THE FUTURE OF CLARK: THE PHILIPPINES’ NEXT TOP INVESTMENT AND BPO DESTINATIONMay 2014

About CBRE

3CBRE PHILIPPINES

CBRE GROUP INC.

1. Includes affiliate offices as of December 31, 2012.2. As of September 30, 2013.

GLOBAL LEADERSHIP WITH BROAD CAPABILITIES

#1 leasing#1 investment sales#1 outsourcing#1 appraisal and

valuation#1 commercial mortgage

brokerage and servicing firm#1 commercial real estate

investment manager

SCALE AND DIVERSITY

400+ offices in over 60 countries1

Serves approximately 80% of the Fortune 100

$189.8billion of transaction activity in 2012

3.3 billion square feet of property and corporate facilities managed1

$87.6 billion of real estate investment assets under management2

$6.8 billion of development projects in process/pipeline2

LEADING GLOBAL BRAND

S&P 500 Only commercial real estate services company in the index

FORTUNE Only commercial real estate services company in the Fortune 500

The Lipsey Company #1 brand for 12 consecutive years

IAOP #1 real estate outsourcing firm for four consecutive years

Newsweek #1 real estate company in “green” rankings

FORTUNE most admired real estate services firm

Euromoney global real estate advisor of the year two consecutive years

Largest and Fully Integrated Commercial Real Estate Services Firm.

4CBRE PHILIPPINES

CBRE PHILIPPINESAn Affiliate of the CBRE Global Network

No. 1 in the Philippines

Awards & Certifications• Only company to have won the Worlds

Best Lettings/Leasing Agency Award from the prestigious International Property Awards for 2 consecutive years

• Most recognized real estate services firm in the country

• Only commercial real estate services firm with ISO-certified business lines: Corporate Agency & Brokerage, Investment Properties & Capital Markets, Asset Services

Awards: total of 16 from 2012-2014• Best International Lettings Agency• Best Lettings Agency Asia Pacific &

Philippines• Best International Property Consultancy

Website• Best Property Consultancy Website Asia

Pacific and Philippines• Best Property Consultancy Marketing• Best Real Estate Agency Marketing• Best Property Consultancy• Best Real Estate Marketing

CBRE PhilippinesEstablished in 1994, headquartered in

Manila with satellite office in Cebu• 20 years of proven track record

• 750 + staff nationally

CLARK

5CBRE PHILIPPINES

CBRE PHILIPPINESNATIONWIDE REACH

6CBRE PHILIPPINES

CBRE PHILIPPINES

CBRE PHILIPPINES SALES & LEASINGTRANSACTION VALUE 2013

PHP 8.3 BillionCAPITAL MARKETS INVESTOR ADVISORY

OF OVER USD 20 Billion

20 YEARS OF PROVEN TRACK RECORD

An Affiliate of the CBRE Global NetworkNo. 1 in the Philippines

Market View

8 CBRE PHILIPPINES

Robust Growth of Central LuzonREGIONAL DEVELOPMENT OF CLARK

On a regional level, Central Luzon ranks3rd on the top contributors to the entirecountry’s economic growth.

REGIONAL CONTRIBUTION TO GDP (%)

Source: PSA

9 CBRE PHILIPPINES

ECONOMIC OVERVIEWIndustry and Manufacturing

78%

8%2%

12%

Region III Region IV

Region VII Others

REGIONAL DISTRIBUTION OF MANUFACTURING ZONES Bulk of the economic growth came from the

Industry Sector which composes 42%. The samesector grew at rate of 5.4% in 2012.

42%

41%

17% Industry

Services

SHARE TO THE REGION’S GDP

10 CBRE PHILIPPINES

Agriculture and TourismECONOMIC OVERVIEW

57%

Clark

Subic

Aurora

Bataan

Bulacan

Nueva Ecija

Pampanga

Tarlac

Zambales

FOREIGN VISITOR ARRIVAL PROFILE BY PROVINCE

The agriculture sector grew at a strongrate of 9.1% well beyond the Industryand Service Sectors.

Central Luzon has been continuously onthe upswing in terms of visitor arrivalsmaking this sector a catalyst of growth.

11 CBRE PHILIPPINES

Services and the BPO IndustryECONOMIC OVERVIEW

TALENT POOL (Pampanga)

Literacy Rate: 93.94%Number of graduates (2012 - 2013):

9,869Discipline groups with the highest

number of graduates:Business Administration and Related –

32.20%

Medical and Allied – 20.54%

IT-Related Disciplines – 17.49%

Engineering and Technology – 11.46%

Number of Higher Education Institutions:

2,883 (Region 3)

IT-BPO COMPANIES

iQor/ Cyber City Teleservices

Sutherland Global ServicesStreamNCO/EGSWallem Innovative SolutionsStartekSource HOV

The young andeducated demographicprofile draws more BPOcompanies to locate inthe area.

12 CBRE PHILIPPINES

STRATEGIC LOCATION

High Accessibility and Connectivity from Land,Air, and Sea

Multi-point land accessibility from

NLEX

SCTEX

TPLEX

13 CBRE PHILIPPINES

Laoag City104,904

Cabanatuan272,676Pangasinan

2,776,862

Bulacan2,924,433

Tarlac1,273,240

Baguio318,676

Zambales534,443

Pampanga2,014,019

CENTRAL TO NORTHERN LUZON

POPULATION

MARKET SNAPSHOT

Source: 2010 Census

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Campus-typeDevelopments

HISTORICAL OFFICE TIMELINE

2007 PeakingRents

Highest Achieved Rents in Makati

2009RentalDecline

2008Falling

Occupancy

Build-to-SuitDevelopments

2010Stable Rents

RisingDemand

2011Rising Development

in Fringes

Green BuildingsFlight to Quality

2011Rental Recovery

DecliningVacancy

2012Supply

Pressures

BPO Expansionto the countryside

2007 2013

15 CBRE PHILIPPINES

Makati: 26

Hong Kong Core Central: 208

Beijing CBD: 184

New Delhi CBD: 115

Seoul CBD: 73

Taipei: 60

Jakarta: 72

Singapore: 100

Kuala Lumpur: 51

Ho Chi Minh: 54Bangalore: 33

Bangkok: 33

Rank Business District Rate 1 Makati 262 Bangkok 313 Bangalore 33

4 New Delhi – Gurgaon 38

5 Kuala Lumpur 516 Hanoi 54

7 Ho Chi Minh City 54

8 Taipei 609 Guangzhou 66

10 Mumbai – Nariman Point 67

11 Jakarta 7212 Seoul – CBD 73

13 Mumbai – BKC 95

14 Singapore 100

15 Shanghai – Puxi 103

16 New Delhi – CBD 115

17 Tokyo 12518 Beijing CBD 184

19 Hong Kong – Core Central 208

OFFICE MARKETVIEWPRIME RENTAL RATES ACROSS ASIA (IN US$/SF/ANNUM)

MAKATI: MOST COST EFFECTIVE

OUTSOURCING DESTINATION IN ASIA

16 CBRE PHILIPPINES

0

200

400

600

800

1,000

1,200

OFFICE MARKETVIEW

Dwindling Supply & Competitive Leasing activity pushing rental

growth upward

OCCUPANCY RATE PER BUSINESS DISTRICT LEASE RATE PER BUSINESS DISTRICTGRADE AVERAGE ASKING LEASE RATES

(PHP/SQM/MONTH)

MNCs & BPO absorbing Prime & Grade A Office Space

Attractive Currency & Business Climate bolster Office Market

LEASE RATES OUTSIDE METRO MANILA(PHP/SQM/MONTH)

Expansion of BPO locators outside Metro Manila has driven rents to be competitive.

Lifting of PEZA incentives inside Metro Manila has given advantage developers to build

outside NCR

98.2

1%

97.7

7%

94.9

1%

96.9

6%

99.2

8%

100%

1.79

%

2.23

%

5.09

%

3.04

% 0.72

%

0

200,000

400,000

600,000

800,000

1,000,000

0

100

200

300

400

500

600

700

800

Region 3 Region 4A Region 7

17 CBRE PHILIPPINES

IT-BPM INDUSTRY

Source: BPAP

18 CBRE PHILIPPINES

Sectors and ServicesIT-BPM INDUSTRY

Sector Services EstimatedFTEs (2012)

FTES%Growthfrom 2011

Revenues (2012)

Revenue%Growthfrom 2011

Voice BPOInbound and outbound

services, technical support, customer services

497,000 19% $8.7 Billion 18%

Non-voice/KPOGlobal in-house centers,corporate services, Back-

office services154,380 20% $2.5 Billion 20%

Healthcare Information Management Outsourcing

Clinical data management,legal/Medical transcription 45,000 80% $460 Million 66%

ITO/Software Development

Programming and software development analysis and

design57,078 14% $1.16 Billion 17%

Engineering Software Outsourcing (ESO)

Designs for civil works, buildings,

electronics, etc.10,836 20% $206 Million 20%

AnimationThe process of giving

illusion of movement to cinematographic drawings

or models thru 2D, 3D

9,000 4% $132 Million 3%

Game DevelopmentOutsourced services combined with IT and

creative work3,500 40% $50 M 257%

Source: ADB

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BPO INDUSTRY STATISTICS

24,900 39,000

108,000

0

50,000

100,000

150,000

200,000

Current FTEs Absoptive Capacity

Western Visayas Hub•Iloilo City•Bacolod City

21,300 219,000

792,000

0200,000400,000600,000800,000

1,000,0001,200,000

Current FTEs Absoptive Capacity

CALABARZON Hub•Santa Rosa•Bacoor/ Imus/ Dasma•Lipa•Cainta•Lucena

485,600 787,000

1,400,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Current FTEs TheoreticalCapacity

National Capital Region

38,882 133,000

461,529

0100,000200,000300,000400,000500,000600,000700,000

Current FTEs Absoptive Capacity

Central Luzon/ Northern Luzon Hub•Metro Clark•Metro Subic•Baguio•Tarlac•Malolos

47,700 44,000

162,000

0

50,000

100,000

150,000

200,000

250,000

Current FTEs Absoptive Capacity

Eastern Visayas Hub•Cebu City•Lapu-Lapu City•Mandaue City•Dumaguete•Tagbilaran

10,000 42,000

117,000

0

50,000

100,000

150,000

200,000

Current FTEs AbsoptiveCapacity

Davao-GenSan Hub

Source: BPAP

20 CBRE PHILIPPINES

1. JP Morgan Chase2. HSBC3. Shell 4. Thomson Reuters5. Dell6. Manulife7. Deutsche Knowledge Services8. Chevron9. Citigroup10. ANZ Bank11. Capital One12. HP13. AIG

849,150 SF363,400 SF304,450 SF246,900 SF126,800 SF113,220 SF304,650 SF148,550 SF139,000 SF163,800 SF161,400 SF577,000 SF245,000 SF

Major outsourcing firms in the Philippines:

IT-BPM INDUSTRYIT-BPM operations in the Philippines continue to grow. Some of the firms choosing the country for their Shared Services Centers are:

21 CBRE PHILIPPINES

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