Colliers-Ten Predictions for 2013 (Philippines)

7/30/2019 Colliers-Ten Predictions for 2013 (Philippines)

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Forecasts and predictions on the Philippine economy and real estate industryfrom various industry experts and Colliers International Philippines.

Ten Predictions for 2013


2/12


The World Bank raised its forecast for

the Philippine GDP in 2013 to 6.2%, upfrom 5%.

Japanese financial services groupNomura also raised their forecast for theGDP to 6.6% in 2013

Growth is expected to tick even higherin 2013 because of the impact of elections, fiscal improvement and governance reforms in private investment. - Nomura

1. Philippine economy to grow by around 6% in 2013

Forecast made by: Nomura, World Bank


3/12


The unfulfilled demand brought by the housing

backlog will continue to fuel residential sales. Thelow interest rate environment also allows morehomebuyers to afford their first homes.

Growth opportunities lie in second- and third-tier

cities with a high OFW emigrant population.

Strong take-up of high-end residential will continueas the economy grows. Vacancies for luxury rentalswill remain stable between 5-6%.

Expat market will grow and remain a major growthdriver for premium residences. Alien employmentpermits are seen to grow by 8% by end-2012, fuelingdemand for high end properties.

2. Residential demand to stay strong across all segments

Forecasts made by: Colliers International Philippines Research


4/12


Remittances will continue to climb

albeit at a slower rate, with aminimum growth of 5.0-5.5%

IDEA: Remittances from majorsources remain buoyant but not fromEurope and UK.

Funds sent from abroad to continueto spur housing purchases.

3. Overseas Filipino remittances to continue upward trend

Source: BSP, IDEA

Forecast made by: Prof Ernesto Pernia of of the Institute for Development and Econometric Analysis (IDEA); Colliers International Philippines Research


5/12


Bank of America sees the US dollar hoveringin the P39 range in 2013. Metrobank also

predicts further strengthening of the pesofrom P38 to P39 to a dollar.

Exporters and Overseas Filipino Workersmay be further put at a disadvantage.

Money transfers from overseas Filipinos tohit a record high of $24 billion this year to cope with the rising peso. World Bank

Manila office rates still seen as one of themost affordable in the Asia Pacific region

despite the appreciation of the Philippinepeso.

4. Peso to appreciate further vs. the dollar

Forecast made by: BofA, BSP, World Bank, Colliers International Research


6/12


Business Process Associationof the Philippines (BPAP): BPOfull-time employees (FTEs) willreach over 1M by 2016 and willincrease annually by 10% in the

next 4 years.

Estimated new BPO FTEs fornext year is at 70,000 workers,

leading to approximately250,000 sqm of additional officespace absorption.

5. BPO to continue to shine, driving officemarket

Forecasts made by: BPAP; Colliers International Philippines Research


7/12


Forecasts by HSBC and DBS indicate thatpolicy rates may stay at 3.5% for overnight

borrowing until the end of 2013.

U.S. Federal Reserve still holding their maininterest rate at near-zero levels until 2015.

Low interest rates seen to further encourage

borrowing, spurring investments as well ashousing affordability.

Still-high domestic demand and an unfavorable base effect could push headlineinflation higher. As such, we expect no more

easing, although rates will likely stay low until(fourth quarter of 2013). -HSBC

6. Interest rates to stay low

Forecasts made by: HSBC, DBS


8/12

Prediction made by: Investment Services, Colliers International Philippines


Rates will increase by 3-5% for land

leases and logistics & storage facilityrentals. Local consumption seems to bedriving warehouse demand.

However, demand for industrial propertyfor heavy manufacturing may continue to

be generally flat. High industrial powerrates discourages expansion amongmanufacturing firms despite the wideavailability of labor and relatively lowerlease rates.

Interest from Japanese manufacturersrelocating to the country is seen as abright spot.

7. Warehouse leasing to perform better


9/12


A short-term uptick in vacancy will likelyoccur due to the delivery of 214,000sqm of new retail stock in 2013.

However, overall retail sales will remain

healthy, driven by: Robust consumer spending

Growing middle income population

Sustained growth in OF remittances

Overall Metro Manila retail vacancyrates to stay below 10%

8. Metro Manila retail occupancy to slightly soften dueto increase in new supply

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012F

2013F

Retail Vacancy Forecast

New Supply (RHS) Average Vacancy Rate (LHS)

Forecasts made by: Colliers International Philippines Research


10/12

Prediction made by: Colliers International Philippines Research


Aggressive overseas promotions by the

Department of Tourism and a robusteconomic environment will propel MetroManila hotel occupancy rates above70% on average.

The debut of Pagcor Entertainment Citywill also encourage more visitors to thecountry, particularly from neighboringcountries.

9. Hotels to enjoy higher occupancy rates


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Due to the recent spate of typhoonsand natural disasters, buyers will bemore inclined to invest in safer andmore secure residential types andlocations.

On the other hand, developers willbe more vigilant during their siteselection process, taking flood andearthquake risks into consideration.

Some areas such as Cavite alreadyseeing an influx of transferees fromflood-prone parts of Metro Manila.

10. Homebuyers to seek safer and higher ground

Prediction made by: Colliers International Philippines Research


12/12

Thank You

Karlo PobreResearch AnalystConsultancy and Valuation ServicesMain +632 888 9988 ext.4030Fax +632 845 2612Email [email protected]

Julius GuevaraAssociate Director & Dept. Head

Advisory & ResearchMain +632 888 9988 ext.4024FAX +632 845 2612Email [email protected]

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Colliers-Ten Predictions for 2013 (Philippines)