research

FORECAST OFFICE NEW SUppLY LOCATION MAKATI CBD ORTIGAS FORT BONIFACIO EASTWOOD ALABANG OTHER LOCATIONS* TOTAL End-2010 2,699,696 1,126,018 485,693 252,979 234,305 685,362 5,484,053 2011 19,332 106,579 39,840 31,247 81,007 278,005 2012 80,353 200,349 35,765 203,282 519,749 2013 101,719 87,110 219,091 33,560 76,163 517,643 2014 137,214 178,052 -

Source: Colliers International Philippines Research *Manila, Pasay, Mandaluyong, and Quezon City

Rents Premium rental rates in the Makati CBD consistently increased quarter-on-quarter (QoQ) by 2.8% to about P875 per sq m on average. This is projected to grow by 6% over the next twelve months and will exceed the P900 per sq m level last seen in early 2007. Meanwhile, both Grade A and B rents grew marginally by 0.22 and 0.42% to p698 per sq m and p483 per sq m, respectively. Running at an average of p720 per sq m, Grade A rental rates in Bonifacio Global City have continuously surpassed that of Makati since 2Q 2011. While most firms remain wedded to Makati mainly due to familiarity and brand, Grade A rents are expected to grow by 7.5% in 1Q 2013 and will eventually level off to that of BGC at p750 per sq m.

COMPARATIVE OFFICE RENTAL RATES (PESO / SQM / MONTH) MAKATI CBD (BASED ON NET USEABLE AREA) 1Q 12 pREMIUM GRADE A GRADE B 825 - 922 500 - 895 455 - 510 4Q 11 788 - 912 497 - 895 451 - 510 % CHANGE (QOQ) 2.8 0.2 0.4 1Q13F 860 - 990 575 - 925 480 - 545 % CHANGE (YOY) 5.9 7.5 2.1

Source: Colliers International Philippines Research

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| coLLiers internationaL

PhIlIPPIneS |

1Q 2012 | OFFICE

NOTABLE LEASING DEALS Building Net Lima Science Hub Tower 2 Insular Life Corporate Center Area Taguig Taguig Alabang Size (sq m) 8,364.00 4,250.00 3,200.00

Source: Colliers International Philippines Research

Capital Values In 1Q 2013, premium building capital values continually went up to their current p114,840 per sq m (+5.54%). As the completion of Zuellig Tower approaches, average values are expected to grow around 7.0%, the highest quarterly increase that could transpire in the business district. To a much lesser degree, capital values on the Grade A and B segments grew by 1.52 and 1.35% to p82,680 and p55,745 per sq m, respectively. Both segments are expected to grow modestly by 3% to 5% in the next twelve months
150,000 130,000
in peso per sq.m.

Makati CBD Office Capital Values

110,000 90,000 70,000 50,000 30,000


3Q12F 1Q13F 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12

Premium

Grade A

Grade B/B-

Source: Colliers International Philippines Research

COMPARATIVE OFFICE CAPITAL VALUES (PESOS / SQM) MAKATI CBD (BASED ON NET USEABLE AREA)
1Q 12 pREMIUM GRADE A GRADE B 104,569 - 125,113 70,091 - 95,267 48,060 - 63,430 4Q 11 100,443 - 117,190 69,933 - 92,950 47,000 - 63,000 % CHANGE (QOQ) 5.5 1.5 1.4 1Q 13F 119,886 - 131,188 72,697 - 100,846 49,200 - 65,910 % CHANGE (YOY) 9.3 5.0 3.3

Source: Colliers International Philippines Research

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| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | RESIDENTIAL


RESIDENTIAL SECTOR
Supply In Metro Manila, supply remains considerably high across condominiums with some 33,000 units completed and over 50,000 units launched last year. Completion grew by over 48% annually while some 40,000 units more are expected towards the end of 2013. Contrary to over a decade ago, the low lending rates, easy access to credit and affordable payment schemes, made intrinsic components for high-take up rates mainly in the smaller-unit segment. Moreover, supply has largely been augmented by the strong presence of high density projects across the metro area, where the primary inventory mix favours studio and one-bedroom units. In the Makati CBD, the gap between the small unit sizes (studio and one-bedroom) and the large unit sizes (two-bedroom and above) started to widen in 2002 and is expected to grow continuously over the next three years. With the 15,500-unit stock at present, the majority or roughly 60% belongs to the 30 to 60 sq m range as against 40% in the 70 to 230 sq m range. Consequently, stock is still expected to grow annually by 15% in the span of two years driven by projects in the Grade A and B sectors. Meanwhile, some of the condominiums that have started turning over are Eton Residences Greenbelt (302 units), Eton Parkview Greenbelt (236 units), and One Pacific Place (240 units).

Makati CBD Residential Stock


20,000 18,000 16,000 14,000
in units

25% 20% 15% 10% 5% 0% -5%

12,000 10,000 8,000 6,000 4,000 2,000


1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12F 1Q13F

Residential Stock

YoY Change (RHS)

Source: Colliers International Philippines Research

FORECAST
RESIDENTIAL NEW SUppLY LOCATION MAKATI CBD ROCKWELL FORT BONIFACIO ORTIGAS EASTWOOD TOTAL (cumulative) 2010 13,076 2,382 10,709 7,481 5,735 39,383 2011 1,659 1,336 1,365 2,389 6,749 2012 2,204 4,819 672 558 8,253 2013 2,105 1,684 262 977 5,028 2014 473 441 1276 792 278 3,260 TOTAL 19,517 4,159 19,853 11,596 7,548 62,673

Demand

Source: Colliers International Philippines Research

In Makati, landed property remains the preferred lease option in the expatriate market. However, due to the narrow options across exclusive villages, demand alternatively settles on premium condominiums. Despite this, the lack of larger units has consistently evened out premium vacancies at the sub-6% level since the second quarter of last year. On the other hand, vacancy across other grades continues to increase by slightly over 2% quarterly and is currently at 12.4%. Specifically, Grade A vacancy rose by 2% to 10.44% in 1Q 2012. Meanwhile, at 14.62%, vacancy in Grade B condominiums remains the highest across all segments.
p. 8 | coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | RESIDENTIAL Makati CBD Residential Vacancy


18% 18% 16% 16% 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2%

LUXURY OTHERS ALL GRADES

Rents Luxury three-bedroom rental rates in both the Makati CBD and Bonfiacio Global City went up in the first quarter by over 4% to an average of P660 per sq m and P685 per sq m, respectively. The gap between the rental rates of the two districts is expected to narrow over the next twelve months as the completion of Raffles Residences in Makati may cause upward pressure on the average premium rates. In particular, this brings a projected annual growth of over 8%, higher than the 6% in Bonfiacio Global City; this will level out at the P710 to P715 per sq m range. In Rockwell Center, rates grew modestly at 1.30% to an average of p780 per sq m and will breach the p800 per sq m mark by the end of this year.

900 800

in peso per sq.m. per month

in peso per sq.m. per month

700 700 600 600 500 500 400 400 300 300
200200 100100

1Q01 3Q01

3Q01 1Q02

1Q02 3Q02

3Q02 1Q03

1Q03 3Q03

3Q03 1Q04

1Q04 3Q04

3Q04 1Q05

1Q05 3Q05

3Q05 1Q06

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12F

3Q12F

Makati CBD Makati CBD

Rockwell Rockwell

Bonifacio Global City Bonifacio Global City

Source: Colliers International Philippines Research

p. 9

1Q13F

3Q12F

1Q01

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

1Q98 1Q98 3Q98 4Q98 1Q99 3Q99 3Q99 1Q00 2Q00 3Q00 1Q01 1Q01 3Q01 4Q01 1Q02 3Q02 3Q02 1Q03 2Q03 3Q03 1Q04 1Q04 3Q04 4Q04 1Q05 3Q05 3Q05 1Q06 3Q06 2Q06 1Q07 1Q07 3Q07 1Q08 4Q07 3Q08 3Q08 1Q09 3Q09 2Q09 1Q10 3Q10 1Q10 1Q11 4Q10 3Q11 1Q12 3Q11 3Q12F 2Q12F

Source: Colliers International Philippines Research

MAKATI CBD COMpARATIVE RESIDENTIAL VACANCY RATES (%)


1Q 12 6.0 12.4 11.7 4Q 11 6.2 10.9 10.5 11.0 1Q 13F

Source: Colliers International Philippines Research

Makati CBD, Rockwell, Bonifacio Global City prime 3BR Units Residential Rents
900 800

| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | RESIDENTIAL

METRO MANILA RESIDENTIAL CONDOMINIUM COMpARATIVE LUXURY 3BR RENTAL RATES


1Q 12 MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 455 - 860 665 - 890 555 - 812 4Q 11 415 - 840 660 - 875 543 - 768 % CHANGE (QOQ) 4.78 1.30 4.27 1Q 13F 502 - 919 696 - 936 577 - 877 % CHANGE (YOY) 8.06 4.97 6.33

Source: Colliers International Philippines Research

COMpARATIVE RESIDENTIAL LEASE RATES THREE-BEDROOM pREMIUM, SEMI-FURNISHED


MINIMUM Apartment Ridge / Roxas Triangle Rental Range * Average Size ** Salcedo Village Rental Range Average Size Legaspi Village Rental Range Average Size Rockwell Rental Range Average Size Fort Bonifacio Rental Range Average Size
* in pesos per month ** in square meters

AVERAGE 145,000 280 93,000 190 190,000 210 200,000 260 150,000 200

MAXIMUM 250,000 330 135,000 330 250,000 280 300,000 330 280,000 300

90,000 210 60,000 170 65,000 120 150,000 200 60,000 130

Source: Colliers International Philippines Research

Capital Values Average capital values for a premium three-bedroom unit in the Makati CBD surpassed that of Bonifacio Global City over the last two quarters. The priors capital values reached p114,000 per sq m last quarter or an annual growth of 10%, higher than the 8% growth with the latters P112,900 per sq m. On a quarterly basis, the Makati CBD capital values increased by 4.8% and will eventually exceed the P120,000 per sq m level by 1Q 2013. Meanwhile, in Rockwell Center, the completion of one Rockwell East pushed capital values to rise by 5.2% to an average of P140,000 per sq m. Despite the dearth in supply, outlook on secondary prices is expected to grow by 9.9% in the next twelve months.

p. 10

| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | RESIDENTIAL | HOTEL & LEISURE

Makati CBD Residential Capital Values


140,000 120,000 130,000 110,000 120,000

in peso per sq.m.

in peso per sq.m.

100,000 110,000
100,000 90,000 90,000 80,000 80,000

70,000 70,000

1Q01 1Q01

3Q01 3Q01

1Q02 1Q02

3Q02 3Q02

1Q03 1Q03

3Q03 3Q03

1Q04 1Q04

3Q04 3Q04

1Q05 1Q05

3Q05 3Q05

1Q06 1Q06

3Q06 3Q06

1Q07 1Q07

3Q07 3Q07

1Q08 1Q08

3Q08 3Q08

1Q09 1Q09

3Q09 3Q09

1Q10 1Q10

3Q10 3Q10

1Q11 1Q11

3Q11F 3Q11

1Q12F 1Q12

Makati CBD Makati CBD

Rockwell Rockwell

Bonifacio Global City Bonifacio Global City

Source: Colliers International Philippines Research

METRO MANILA RESIDENTIAL CONDOMINIUM COMPARATIVE LUXURY 3BR CAPITAL VALUES (PESOS / SQ M)
1Q 12 MAKATI CBD ROCKWELL BONIFACIO GLOBAL CITY 78,000 - 150,121 98,421 - 140,551 90,658 - 135,125 4Q 11 74,230 - 144,200 94,069 - 133,041 89,212 - 127,533 % CHANGE (QOQ) 4.8 5.2 4.2 1Q 13F 89,454 - 157,301 103,122 - 159,493 92,208 - 146,815 % CHANGE (YOY) 8.2 9.9 5.9

Source: Colliers International Philippines Research

RETAIL
Supply Over the last six months, Metro Manila retail stock improved, brought about by the newly completed retail developments. At present, there is about 5.2 million sq m of leasable retail space, 2.11% higher than in the fourth quarter of last year. Supply mainly increased across super-regional malls by 3.67% or an additional leasable space of over 100,000 sq m driven by the completion of Lucky China Town Mall in Binondo Manila. Meanwhile, some other developments which were completed over the last two quarters include BHS Central East Block in Fort Bonfacio which covers 10,000 sq m and Two Shopping Center in pasay which covers 50,000 sq m. In an aim to further increase foot traffic and slacken competition, major mall developers are currently turning away from the traditional mall configuration, and are presently geared towards improving the shopping experience through the integration of new technologies, attractions and natural parks. The introduction of 3D devices in cinemas and the inclusion of pocket gardens and theme parks evidently became a major trend especially across major entertainment districts. These are most likely to increase as retail developers plan major facelifts and continuous retrofitting over the long haul. Filinvests Festival Mall is expected to undergo a revamp which includes a new wing of about 50% of its leasable area. Besides the new open spaces, the mall will utilise its existing creek as a major waterway attraction. At a separate location, the companys seafront SRP in Cebu will similarly use its beachside ambiance as the retails water feature. Likewise, SM Baguio is also set for an upgrade. Apart from an additional space of some 76,000 sq m, it is geared to obtain LEED certification followed by its integration of new open-air retail spaces, roof gardens, and landscapes of native plant materials. Meanwhile, Ayala Land is continually banking on its cultural districts emphasized by its upcoming retail development at the Santa Ana racetrack property. Besides the on-site upgrades and improvements, expansion plans remains persistent across geographic reach. Robinsons Land has recently opened its 30th mall in Calasio, pangasinan. Besides this, the developer is also set to open Robinsons place palawan and Robinsons Magnolia this year. In Bacolod, SM Prime ramps up its expansion with the SM City Bacolod annex which will offer an additional space of over 80,000 sq m towards the end of 2014. Beyond regional level, SM Tianjin (530,000 sq m), branded as the worlds largest freestanding shopping centre, is set to be completed by the end of 2013. Moreover, Ayala Land plans to reopen Glorietta 1 and 2 towards the third or fourth quarter of this year. After the Abreeza Mall in Davao, the developer is also on track with its Centrio Mall (44,000 sq m), which is set to open by October.

3Q12F

60,000 60,000

p. 11

| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | RESIDENTIAL | HOTEL & LEISURE

Demand Vacancy rates, in both super-regional and regional malls across Metro Manila slightly increased by .07% or a total vacant space of about 42,000 sq m, lower than the 45,000 sq m of vacant space registered in the third quarter of last year. The average vacant space for super-regional and regional malls is roughly around 2,400 sq m and 600 sq m, respectively. Despite the numerous renovations of clothing and apparel stores coupled with the consistent retrofitting of malls, the occupancy rate remains at the 99% level driven by the strong demand from food and dining options and the growing presence of international brands. The outlook on vacancy is that it will remain stable while fewer households are seen to increase their expenses on goods and services according to the recent survey conducted by the Bangko Sentral ng Pilipinas.

METRO MANILA RETAIL VACANCY RATE (%) 4Q 11 SUpER-REGIONAL REGIONAL 1.04 0.65 1Q 12 1.09 0.75

Source: Colliers International Philippines Research

RETAIL STOCK METRO MANILA (SQ M)


1Q 12 SUpER-REGIONAL REGIONAL DISTRICT / NEIGHBOURHOOD ALL LEVELS 3,051,353 1,115,378 1,055,734 5,222,465 4Q 11 2,943,353 1,115,378 1,055,734 5,114,465 % CHANGE (QOQ) 3.67 0.00 0.00 2.11 1Q 13F 3,051,353 1,115,378 1,117,734 5,284,465 % CHANGE (YOY) 0.00 0.00 5.87 1.19

Source: Colliers International Philippines Research

Rents Rental rates in Ayala Center slightly increased by 0.2% to an average of p1,220 per sq m. Likewise, rental rates in Ortigas Center marginally improved by 0.6% to about P1,077 per sq m. Despite the perceived increase in fuel prices and eventually in the inflation rate, the confidence index improved, from -20.6 to -14.7% in the first quarter of this year. Rents may grow modestly by 2 - 3% in the next twelve months.

COMPARATIVE EFFECTIVE RETAIL RENTS (PESOS / SQ M / MONTH) 1Q 12 AYALA CENTER ORTIGAS 1,220 1,077 4Q 11 1,218 1,071 % chanGe (QoQ) 0.2 0.6 1Q 13f 1,258 1,097 % chanGe (yoy) 3.1 1.9

Source: Colliers International Philippines Research

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| coLLiers internationaL

PhIlIPPIneS | 1Q 2012 | HOTEL & LEISURE

Makati CBD Retail Rent


Ayala Center
1,350 1,250
Php/ sq m/ month

8% 7% 6% 5% 4% 3% 2% 1%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12F 3Q12F 4Q12F 1Q13F
1Q13F

1,150 1,050 950 850 750 650 550

0%

(Makati) Monthly Rent

(Makati) YoY Increase (RHS)

Source: Colliers International Philippines Research

Ortigas Center Retail Rent


Ortigas Centre
1,150 1,050
Php/ sq m / m onth

4% 4% 3% 3% 2% 2% 1% 1%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12F 3Q12F 4Q12F

950 850 750 650 550

0%

(Ortigas) Monthly Rent

(Ortigas) YoY Increase (RHS)

Source: Colliers International Philippines Research

Spending Indicators Short by some 3,500 units, total car sales fell by almost 16% in the first two months of this year to 18,977 units. The latest data from the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) shows that sales of passenger cars and commercial vehicles registered 33% and 7% drops to 5,299 and 13,678 units, respectively. However, on a monthly basis, car sales grew by about 29% to 10,861 units a slight indication of recovery and normalisation of the industry which was stalled from the disrupted production in Japan and Thailand. Furthermore, the industry is expected to improve this year as supply becomes gradually stable over the next few months.

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PhIlIPPIneS | 1Q 2012 | AUTOMOTIVE

Quarterly Vehicle Sales


50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 1Q10 4Q09 3Q09 2Q09 1Q09 4Q08 3Q08 2Q08 1Q08 4Q07 3Q07 2Q07 1Q07 4Q06 3Q06 2Q06 1Q06 4Q05 3Q05 2Q05 1Q05 4Q04 3Q04 2Q04 1Q04
Car Sales YoY Change (RHS)

522 offices in 62 countries on 6 continents


40% 30% 20% 10% 0% -10% -20%

United States: 147 offices Canada: 37 offices Latin America: 19 offices Asia Pacific: 201 offices EMEA: 118 offices $1.8 billion in annual revenue 1.25 billion square feet under management Over 12,300 professionals worldwide

10F Tower 2 RCBC Plaza Ayala Avenue, Makati City philippines TEL +632 888 9988 FAX +632 845 2312 www.colliers.com

coLLiers internationaL phiLippines

Source: Chamber of Automotive Manufacturers of the Philippines

karlo pobre

Research Analyst Consultancy and Valuation Services Main +632 888 9988 ext.4030 Fax +632 845 2612 Email Karlo.Pobre@colliers.com

david a. young

Managing Director, philippines Main +632 888 9988 FAX +632 845 2312 Email David.a.Young@colliers.com

Copyright 2011 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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