Midyear Market Update

Media Round Table | August 28, 2014

real estate market overview

Despite slowdown in economic growth, real estate

sector remains bullish

Multi-billion dollar expansion programs

Major transactions

Joint ventures with international investors

Asset market remains challenging for purely

investment-minded players

Township projects

Southwoods City

Clark Green City

Arca South

Circuit Makati

Aseana City

Vista City

real estate market outlook

Outlook remains very positive

Economy is expected to grow 6.0% to 7.0%

Investment activity to remain robust

Focus to remain in CBDs

Strong leasing demand from IT-BPO sector

Shift in direction for residential developers

Luxury to lower to mid-end segments

Retail holds opportunities for rise in rental rates

residential market update

Continues to grow at a steady rate

Shift of direction for developers from luxury to

lower to mid-end market

Middle-income markets keeps market demand

buoyant

Residential supply to peak this year

Residential rates are expected to rise at a

moderate rate

residential market bubble?

No bubble in residential market

Backlog of housing will keep the market

sentiment positive

Rising middle-class

Wealthy locals

OFWs

Buying powers supported by actual buying power

and not loans

Overseas interest remains strong as Metro

Manila offers more attractive yields

Cooling measures in Singapore & Hong Kong

accelerated the overseas demand

how to plan your next residential investment

How will you make money out of a residential investment?

Capital appreciation

Rental yields

Ancillary investment income

What kind of property are you looking for?

Apartment building

Condominium

House and lot

Townhouse

What is the source of your capital?

Retirement funds

Savings

Income form other investments

Mortgage

retail market update

Opportune condition for retail

sector

Rise in domestic spending and

purchasing power

OFW remittances

Growing middle-class

Good employment situation

Retail sector remains bullish in

modern retail formats (e.g.

Convenience stores and

hypermarkets)

Lawson Inc. and Puregold

partnership

retail market drivers

New market entrants & bullish

expansion of international brands

(H&M, Sephora among others)

Diversification of tenants in retail

spaces

Unique offerings compared to

common establishments (banks,

convenience stores, etc.)

Created by rising middle class

Usually first-time business

owners

retail market outlook

Aggressive expansion by developers inside and

outside of Metro Manila

Ayala Land, Inc. opens the Wellworth

department store, a joint venture with Rustan’s

SM Group plans to invest PHP 38.8B into the

retail sector for this year alone

By end of the year, SM’s portfolio will

amount to half of total retail space (7.5M

sq.m)

Will concentrate on areas outside of Metro

Manila

serviced office market update

BPO & KPO operations continue to be

main growth driver

Continuous government support

Government agencies (e.g. BOI,

PEZA, etc.)

Industry associations (e.g. IBPAP,

CCAP, HIMOAP, etc.)

Business chambers (e.g. ECCP,

FCCP, NBCP, BCCP, etc.)

Small and medium enterprises (SMEs) as

also large customer base

Attractive office option since it offers low

risk and low capital factors

serviced office market outlook

Serviced office concept seen expanding to Next

Wave Cities:

Metro Bulacan

Metro Pampanga

Metro Cavite

Metro Laguna

Serviced office market to remain attractive as

prime office supply in CBDs will remain low until

2016/2017

office market update

Leasing market retains a positive atmosphere, mainly driven by IT-BPO sector

Demand for office space remain concentrated in Metro Manila

Cebu and other second-wave cities continue to make themselves more attractive

Low vacancy levels remain to be a positive problem

Market is expected to absorb 280,000 sq.m of the new supply (300,000 sq.m)

office market drivers

IT-BPO continues to be main driver of the office

market

No. 2 top IT-BPO outsourcing destination in the

world

The industry has at least 5 years left in the sweet

spot

Majority of population is expected to join

workforce

Growing number of middle-income families

No foreseeable competitors in voice outsourcing

China may be a threat for backend outsourcing

disaster preparedness

Increasing strength and frequency of typhoons

and earthquakes

Companies now focus on business continuity

Next wave cities have become secondary sites

Case study

Multinational insurance company outsources

regional back-end office to the Philippines

8,000+ sq m head office located in BGC, Metro

Manila

Expanded 5,500+ sq m in Cebu for business

continuity reasons in case Metro Manila sites go

offline due to natural disaster

next wave cities migration pattern

5th Avenue, Bonifacio Global City

Foreseen to become the next Ayala Avenue

Financial center of BGC

Pipeline of Premium and Grade A office and

residential properties

Major leisure and entertainment establishments

located along 5th Avenue

Notable properties:

Bonifacio High Street

Fort Strip

PSE Tower

Shangri-La at the Fort

ArthaLand Tower

upcoming office developments in BGC

Net Park 5th Avenue Grade A+

ArthaLand Tower 5th Avenue Premium

PSE Tower 5th Avenue Premium

World Plaza 5th Avenue Grade A+

The Finance Centre 9th Avenue Grade A+

Asian Century Center 4th Avenue Grade A

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Midyear Market Update Media Round Table | August 28, 2014