Research & Forecast Report 1Q2014

Page 1

Philippine Property Market Report Philippines 1Q 2014

Economic growth fuels real estate sector to expand The Philippine economy expanded by 7.2% in FY 2013, the highest GDP growth in the last two years. The services sector supported the uptrend with the industrial sector gaining significant traction. Despite an increasing inflation rate, consumption spending remained buoyant as lending rates continued to be at their lowest levels while OFW remittances posted its record amount for FY 2013. To sustain the growth, the government is pursuing fiscal and monetary adjustments to ensure macroeconomic stability in the medium term.

Office Four new office buildings were completed in 1Q 2014, amounting to 75,000 sq m of new office space. By next year, close to 450,000 sq m of office space is expected to be delivered, 55% of which are located in Ortigas Center and Quezon City. Overall vacancy rates in the Makati CBD increased due to non-renewal of leases and completion of V Corporate Center. Despite the rise in vacancy, office rents in the area accelerated in the period as tenants continued to compete for remaining office space in the area.

Accelerating success.

Residential Approximately 1,500 residential units were delivered in 1Q 2014, 70% of which are located in Fort Bonifacio and the remaining 30% in the Makati CBD. Twenty new residential condominiums are expected to be turned over this year, with the majority of the units classified as studio and one-bedroom units. Premium units experienced a rise in vacancy as smaller unit cuts had some difficulties in being leased out. As a result, rental growth slowed down during the period.

Retail Metro Manila retail stock reached 5.7 million sq m, as close to 225,000 sq m of retail space was introduced to the market during the last six months. An additional 150,000 sq m will be completed by year-end. Retail developers are setting up retail with smaller configurations, as they target specific markets and locations. Demand continued to be driven by strong interest from local and foreign businesses to operate in the country.

Market Indicators OFFICE RESIDENTIAL RETAIL


Economic Growth Indicators Economic Indicators 2007

2008

2009

2010

2011

2012

1Q13

2Q13

3Q13

4Q13

Gross National Product (%)

6.10

6.00

6.50

8.40

3.20

5.80

7.80

6.40

8.10

7.80

Gross Domestic Product (%)

6.60

4.20

1.10

7.60

3.90

6.60

7.70

7.60

6.90

6.50

Personal Consumption Expenditure (%)

4.60

3.70

2.30

3.40

6.10

6.10

5.10

5.20

6.20

5.60

Gov’t. Expenditure (%)

6.90

0.30

10.90

4.00

1.00

11.80

13.20

17.00

4.60

(5.20)

Capital Formation (%)

(0.50)

23.40

(8.70)

31.60

8.10

(4.40)

17.90

13.20

15.60

5.70

Exports (%)

6.70

(2.70)

(7.80)

21.00

(4.20)

8.70

(7.00)

(6.50)

10.60

6.40

Imports (%)

1.70

1.60

(8.10)

22.50

0.20

4.20

1.60

(3.00)

14.20

1.90

b

AHFF (%)

4.70

3.20

(0.70)

(0.20)

2.70

2.70

3.30

(0.30)

0.30

1.10

Industry (%)

5.80

4.80

(1.90)

11.60

2.30

6.50

10.90

10.30

8.20

8.40

7.60

4.00

3.40

7.20

5.10

7.40

7.00

7.40

7.50

6.50

Services (%) Average Inflation

2.90

8.30

4.10

3.90

4.60

3.20

3.20

2.70

2.80

3.40

Budget Deficit (PHP Bn)

(12.4)

(68.1)

(298.5)

(314.4)

(197.7)

(242.8)

(66.5)

15.2

(49.9)

(62.8)

c

PHP:US$ (Average)

46.1

44.7

47.6

45.1

43.3

42.1

40.8

41.1

43.4

43.6

Average 91-Day T-Bill Rates

3.40

5.20

4.00

3.70

1.37

1.58

0.06

0.39

0.71

0.00

Source: Philippine Statistics Authority, Bangko Sentral ng Pilipinas, Bureau of Treasury b

Economic performance defies expectations, grows at 7.2% in 2013

The services sector remained the key driver for growth in the fourth quarter, contributing 55% of the country’s GDP. Robust activity in financial intermediation (+9.9%), trade (+7.4%), and real estate, renting, and business activities (+6.3%) supported the growth. Meanwhile, manufacturing buoyed the industrial sector to grow by 8.4% in the period. Manufacture of food, chemicals and chemical products, and radio, television, and communications equipment contributed close to 70% of the output, thereby signifying an increasing consumer base for such products. The increasing inflation rate for the first three months of 2014 (4.1%) did not deter consumption as lending rates remain at their lowest levels (4.4 – 6.7%) while the inflow of OFW remittances grew by 6.4% YoY to reach a record US$ 22.8 billion in 2013.

Economic managers are initiating mechanisms to ensure macroeconomic stability in the medium term by exercising prudent and effective fiscal and monetary policies. In March, the Central Bank hiked its reserve requirements imposed on banks to avert possible effects of excessive liquidity in the market. The move signaled the commitment of the Central Bank to manage inflation pressures amid increasing credit activities to further economic growth. As a result, the government is optimistic that the 6.5 – 7.5% annual growth is attainable.

OFW Remittances 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

The year 2013 proved to be a successful one for the Philippine economy, as the country posted an annual GDP growth of 7.2%, the highest in the last two years. Meanwhile, the economy grew by 6.5% YoY in 4Q 2013, exceeding expectations once again after analysts predicted slower growth because of Typhoon Haiyan. The country’s growth was the highest in Southeast Asia, ahead of Indonesia (+5.8%), Vietnam (+5.5%), Malaysia (+4.7%), Singapore (+4.1%), and Thailand (+2.9%), but trailing behind China (+7.7%).

1Q

Source: Bangko Sentral ng Pilipinas

2

a at constant 2000 prices Agriculture, Hunting, Forestry, Fishing c at constant 2006 prices (2007-2012)

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International

2Q

3Q

4Q a

for Full Year 2013


Land Values

Land values appreciate amid spectacular economic growth Land values in the Makati CBD increased by 3.6% in 1Q 2014, with an average price of PHP 353,795 or an accommodation value of PHP22,112 per sq m. Fort Bonifacio land values appreciated by 2.2% QoQ, with an average price of PHP266,050 per sq m. Meanwhile, land values in Ortigas grew by 1.9%. Colliers estimates that both Makati CBD and Fort Bonifacio land values will appreciate by 8.2% in the next four quarters, while Ortigas annual growth forecast remains at 5.7%.

Source: Colliers International Philippines Research

Comparative Land Values (Php / sqm) LOCATION

4Q 2013

1Q 2014

% CHANGE (QoQ)

1Q 2015F

% CHANGE (YoY)

Makati CBD

317,015-365,995

328,110-379,480

3.60

345,740-419,805

8.19

Ortigas Center

109,700-179,665

111,345-181,575

1.93

120,525-188,945

5.65

Fort Bonifacio

211,630-309,080

215,755-316,340

2.19

232,340-343,510

8.22

Source: Colliers International Philippines Research

Total residential licenses decline despite rebound in socialized and low-cost segments

HLURB Licenses

Licenses to sell issued by HLURB increased by 39.7% YoY from December 2013 to February 2014. Residential projects fell to 59,200 units, some 7,200 units lower than the same period last year. Significant increases were posted in the socialized (+17.4%), and low-cost (+23.2%) housing segments, as developers started to comply with government requirements to produce socialized housing units in exchange for valueadded tax exemptions. On the other hand, high-rise residential projects continued to decline by 38.6% despite a surge of launches in December 2013, as developers slowed down in their launches in the first two months of the year. Meanwhile, the number of commercial condominiums decreased by 50% to 429 units during the period.

Source: Housing and Land Use Regulatory Board

HLURB Licenses to Sell SEGMENT

DEC ‘12 - FEB ‘13

DEC ‘13 - FEB ‘14

% CHANGE YoY

Socialized Housing

12,308

14,451

17.4%

Low Cost Housing

15,536

19,146

23.2%

9,117

7,269

-20.3%

29,847

18,331

-38.6%

429

-50.6%

Mid Income Housing High Rise Residential Commercial Condominium Farm Lot Memorial Park Industrial Subdivision Commercial Subdivision Total (Philippines)

869 32,069

79,795

-

26

52

16

-69.2%

139,463

39.7%

99,798

Source: Housing and Land Use Regulatory Board

3

148.8%

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International


Office Office supply in the Makati CBD to plateau; expansion to happen outside the district Close to 450,000 sq m of new office space is expected to be introduced in the market in 2014, 55% of which is located in Ortigas Center and Fort Bonifacio. This quarter, four new buildings were completed, amounting to 75,000 sq m. These were Cyberpod Centris North (26,190 sq m) and South (27,840 sq m)Towers, CityNet 1 (5,720 sq m), and V Corporate Center (15,290 sq m), all of which cater to BPO operations. The lack of developable land in the Makati CBD caused the office inventory to remain at 2.84 million sq m, despite introduction of V Corporate Center. While a new building, Frabelle Legazpi Building (7,510 sq m) located in Legazpi Village, is expected to be delivered this year, total inventory is likely to plateau at 2.85 million sq m. Meanwhile, aggressive development outside the Makati CBD is being pursued by office developers in response to the increasing demand from the outsourcing industry. Approximately 1.2 million sq m of office space will be delivered outside the Makati CBD from 2014 to 2016, with Fort Bonifacio increasing its office space by 43% by 2016 to 1.3 million sq m. Other locations such as Mandaluyong, Quezon City, and Pasay City are identified as attractive alternative locations as approximately 350,000 sq m of office space will be delivered in these areas by 2016.

Makati CBD vs. Metro Manila Office Stock

Source: Colliers International Philippines Research

Strong office demand foreseen despite increase in vacancy New supply coupled with non-renewal of leases resulted in an increase in the overall vacancy rate in the Makati CBD by 1.9% QoQ to 4.2%. Premium offices experienced a rise in vacancy as a lease pre-termination occurred in Zuellig Building. Similarly, Grade A vacancy swelled to 7.2% this period because some tenants ended the lease contracts for their offices. Meanwhile, the completion of V Corporate Center drove Grade B vacancy to 3.8%. Despite the current vacancy level, Colliers projects the overall vacancy rate in the Makati CBD will fall to 3.4% in the next twelve months due to continued strong demand.

Makati CBD Comparative Office Vacancy Rates (%) 4Q 2013

Premium Grade A

1Q 2014

1Q 2015F

1.61

1.89

1.36

6.61*

7.20

5.29

Grade B & Below

1.02

3.77

3.29

All Grades

2.26

4.23

3.36

Source: Colliers International Philippines Research

*

revised figures

Forecast New Office Supply (Net Usable Area) LOCATION

Makati CBD

END OF 2013*

2014F

2015F

2016F

TOTAL

2,827,865

22,802

-

1,160,350

124,809

75,072

17,378

1,377,609

Fort Bonifacio

907,397

69,529

75,444

248,075

1,300,445

Eastwood

300,264

-

-

-

300,264

305,718

69,210

-

18,000

392,928

972,649

165,443

211,737

122,649

1,472,478

6,474,243

451,794

362,253

406,102

7,694,392

Ortigas

Alabang Other Locations** Total

Source: Colliers International Philippines Research

4

-

**

2,850,668

* revised figures Manila, Pasay, Mandaluyong, Quezon City and other fringe locations

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International


Office rents rise as competition increases Rental rates in the Makati CBD rose this quarter as a result of increasing competition for available spaces. A premium office space in the area would cost an average of PH P1,058 per sq m, 1.4% higher than the previous period. Grade A rents recorded a 1.5% QoQ increase while Grade B rents increased by 1.4%, resulting in an average Grade A rent of PHP 789 and a Grade B rent of PHP 565. Colliers forecasts that rental rates in the district will appreciate between 5 and 8% over the next twelve months.

Makati CBD Office Supply and Demand

0

Office capital value growth to lag behind rental rate growth Capital values in offices in the Makati CBD lagged behind the rental rate growth this quarter. Average capital values for Premium and Grade B buildings rose by 1.2%, with an average value of PHP 141,555 per sq m for Premium office space and PHP 63,445 per sq m for Grade B office space. Meanwhile, Grade A capital values posted 1.4% QoQ growth at PHP 90,844 per sq m. Colliers predicts capital values for all grades in the Makati CBD to increase by 4 to 6% by next year, with capital value growth continuing to trail behind rental rate growth.

Source: Colliers International Philippines Research

Makati CBD Office Capital Values

Source: Colliers International Philippines Research

Comparative Rental Rates (Php/sq m/month) Makati CBD (based on net usable area) GRADE

4Q 2013

1Q 2014

% CHANGE (QoQ)

1Q 2015F

%CHANGE (YoY)

Premium

880 - 1,205

890 - 1,225

1.44

930 - 1,290

5.04

Grade A

605 - 950

610 - 970

1.48

650 - 1,025

6.02

Grade B

470 - 645

475 - 655

1.41

500 - 690

5.25

Source: Colliers International Philippines Research

Comparative Office Capital Values (Php / sq m) Makati CBD (based on net usable area) GRADE

4Q 2013

1Q 2014

%CHANGE (QoQ)

Premium

136,460 - 143,360

137,960 - 145,150

1.18

144,610 - 151,895

4.73

Grade A

75,025 - 104,160

75,965 - 105,725

1.40

80,410 - 111,965

5.88

Grade B

53,300 - 72,105

53,885 - 73,010

1.19

56,530 - 76,305

4.68

Source: Colliers International Philippines Research

5

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International

1Q 2015F

%CHANGE (YoY)


Residential

Makati CBD Residential Stock

Supply to increase substantially in the next three years In the five major submarkets that Colliers tracks, 20 new residential condominiums are expected to be turned over in the market this year amounting to 7,748 units. This quarter, 1,499 units were delivered with 70% located in Fort Bonifacio and the remaining 30% in the Makati CBD. The projects included Red Oak at Two Serendra (520 units) , Avida Towers BGC 9th Avenue Tower 1 (224 units), Arya Residences Tower 1 (301 units), and The Grand Midori Tower 2 (454 units).

Source: Colliers International Philippines Research

Forecast Residential New Supply LOCATION

Makati CBD Rockwell Fort Bonifacio Ortigas

END-2013

2014F

2015F

2016F

2017F

TOTAL

17,656

1,410

3,652

2,017

1,485

26,220

3,718

441

-

-

346

4,505

17,585

3,142

4,386

4,895

2,979

32,987

11,921

2,037

2,430

1,227

573

18,188

Eastwood

6,830

718

-

988

-

8,536

Total

57,710

7,748

10,468

9,127

5,383

90,436

Source: Colliers International Philippines Research

An average of 8,180 units will be delivered annually from 2014 to 2017, bringing the total inventory to 90,436 units. About 95% of the new supply is located in the three major CBDs – Makati CBD, Fort Bonifacio, and Ortigas Center, with Fort Bonifacio delivering more than 15,000 units in the next three years. Smaller unit cuts are set to capture a significant share of the market by 2017 as 75% are classified as studio and one bedroom units with sizes ranging from an average of 21 sq m for a studio unit to 60 sq m for a one bedroom unit. As a result, the availability of residential projects with larger unit cuts remains to be limited in the medium term despite an increasing number of projects offering such units.

Makati CBD Comparative Residential Vacancy Rates (%) 4Q 2013*

1Q 2014

Luxury

4.0

Others

10.5

11.7

9.8

10.9

All Grades

Source: Colliers International Philippines Research

Makati CBD Residential Vacancy

New residential condominium supply forces vacancies to rise Overall vacancy in the Makati CBD increased by 1.1% to 10.9%, from the revised vacancy rate of 9.8% recorded in the previous quarter. While premium three-bedroom units were enjoying virtually full occupancy, smaller unit cuts in the said buildings had some difficulties in being leased out, thereby affecting the vacancy rate. On the other hand, Grade A and B units experienced an artificial increase in vacancy as a result of the turnover of The Grand Midori Tower 2. In the next twelve months, vacancy is expected to rise to 11.2% as demand will not be able to catch up with the influx of new supply. Meanwhile, the Fort Bonifacio vacancy rate increased to 8.2% this quarter but is expected to normalize at 6.9% by next year.

6

Source: Colliers International Philippines Research

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International

1Q 2015F

4.6 11.2 *

revised figures


Residential rental growth remains flat Premium three-bedroom rental rates in the Makati CBD increased slightly by 0.8%, and were pegged at an average monthly rent of PHP 811 per sq m. This translates to a monthly rate of PHP 202,750 for a 250 sq m unit. Fort Bonifacio rental rates grew at a similar rate of 0.9% QoQ, at an average monthly rent of PHP 815 per sqm. Premium rents for both locations are expected to appreciate by 4 to 6% in the next four quarters, with Fort Bonifacio gaining higher rates than the Makati CBD. On the other hand, premium rental rates in Rockwell reached an average of PHP 875 per sq m, 0.7% higher than the previous period. Annual rental rate growth in Rockwell is projected between 5 and 7%.

Makati CBD, Rockwell, Fort Bonifacio Prime 3BR Units Residential Rents

Meanwhile, asking rental rate for studio and one-bedroom units in Fort Bonifacio increased from an average rent of PHP770 to PHP775 sq m. Colliers foresees pressure on rental rates to remain at current levels in this segment as an unprecedented level of new residential supply is expected in the medium term. Source: Colliers International Philippines Research

Makati CBD Comparative Residential Lease Rates for Exclusive Villages (Php / month) 3BR - 4BR, Unfurnished to Semi-Furnished VILLAGE

LOW

HIGH

Forbes Park

300,000

650,000

Dasmarinas Village

200,000

400,000

Urdaneta Village

250,000

350,000

Bel-air Village

150,000

250,000

San Lorenzo Village

100,000

200,000

Ayala Alabang Village

85,000

200,000

Magallanes Village

70,000

150,000

Source: Colliers International Philippines Research

Metro Manila Residential Condominium Comparative Luxury 3BR Rental Rates (PHP / sq m / month) LOCATION

4Q 2013

1Q 2014

% CHANGE (QOQ)

1Q 2015F

%CHANGE (YoY)

Makati CBD

550 - 1,060

555 - 1,065

0.75

580 - 1,115

4.58

Rockwell

720 - 1,020

725 - 1,025

0.69

755 - 1,075

4.86

610 - 1,010

610 - 1,020

0.87

640 - 1,070

4.75

Fort Bonifacio

Source: Colliers International Philippines Research

7

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International


Comparative Residential Lease Rates (High-Rise) 3BR, Semi Furnished to Fully Furnished LOCATION

MINIMUM

AVERAGE

MAXIMUM

Apartment Ridge/Roxas Triangle Rental Range (Php/month) Average Size (sq m)

120,000

185,000

280,000

210

285

335

120,000

140,000

160,000

185

210

250

120,000

185,000

250,000

135

205

280

125,000

185,000

300,000

120

230

300

120,000

210,000

270,000

115

230

310

Salcedo Village Rental Range (Php/month) Average Size (sq m) Legaspi Village Rental Range (Php/month) Average Size (sq m) Rockwell Rental Range (Php/month) Average Size (sq m) Fort Bonifacio Rental Range (Php/month) Average Size (sq m) Source: Colliers International Philippines Research

Capital value growth increases

Capital Values

Premium secondary capital values enjoyed faster growth than rents during the period. Average values in the Makati CBD grew by 1.2% QoQ to PHP 136,534 while Fort Bonifacio values increased by 1.1% QoQ with an average price of PHP 133,175 per sq m, maintaining a PHP 3,000 difference between the two locations. Colliers expects secondary prices for both locations to appreciate between 4 and 5% by next year. On the other hand, the average capital value of residential units in Rockwell Center amounted to PHP 140,177 per sq m and is predicted to grow between 3 and 4% in 1Q 2015. Source: Colliers International Philippines Research

Metro Manila Residential Condominium Comparative Luxury 3BR Capital Values (PHP / sqm) LOCATION

Makati CBD

4Q 2013

1Q 2014

% CHANGE (QoQ)

1Q 2015F

%CHANGE (YoY)

90,675 - 179,140

91,715 - 181,350

1.21

94,150 - 188,715

3.59

Rockwell

109,315 - 168,220

110,240 - 170,115

1.01

112,950 - 175,685

2.95

Fort Bonifacio

102,230 - 161,290

103,200 - 163,150

1.07

107,600 - 169,785

4.14

Source: Colliers International Philippines Research

8

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International


Retail Retail developers bullish in the sector, Ongoing renovations for mall spaces forces an increase in vacancy introduces record level of supply Metro Manila retail stock reached 5.7 million sq m, increasing by 224,330 sq m due to five new projects completed from October 2013 to March 2014. More than 190,000 sq m of retail supply was delivered in the first quarter alone, the highest level of supply in a single quarter since Trinoma Mall was launched in 2007 (189,000 sq m GLA). By year-end, close to 150,000 sq m will be added to the inventory. Retail developers are exploiting the increasing purchasing power of consumers by setting up retail areas with smaller configurations. Apart from putting retail areas in integrated mixed-use developments, developers have now shifted to constructing district and neighborhood centers as a means to capture particular segments of the market. Out of the five new projects completed, three were district and neighborhood centers intended to serve a certain location. These include Century City Mall in Kalayaan Avenue (17,000 sq m GLA), SM City BF in Paranaque (33,750 sq m GLA), and Fairview Terraces in Fairview (49,580 sq m GLA). Estancia Mall, a high end retail development in Ortigas & Co.’s Capitol Commons project in Pasig City, is set to open in the latter part of 2014, with a majority of its space to be occupied by Store Specialists, Inc. brands. In other regions, DoubleDragon Properties, a listed real estate company owned by Injap Investments, Inc. and Tony Tan-Caktiong of Jollibee Foods Corp., unveiled their latest community retail project, CityMall, a chain of malls with an average floor area of 7,000 sq m. The company aims to deliver 45 CityMalls in Visayas and Mindanao in the next two years.

Vacancy rates in both super-regional and regional malls in Metro Manila increased to 1.5% in 1Q 2014, with an occupancy rate of 98.5 from 98.7% recorded in the previous quarter. Some shopping malls are undergoing major renovation in their retail spaces, forcing an artificial increase in vacancies. Once renovations are completed, Colliers expects that the spaces will be easily taken up, thereby returning to high 99% occupancy levels. The influx of new retail supply, amounting to 350,000 sq m, will increase vacancy rates in Metro Manila. In the medium term, vacancy rates are expected to fall as these spaces are being taken up due to strong interest from local and foreign businesses to operate in the country. Foreign brands are particularly interested in the country as a viable location due to the increasing purchasing power of consumers.

Metro Manila Comparative Retail Vacancy Rates (%) 4Q2013

1Q2014

Super Regional

1.31

1.41

Regional

1.50

1.88

Source: Colliers International Philippines Research

Overall, retail developers are confident in pursuing retail projects because of strong domestic consumption. In Metro Manila alone, approximately 340,000 sq m of new retail space is currently being targeted to be delivered by 2016.

Retail Stock Metro Manila CLASSIFICATION

Super Regional

4Q 2013

1Q 2014

%CHANGE (QoQ)

1Q 2015F

%CHANGE (YoY)

3,533,635

3,657,635

3.51

3,657,635

0.00

934,983

934,983

0.00

1,049,983

12.30

District/Neighborhood

1,078,278

1,144,858

6.17

1,188,641

3.82

All Levels

5,546,896

5,737,476

3.44

Regional

Source: Colliers International Philippines Research

9

Research & Forecast Report | 1Q 2014 | Philippines | Colliers International

5,896,259

2.77


Retail rents experience steady growth

Makati Monthly Rents

Rental rates in Ayala Center accelerated by 1.5% QoQ to an average of PHP1,350 per sq m. Meanwhile, rental rates in Ortigas Center increased by 1.3% QoQ, with an average rent of PHP1,160 per sq m. Rental rates in both locations are projected to grow between 4 and 6% by 1Q 2015.

Source: Colliers International Philippines Research

Ortigas Monthly Rents

Source: Colliers International Philippines Research

10 Research & Forecast Report | 1Q 2014 | Philippines | Colliers International


Spending Indicators

Consumer sentiment increases, drives domestic consumption

8%

485 offices in 63 countries on 6 continents

$2.1

billion in annual revenue

1.46

billion square feet under management

United States: 146 Canada: 44 Latin America: 25 Asia: 38 ANZ: 148 EMEA:

15,800 professionals and staff

7% 6% 5% 4%

Source: Colliers International Philippines Research

Authors: Romeo Arahan Research Analyst | Philippines +63 2 888 9988 romeo.arahan@colliers.com

84

Colliers International Philippines 10F Tower 2 RCBC Plaza Ayala Ave. cor. Sen. Gil Puyat Ave. Philippines TEL +63 2 888 9988

Contributors: Julius Guevara Director | Research & Advisory julius.guevara@colliers.com David A. Young Managing Director| Philippines david.a.young@colliers.com

Copyright Š 2014 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.

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2%

2000

3% 1999

Despite an increasing inflation rate, domestic consumption remained strong due to remittances from Overseas Filipino Workers and an expanding industrial base. Data from the Philippine Statistics Authority showed that household spending expanded by 5.6% in FY2013. Noticeable increases in spending for communications (+6.8%), restaurants and hotels (+5.7%), and transportation (+6.6%) indicate categories in which Filipinos allocated their incomes apart from the basic necessities in 4Q 2013. This reflects an increasing purchasing power brought about by several sectors, such as the BPO, financial, and trade sectors. The increasing purchasing power coincides with a moderately improving consumer sentiment. Based on the latest survey of the Central Bank, consumer sentiment grew in 1Q 2014 due to favorable prospects in the economy, higher income, stronger business activity, and increased investments.


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