Research & Forecast Report Philippines 2Q 2014
Real estate: key driver for slowerthan-expected economic growth The Philippine economy started at a slower pace, growing by 5.7% YoY in 1Q 2014. Real estate was identified as one of the top contributors in the quarter, expanding by 9.2%, while exports rebounded from its negative growth last year. While inflation increased by 110 basis points, domestic consumption remained to be buoyed by low interest rates and increasing OFW remittances. To establish momentum, the government plans on increasing public spending while adjusting key monetary policies to reach its target of 6.5 – 7.5% growth by year-end.
Office Five new buildings were completed in the period, all of which are located outside the Makati CBD. Close to 130,000 sq m of new office space are delivered, with more than 270,000 sq m slated for completion by year-end. The lack of new office space in Makati CBD benefits other locations, particularly Fort Bonifacio, as it is set to capture a significant share in the office supply in the next three years. Overall vacancy in the Makati CBD decreased due to the fast take-up of Zuellig Building and V Corporate Center. As a result, office rents in the area established its highest increase in the last four quarters.
Accelerating success.
Residential Two new projects were delivered in 2Q2014, amounting to 712 units. By end-2014, an additional 5,000 new units are expected for delivery, majority of which are located in the Makati CBD, Fort Bonifacio, and Ortigas Center. Residential vacancy in the Makati CBD eased in the period, decreasing by 50 basis points despite more unit owners deciding to offer units in the leasing market. Despite the relief, rental growth in the area remained stable.
Hotel & Leisure Close to 900 hotel rooms are completed in 1H2014 with about 22% of the forecasted 4,015 rooms slated for delivery by the end of 2014. More projects are expected to be delivered in the next three years with an average of 3,700 rooms annually. While Entertainment City is seen to capture a lion’s share of the supply, more international brands are expanding their presence in various locations within Metro Manila, particularly the cities of Taguig, Pasay, and Quezon. Despite the increase in supply, hotel occupancy remained flat in FY 2013. The situation thereby put pressure on hotel room rates.
Industrial Industrial supply slightly decreased in 1H2014, as some developers adjusted their land area applications with the Philippine Economic Zone Authority. Nonetheless, demand continued to be strong as vacancy rates in major industrial zones in Cavite, Laguna, and Batangas decreased significantly. Consequently, average land lease hold rates enjoyed a 21.4% increase while lease rates for warehouse and logistics facilities improved by 3.2%
Economic Growth Indicatorsa Economic Indicators 2007
2008
2009
2010
2011
Gross National Product
6.10
6.00
6.50
8.40
3.20
6.40
7.50
7.60
Gross Domestic Product
6.60
4.20
1.10
7.60
3.90
6.80
7.20
5.70
Personal Consumption Expenditure
4.60
3.70
2.30
3.40
6.10
6.60
5.70
5.80
Government Expenditure
2012
2013
1Q14
6.90
0.30
10.90
4.00
1.00
15.50
7.70
2.00
(0.50)
23.40
(8.70)
31.60
8.10
(5.30)
29.90
7.70
Exports
6.70
(2.70)
(7.80)
21.00
(4.20)
8.50
(1.10)
12.60
Imports
1.70
1.60
(8.10)
22.50
0.20
4.90
5.40
8.00 0.90
Capital Formation
AHFF
4.70
3.20
(0.70)
(0.20)
2.70
2.80
1.10
Industry
5.80
4.80
(1.90)
11.60
2.30
7.30
9.30
5.50
Services
7.60
4.00
3.40
7.20
5.10
7.40
7.20
6.80
b
Average Inflationc Budget Deficit (PHP Billion) PHP:US$1 (Average) Average 91-day T-Bill Rates
2.90
8.30
4.10
3.90
4.60
3.20
3.00
4.10
(12.40)
(68.10)
(298.50)
(314.40)
(197.70)
(242.80)
(164.10)
(84.10)
46.10
44.70
47.60
45.10
43.31
42.09
42.45
44.87
3.40
5.20
4.00
3.70
1.37
1.58
0.32
1.05
at constant 2000 prices b Agriculture, Hunting, Forestry, Fishing c at constant 2006 prices
Source: Philippine Statistical Authority, Bangko Sentral ng Pilipinas, Bureau of Treasury
a
Economy off to a slow start, grows at 5.7% The Philippine economy started 2014 at a slower pace than last year, growing by 5.7% in 1Q 2014, due to the lingering effects of Typhoon Haiyan. While it was expected that government spending would increase in the period to aid in rehabilitation efforts, the Philippine Statistical Authority reported a meager 2% growth, significantly lower than 7.7% growth reported in FY 2013. Nonetheless, the country’s growth was the second highest in Southeast Asia, trailing behind Malaysia (+6.2%), but ahead of Indonesia (+5.2%), Singapore (+5.1%), Vietnam (+5.0%), and Thailand (-0.6%). The economy benefitted from strong performances in the services and industrial sectors, particularly in mining and quarrying (+12.8%), real estate, renting, and business activities (+9.2%), and transport, storage and communications (+8.9%). Exports posted higher growth rates (+12.6%) after last year’s lackluster performance as the manufacturing and business process outsourcing (BPO) sectors expanded to service increasing demand from overseas. Consequently, imports also rose (+8.0%) to sustain a more active export sector while catering to the increasing domestic consumption base. While the inflation rate increased in April - June 2014 (4.3%), domestic consumption remained a vital contributor to the economy aided by low lending rates (4.4 - 6.8%) and increasing OFW remittances (+5.7% YoY).
The government is taking necessary actions to ensure macroeconomic stability in the medium term by increasing their expenditures while maintaining sound monetary policies. In June, the Central Bank maintained its policy rates at its lowest levels; however, SDA rates increased by 25 basis points. The measure was taken to offset inflation risks due to ample liquidity in the market. Meanwhile, several big ticket infrastructure projects are expected to be bid for in the PublicPrivate Partnership Program by year-end to spur further economic expansion. As a result, the government is confident that the 6.5 - 7.5% annual GDP growth is attainable.
OFW Remittancesa
Source: Bangko Sentral ng Pilipinas
2
Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
a
as of May 2014
Land values appreciate despite slower growth Despite slower-than-expected economic growth in 1Q 2014, land values continued to increase in 2Q 2014. Land values in the Makati CBD appreciated by 3.6%, with an average price of PHP 366,425 per sq m, while land values in Fort Bonifacio increased by 2.0%, amounting to an average price of PHP 271,290 per sq m. A similar growth rate was reported in Ortigas, with land values amounting to PHP 149,365 per sq m. Colliers forecasts that both Makati CBD and Fort Bonifacio land values will appreciate by 8.4% by next year, while Ortigas land values are expected to grow by 5.7%.
Land Values
Source: Colliers International Philippines Research
Comparative Land Values (Php / sqm) LOCATION
1Q 2014
Makati CBD
2Q 2014
% CHANGE (QoQ)
2Q 2015F
% CHANGE (YoY)
328,110-379,480
340,085-392,765
3.57
356,175-438,200
8.40
Ortigas Center
111,345-181,575
113,570-185,160
1.98
122,935-192,680
5.65
Fort Bonifacio
215,755-316,340
220,070-322,510
1.97
237,800-350,380
8.40
Source: Colliers International Philippines Research
Total residential licenses remain stable after surge in high rise residential applications
HLURB Licenses 500,000
400,000
Licenses to sell issued by HLURB increased by 22.3% YoY from January to June 2014, due to double-digit growth in memorial park (+74.3%) and high-rise residential (+26.6%) project applications. Residential projects were relatively stable during the period, increasing by 1.5% due to notable decreases in the socialized (-5.1%), low cost (-14.4%), and mid-income (-11.8%) housing segments. The decline in the critical housing segments may lead to a delay in reaching the preliminary target of the government of providing one million housing units by 2016. Meanwhile, the number of new commercial condominium licenses decreased by 46% to 662 units during the period.
300,000 200,000 100,000 0
Source: Housing and Land Use Regulatory Board
HLURB Licenses to Sell SEGMENT
JAN - JUN '13
JAN - JUN '14
% CHANGE YoY
Socialized Housing
19,293
18,311
-5.1%
Low Cost Housing
27,151
23,252
-14.4%
Mid Income Housing
13,548
11,949
-11.8%
High Rise Residential
29,310
37,095
26.6%
662
-45.6%
Commercial Condominium Farmlot Memorial Park
1,216 37,542
65,426
74.3%
Industrial Subdivision
94
93
-1.1%
Commercial Subdivision
81
17
-79.0%
156,805
22.3%
Total (Philippines)
128,235
Source: Housing and Land Use Regulatory Board
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Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Office Lack of new office supply in Makati CBD benefits Fort Bonifacio
Makati CBD vs. Metro Manila Office Stock
Approximately 480,000 sq m of new office space is slated for delivery by year-end, with close to 45% already introduced as of 1H 2014. In 2Q 2014, five office buildings comprised of almost 130,000 sq m of office space were completed. The first three buildings, Cyberscape Alpha (35,440 sq m) and Beta (32,750 sq m), and SM Cyber West Avenue (20,430 sq m), cater to BPO operations, while RCBC Savings Bank Corporate Center (28,160 sq m) and Marco Polo Manila Offices (7,770 sq m) are geared towards traditional office users. The dearth of new office supply in the Makati CBD provides opportunities for other locations to capture a significant share of the Metro Manila market. Fort Bonifacio has been an evident beneficiary of such a scenario. From 30,000 sq m of inventory in 2005, Fort Bonifacio office supply currently stands at 957,000 sq m. By 2017, Colliers estimates that Fort Bonifacio will surpass Ortigas Center as the largest CBD after the Makati CBD with close to 1.6 million sq m of office space, an increase of 66%. Emerging CBDs are also on the radar, as Aseana City in the Reclamation Area and Vertis North in Quezon City are expected to contribute a significant amount of office space, further reducing Makati CBD’s share of the market. This unprecedented level of new supply, an average of 470,000 sq m annually in the next two years, is driven by strong demand coming from the BPO industry and multinational firms looking to expand their operations in the country.
Office demand accelerates as Makati CBD vacancy declines to 2% After a sluggish take-up in the previous quarter, overall vacancy in the Makati CBD significantly decreased by half, from 4.2% to 2.1% due to strong take-up in available office spaces. All office grades experienced a decrease in vacancy with Premium and Grade B offices contributing the highest take-up during the period, due to lease transactions in Zuellig Building and V Corporate Center. Similarly, Grade A vacancy decreased to 6.8%. In the next twelve months, Colliers projects overall vacancy to decrease further to 2.0% due to continued strong demand in the area.
Source: Colliers International Philippines Research
Makati CBD Office Supply and Demand
Source: Colliers International Philippines Research
Makati CBD Comparative Office Vacancy Rates (%) 1Q 2014
2Q 2014
2Q 2015F
Premium
1.89
0.56
0.22
Grade A
7.2
6.79
4.3
Grade B & Below
3.77
1.01
1.71
All Grades
4.23
2.14
2.03
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
125,999
75,072
17,378
1,378,799
Fort Bonifacio
929,810
69,529
119,096
250,783
1,369,218
Eastwood
300,264
-
-
Alabang
305,707
75,036
-
16,200
396,943
Ortigas
-
-
2,850,668
300,264
Other Locations**
1,027,220
187,702
255,313
202,365
1,672,600
Total
6,551,217
481,068
449,481
486,726
7,918,492
Source: Colliers International Philippines Research
4
**
* revised figures Manila, Pasay, Mandaluyong, Quezon City and other fringe locations
Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Office rents rise, post highest growth in four quarters Rental rates in the Makati CBD were considerably higher than in the last quarter due to the lack of available office space. Premium rents escalated by 4.0% QoQ, costing an average of PHP 1,100 per sq m. Grade A rents recorded a 3.6% QoQ increase, with an average rent of PHP 818 per sq m. Meanwhile, Grade B rents posted the highest increase at 8.9% QoQ, resulting in an average rent of PHP 615 per sq m. Colliers predicts that rental rates in the area will appreciate between 6 and 8% over the next twelve months.
Comparative Rental Rates (Php/sq m/month) Makati CBD (based on net usable area) GRADE
Premium
1Q 2014
2Q 2014
% CHANGE (QoQ)
2Q 2015F
%CHANGE (YoY)
890 - 1,225
930 - 1,270
4.02
990 - 1,360
6.91
Grade A
610 - 970
650 - 985
3.61
695 - 1,055
6.87
Grade B
475 - 655
515 - 715
8.86
550 - 770
6.92
Source: Colliers International Philippines Research
Capital value growth escalates but continues to lag behind rental rate growth Capital values of offices in the Makati CBD benefitted from a significant increase in rents this quarter. Average capital values for Premium buildings grew by 3.3% QoQ, with an average value of PHP 146,280 per sq m. A similar growth rate was recorded for Grade A buildings at 3.4% QoQ. As such, a typical Grade A building would cost PHP 93,190 per sq m on average. On the other hand, Grade B capital values amounted to PHP 66,595 per sq m, a 5.0% increase QoQ. Colliers predicts capital values for all grades in the district to appreciate by 5 - 6% by next year.
Makati CBD Office Capital Values
Source: Colliers International Philippines Research
Comparative Office Capital Values (Php / sq m) Makati CBD (based on net usable area) GRADE
1Q 2014
2Q 2014
% CHANGE (QoQ)
2Q 2015F
%CHANGE (YoY)
Premium
137,960 - 145,150
141,680 - 150,885
3.34
148,820 - 158,360
5.00
Grade A
75,965 - 105,725
77,995 - 109,820
3.37
82,195 - 115,795
5.42
Grade B
53,885 - 73,010
55,800 - 77,390
4.96
58,600 - 80,925
4.76
Source: Colliers International Philippines Research
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Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Residential
Makati CBD Residential Stock
Major CBDs to house substantial residential supply by 2017 Out of the expected 7,400 units to be completed by year-end, only 30% have been delivered as of 1H 2014, leading to a total new supply of 2,210 units. This quarter, two projects were completed, amounting to 712 units. The projects include Edades Tower and Garden Villas (441 units) in Rockwell Center and Sonata Private Residences Tower 2 (271 units) in Ortigas Center.
Source: Colliers International Philippines Research
Forecast Residential New Supply LOCATION
Makati CBD Rockwell
END-2013
17,656
2014F
1,410
2015F
2016F
2017F
TOTAL
2,017
1,485
26,220
3,652
3,718
441
-
-
346
4,505
17,585
3,142
4,386
4,895
2,979
32,987
Ortigas
11,921
1,711
2,756
1,227
573
18,188
Eastwood
6,830
718
-
988
-
8,536
Total
57,710
7,422
10,794
9,127
5,383
90,436
Fort Bonifacio
Source: Colliers International Philippines Research
With more than 30,000 units expected to be delivered by 2017, total expected inventory in the five major submarkets that Colliers monitors will amount to 90,440 units. The three major CBDs – Makati CBD, Fort Bonifacio, and Ortigas Center – are the preferred locations for these developments, as developers attract buyers by providing a substantial number of smaller unit cuts in these projects. While the buyer’s motivations are mainly for investment purposes, a handful of units are targeted towards end-user and expatriate requirements with the hope of mitigating the lack of multi-bedroom units.
Makati CBD vacancy relaxes, trims down to 10.4% The leasing market in the Makati CBD experienced some relief in 2Q 2014, as overall vacancy decreased slightly by 50 basis points to 10.4%, due to increasing occupancy rates in Grade A and Grade B units. On the other hand, Premium unit vacancy increased to 5.3% due to some unit owner-users deciding to vacate their units and offer them in the leasing market. Meanwhile, multi-bedroom units in the Premium projects continued to enjoy virtually full occupancy in the period. Overall vacancy in the Makati CBD is expected to rise to 11.7% in the next twelve months, as more than 3,500 units will be available in the market.
6
Makati CBD Comparative Residential Vacancy Rates (%) 1Q 2014
2Q 2014
Luxury
4.6
5.3
Others
11.7
11.1
All Grades
10.9
10.4
Source: Colliers International Philippines Research
Makati CBD Residential Vacancy
Source: Colliers International Philippines Research
Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
2Q 2015F
11.7 *
revised figures
Residential rents remain stable While vacancy in the Makati CBD rebounded, rental rate growth for premium three-bedroom units was relatively stable, growing by 1.1% QoQ. This translates to an average monthly rent of PHP 820 per sq m, or PHP 205,000 for a 250 sq m unit. Rental rates in Fort Bonifacio grew at the same rate, with an average rate of PHP 825 per sq m. Premium rents for both locations are expected to grow by 4 to 6% in the next twelve months, with both locations reaching parity in their rental rates. Meanwhile, premium rental rates in Rockwell amounted to PHP 885 per sq m, growing by 1.0% from the previous quarter. Rental rate growth is projected at 4 to 5% by next year.
Makati CBD, Rockwell, Fort Bonifacio Prime 3BR Units Residential Rents
Source: Colliers International Philippines Research
Metro Manila Residential Condominiums Comparative Luxury 3BR Rental Rates (PHP / sq m / month) 1Q 2014
2Q 2014
Makati CBD
LOCATION
555 - 1,065
560 - 1,080
% CHANGE (QoQ)
1.12
2Q 2015F
%CHANGE (YoY)
585 - 1,140
5.12
Rockwell
725 - 1,025
740 - 1,030
Fort Bonifacio
610 - 1,020
625 - 1,025
1.03
770 - 1,080
4.60
1.10
650 - 1,075
4.73
Source: Colliers International Philippines Research
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
170,000
275,000
210
285
330
120,000
140,000
160,000
185
195
210
160,000
220,000
250,000
185
220
295
130,000
170,000
210,000
140
200
290
100,000
200,000
250,000
115
250
320
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
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Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Makati CBD Comparative Residential Lease Rates for Exclusive Villages (Php / month)
Capital Values
3BR - 4BR, Unfurnished to Semi-Furnished VILLAGE
LOW
HIGH
Forbes Park
300,000
500,000
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
Source: Colliers International Philippines Research
Capital values rises on pace with rental growth Capital values in premium locations grew on pace with rental rate growth during the period. Average values in the Makati CBD appreciated by 1.1% QoQ to PHP138,085 per sq m while Fort Bonifacio values increased by 1.3% QoQ to PHP134,935 per sq m. On the other hand, Rockwell capital values amounted to PHP141,705 per sq m, growing by 1.1% from the previous period. For all locations, Colliers expects annual capital value growth somewhere between 3 and 5%.
Metro Manila Residential Condominiums Comparative Luxury 3BR Capital Values (PHP / sqm) LOCATION
Makati CBD Rockwell Fort Bonifacio
2Q 2014
% CHANGE (QoQ)
2Q 2015F
%CHANGE (YoY)
91,715 - 181,350
1Q 2014
93,000 - 183,165
1.13
96,805 - 192,870
4.89
110,240 - 170,115
111,345 - 172,070
1.09
113,810 - 177,200
2.68
103,200 - 163,150
104,400 - 165,465
1.32
108,040 - 171,400
3.55
Source: Colliers International Philippines Research
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Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Hotel & Leisure More hotel brands enter PH; supply to swell two-fold by 2017 By the end of 2014, approximately 4,015 new hotel rooms are expected in Metro Manila, bringing the hotel room stock to 21,532 (+22.9% YoY). Only 20% of the projected hotel rooms were delivered in 1H 2014, brought about by four projects, namely Tune Hotels Ortigas (182 rooms), Azumi Boutique Hotel (187 rooms), Marco Polo Ortigas (313 rooms) and Citadines Salcedo Makati (215 rooms). The bulk of the inventory will be delivered in the latter half of the year, with close to 1,660 rooms located in Paranaque City. While 75% of the rooms will be located in Entertainment City, two new hotel projects will be located outside the area. One particular project, Go Hotels Paranaque (199 rooms), is expected to attract budget travellers who want to temporarily stay near the airport terminals. From 2014 to 2017, an average of 3,700 rooms will delivered annually in Metro Manila. While 56% of the rooms will be located in Entertainment City, a substantial number will be constructed in other locations such as Pasay City, Quezon City and Taguig City. The three locations alone will contribute 3,600 rooms that will cater to business travellers, with the majority of the hotels to be operated by international brands. As Fort Bonifacio rises into dominance as the next business district after Makati, international brands such as Shangrila, Grand Hyatt, and Ascott have established their presence in the area. Furthermore, Sheraton, Hilton, and Conrad will be locating in Pasay City in anticipation of the influx of travellers to Aseana City and Newport City. Meanwhile, the emergence of hotel developments in Quezon City is seen as a strategy to boost business activities in the area, with the likes of Microtel, Ayala Hotels, and Novotel operating soon in the emerging business areas of Cubao, Vertis North and UP Technohub.
Metro Manila Hotel Room Stock
Source: Department of Tourism, Colliers International Philippines Research
Forecast on New Hotel Room Supply
Source: Colliers International Philippines Research
Occupancy remains flat despite record number of tourist arrivals The Department of Tourism reported 4.7 million foreign tourist arrivals in the country in 2013, a 9.6% increase from the 4.3 million tourist arrivals in 2012. Despite the surge in tourist arrivals, the 2013 average occupancy rate in Metro Manila remained flat at 67%, while the average length of stay was unchanged at 2.48 nights. As of May 2014, foreign tourist arrivals grew slightly at 2.5% YoY to 2.1 million. If the trend continues, Colliers estimates that the average hotel occupancy rate will decrease to 63% by year end, as the overwhelming level of hotel room supply in the latter half of the year will provide greater accommodation options to travellers visiting the country, thereby creating greater competition among hotel operators.
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Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
Occupancy and new supply pressure hotel rates The substantial number of new hotel rooms in Metro Manila coupled by the occupancy performance the previous year affected hotel room rates as of 1H 2014. Average published rates for five-star rooms enjoyed a 4.8% HoH increase, to US$349 per night, while rates for three-star rooms increased by 8.1% HoH to US$174. In contrast, average four-star room rates declined significantly by 13.2% HoH to US$237. This can be seen as a response of hotel operators to falling occupancy rates registered at four-star hotels in 2013 (60.1%), aimed at attracting a substantial number of travellers to stay in their rooms. Corporate rates were also affected, as rates for four-star and three-star rooms decreased by 26.3 and 16.7%, respectively. Meanwhile, corporate rates for five-star rooms increased by 3.8% HoH, to US$244 per night.
Visitor Arrivals
Source: Department of Tourism, Colliers International Philippines Research
Metro Manila Average Hotel Room Rates PUBLISHED RATES (US$) CLASS
CORPORATE RATES (US$)
2H2013
1H2014
2013
5-Star
333
2014
349
235
244
4-Star 3-Star
273
237
224
165
161
174
138
115
Source: Department of Tourism, Colliers International Philippines Research
Industrial Industrial supply shrinks in Cavite, Laguna, and Batangas
Philippine Industrial Supply Stock by Region of Highest Supply (Manufacturing)a
As of 1H 2014, the land area of manufacturing economic zones in the Philippines registered with the Philippine Economic Zone Authority (PEZA), decreased slightly by 0.2% HoH to 55,685 ha due to adjustments in applications made by industrial park developers in Batangas and Laguna. While Carmelray Industrial Park and First Philippine Industrial Park increased their land area application by 22.1 ha, Light Industry & Science Park IV decreased their application by 73%, resulting in a total of 68.9 ha covered by PEZA. As a result, supply stock in Cavite, Laguna, and Batangas shrunk by 2.5% HoH, to 6,408 ha.
Industrial Supply Stock (Manufacturing)a 2H2013 HECTARES
1H2014
Batangas
3,039.45
2,862.77
-5.8%
Cavite
2,123.87
2,123.87
0.0%
Laguna
1,411.03
1,421.14
0.7%
6,574.35
6,407.78
-2.5%
REGION IV
Total
CHANGE (HoH)
Source: Philippine Economic Zone Authority
Source: Colliers International Philippines Research
10 Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
a
PEZA accredited economic zones as of March 2014
Strong demand drives vacancy to decline The decrease in land area did not deter demand, as the average industrial vacancy rate in Cavite, Laguna and Batangas declined by close to 3.0% in 1H 2014, to 9.8%. While vacancies in all locations decreased, Batangas posted the highest decline of 26.6% HoH, to 12.4%. Batangas benefitted from existing infrastructure critical for manufacturing operations, such as an international port and expressways connected to Metro Manila. Cavite industrial vacancy also decreased substantially by 290 basis points, to 13.4%, despite higher vacancies recorded in Suntrust Ecotown Tanza. Laguna remains highly preferred as its vacancy reached 5.6%, the lowest among three locations.
Industrial Vacancy Rates (Manufacturing)a REGION IV
a b
2H2013
1H2014
Batangas
16.86
12.37
Cavite
16.27
13.37
Laguna
6.02
5.56
Totalb
12.77
9.79
PEZA accredited economic zones Revised and Rebased
Source: Colliers International Philippines Research
Region IV Industrial Land Values
Industrial rates experience steady growth Average land leasehold rates in Cavite, Laguna, and Batangas continue to improve significantly during the period. From an average of PHP35 per sq m per month last period, land leasehold rates increased by 21.4% to PHP43 per sq m. Average lease rates for warehouses and logistics facilities likewise escalated by 3.2% HoH, to PHP180 per sq m. Increasing manufacturing activities in the country would result in lease rates for warehouses growing from 6 to 8% by next year. Meanwhile, average land values in Cavite, Laguna, and Batangas increased by 3.1% HoH to PHP4,020 per sq m. Colliers projects land values to appreciate by 5 to 6% next year, as strong demand for industrial land would put pressure on prices.
OFW remittances drive consumer spending to increase With OFW remittances growing by 5.7% YoY as of May 2014, strong domestic consumption was sustained despite a 1.1% increase in inflation during the first quarter. Allocations for basic commodities continued to increase, with food, housing, water and electricity growing by an average of 4.6%. Spending on leisure activities, such as recreation and culture, and restaurants and hotels, had more pronounced growth in 1Q 2014, at 6.4 and 7.3% respectively. In addition, data from the Chamber of Automotive Manufacturers of the Philippines (CAMPI) reported a 69.2% overall increase in car sales as of June 2014. Passenger car sales almost doubled with 54,846 units, a 97.0% YoY change from the 27,838 units sold in the same period last year. This scenario is attributed to increasing incomes of the typical Filipino consumer, allowing him to gain greater purchasing power for other products and services.
Source: Colliers International Philippines Research
Industrial Supply Stock (Manufacturing)a REGION IV
a
2H2013 (PHP/SQ M/MO)
1H2014 (PHP/SQ M/MO)
Lease Hold (Land)
35.00
42.50
Lease Rates (SFBb)
174.50
180.00
PEZA accredited economic zones
Source: Colliers International Philippines Research
Consumer Spending Growth Rate
Source: Colliers International Philippines Research
11 Research & Forecast Report | 2Q 2014 | Philippines | Colliers International
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Primary Author: Romeo Arahan Research Analyst | Philippines +63 2 888 9988 romeo.arahan@colliers.com Contributors: Julius Guevara | Director David A. Young | Managing Director
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