8/7/2019 2011 1Q Manila Office Market Beat
1/2
MANILA OFFICE REPORT
MANILA OFFICE REPORT 1Q111
1Q1
ECONOMY
The Philippines posted an annual GDP Growth Rate of 7.3% in
2010, thehighest in the post-Marcos era. The first quarter of 2011
has seeneconomic growth experienced the previous year, albeit
conservatively.Leading Economic Indicators (LEI) as published by
the NSCB hasincreased to 0.012 percent from a revised minus 0.031
percent in fourthquarter of 2010. However, consumer sentiment has
dipped. This declineresulted from the social unrest in the Middle
East, which in turn resulted inhigher oil prices and a reduced
remittance flow. Natural calamities, i.e., theearthquakes that hit
New Zealand and Japan, also contributed to the low
consumption growth. These events also weighed in on the stock
market,which saw a surge only in late March with PLDTs purchase of
Digitel, thebiggest telecom deal in decades. Meanwhile, the
monetary board hasincreased overnight borrowing and lending rates
by 25 basis points to4.25% and 6.25% respectively, based on signs
of stronger and broadeninginflation pressures as well as a further
upward shift in the balance ofinflation risks. Average inflation
rate for the quarter is 4.1% and is wellwithin the government
target of 3 to 5 percent for the year. Foreign debtrose 9.5% to
US$60.1 billion as of end-December 2010. The central bankattributed
the hike in the countrys external debt to foreign
exchangerevaluation due to the appreciation of the Japanese yen
against the dollarand bigger net availment of both the public and
private sectors.
OVERVIEW
The first quarter has seen only a handful of landlords
conservativelyincrease their lease rates. While the market remained
relatively at thebottom for the remaining part of 2010, 2011 is
expected to see gradualincrease as demand peaks and supply
gradually diminish. Office market isanticipated to be neutral later
this year. The wait-and-see attitude of themarket has ended
shifting towards optimism as investor sentimentimproves. Low lease
rates and high vacancy rates in most submarkets arestill enjoyed so
far. Makati CBDs prime rates averaged at Php850/sqm/mo,whereas
vacancy rate stood at 8.75%.
OUTLOOK
Current world events show little negative effect on investor
sentiment andeconomic indicators. 2011 is still expected to be a
better year for the officemarket. The probability of a commencement
of the general increases inlease rates is still supported. While
developers continue shoring up newsupply, only a small percentage
of the projects are expected to becompleted within 2011. This may
result to restrictions in supply, puttingpressure on vacancy
rates.
Absorption rates are likely to increase late this year,
particularly in non-CBDareas such as Fort Bonifacio and Quezon
City, as demand picks up, led byBPOs, and business relocations from
Japan are expected. From beingtenant-favorable in 2010, the market
will shift to neutral come 2011 until2012.
ECONOMIC INDICATORS
2009 2010 20
GDP Growth 1.13% 7.3% 7
CPI Growth 3.4% 3.8% 3.5-5
UnemploymentRate
7.5% 7.3% 7
Employment Rate 92.5% 92.7% 92
Source: NSCB, NSO, NEDA, CFEI
BEAT ON THE STREET
"Our contact-center sector grew over 2percent in 2010,
overtaking India anestablishing itself as the largest in the woron
the back of the Philippines beinrecognized as the most-preferred
destinatioin the world for these [BPO] services. Alfredo Ayala,
BPAP chairman, in ainterview for BusinessWorld, 09 April 2011
GRADE A RENTAL VS. VACANCYRATES
MARKET FORECAST
ABSORPTON:Low absorption rates
continue as an effect of a cautious globaleconomy due to recent
social unrest andnatural calamities.
CONSTRUCTION: Developerscontinue bullish construction of
officespaces, however, only a small percentageare expected to be
finished within theyear.
RENTAL RATES: Lease rates generallyremain stable, but gradual
increase isexpected within the year , evident in fewlandlords who
hiked their rates.
8/7/2019 2011 1Q Manila Office Market Beat
2/2
MANILA OFFICE REPORT 1Q112
MANILA OFFICE REPORT 1Q11
*Market terms & definitions based on BOMA and NAIOP
standards.
This report contains information available to the public and has
been relied upon by Cushman & Wakefield on the basis that it is
accurate and complete.Cushman & Wakefield accepts no
responsibility if this should prove not to be the case. No warranty
or representation, express or implied, is made to theaccuracy or
completeness of the information contained herein, and same is
submitted subject to errors, omissions, change of price, rental or
other conditi ons,withdrawal without notice, and to any special
listing conditions imposed by our principals.
2010 Cushman & Wakefield, Inc. All rights reserved.
Please consider your environmental responsibility before
printing this report.
FOR INDUSTRY-LEADING INTELLIGENCE TO SUPPORT YOUR REAL ESTATE
AND BUSINESS DECISIONS, GO TO CUSHMAN & WAKEFIELDS KNOWLEDGE
CENTER AT: www.cushmanwakefield.com/knowledge
Cushman & Wakefield of California601 South Figueroa Street,
47 th FloLic. # 00616335Los Angeles, California 90017(213)
955-5100
Cuervo Far East, Inc.101 Esteban St. Cor. Dela Rosa St.,Legaspi
Village, Makati City, PhilippinesTrunk Line: (632) 750-6610
Fax: (632) 750-6603
MARKET / SUBMARKET STATISTICS
MARKET HIGHLIGHTS
*Php/sqm/mthExchange Rate:US$ = Php43.0750EUR =
Php61.8810Source: CFEI
