Philippines Real Estate Report Q4 2010
Business Monitor International, September 2010, Pages: 55
Key Insights on the Real Estate Sector of the Philippines
Although the Philippines’ economy rode out the global financial crisis fairly well, 2009 was a difficult year for most protagonists in the country’s commercial real estate sector.
Over the course of the year, rental rates fell sharply in all three cities for which data was gathered– Manila, Makati and Cebu. In Cebu especially, there appears to have been over-building of commercial Real Estate and consequent over-supply. However, the authors sources indicate a more important problem has been the general lack of confidence about the prospects for the Philippines on the part of landlords/owners and tenants.
In most of the countries where real estate sectors are monitored, rental rates slipping during 2009 – in the wake of the global financial crisis – has resulted in a corresponding fall in yields. Typically, there are few or no transactions, so rental rates have fallen in relation to prices and capital values that were determined some time previously. In the Philippines, by contrast, it is very difficult to generalise about the movement in rental yields over the last year or so. In some sub-sectors, such as Makati offices and Cebu retail space, yields have actually risen sharply. In most others, they have tracked sideways or fallen.
The authors suspicion is that, in the areas where yields have risen (meaning that capital values have slipped sharply relative to rental rates which were falling) there have been a number of distressed sales. When they interviewed their in-country sources for a second time in mid-2010, they indicated the cautiously optimistic view of the commercial real estate market that they had expressed earlier in the year had turned out to be correct. The Presidential Election appears to have provided the catalyst for a stabilisation of rents. In two sub-sectors, rental rates are reported to have risen by low double digits. Elsewhere, increases have typically been 5% or less. The authors in-country sources are looking for modest rises in rental rates through 2011.
Looking forward, the authors assume that yields will remain broadly unchanged over the next five years if they are already well into double-digits. In other sub-sectors, they anticipate that yields will rise gradually as investors assess that meaningful improvement in the Philippines’ business environment is unlikely.
Key Features of This Report
This is the latest edition of a new series of industry reports that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. The questions that the report seeks to answer for each country remain as follows: what are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term? What are the main constraints that they face? What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries?
In Q3 the authors introduced a very substantial new improvement to the reports. They incorporated data and qualitative observations provided by commercial real estate agents operating in the countries surveyed. As a result the authors gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors – office, retail and industrial. They also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.
In Q4, the authors have incorporated a lot of new data in relation to rents and yields in 2010. They gained this data by way of a new round of interviews with their in-country sources in mid-2010. In some cases, the latest information from their sources has caused them to make significant revisions to their forecasts for 2011-2014. They asked their sources to indicate what growth in rents is likely for 2011. They explain their answers in the Industry Forecast Scenario.
Philippines Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines' Real Estate industry.
Executive Summary
Key Insights on the Real Estate Sector of the Philippines
SWOT Analysis
Philippines Real Estate/ Construction SWOT
Philippines Economic SWOT
Philippines Business Environment SWOT
Regional Real Estate Overview
Table: Asia Pacific’s Office Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Table: Asia Pacific’s Retail Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Table: Asia Pacific’s Industrial Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Real Estate Market Overview
Table: Philippines Real Estate Markets – Rentals in m²/month (PHP)
Table: Philippines Real Estate Markets - Net Yield (%)
Table: Philippines Real Estate Markets –Terms of Contract/Lease
Table: Philippines Real Estate Markets – Available Space (m²) and Vacant Space (%)
Forecast Scenario
Real Estate Outlook
Table: Philippines Real Estate Markets - Rentals in m²/month (PHP)
Table: Philippines Real Estate Markets –Forecast Net Yield (%)
Construction And Infrastructure Outlook
Table: Construction Industry Data
The Philippines’ Macroeconomic Outlook
Table: Philippines - Economic Activity, 2007-2014
Business Environment
Real Estate/Construction Business Environment Rating
Table: Asia Real Estate/Construction Business Environment Ratings
The Philippines’ RECBER
Asia Pacific Project Finance Ratings
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
Philippines’ Business Environment
Table: Business And Operational Risk Ratings
Table: Legal Framework Ratings
Table: Annual FDI Inflows Into Asia, 2006-2008
Table: Trade Ratings
Table: Philippines’s Top Export Destinations, 2001-2008 (US$mn)
Company Monitor
Ayala Land Incorporation
EEI Corporation
Filinvest Land Incorporated
First Philippine Balfour Beatty
Megaworld Corporation
Robinsons Land Corporation
Vista Land & Lifescapes Incorporation
Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating
- Ayala Land Incorporation
- EEI Corporation
- Filinvest Land Incorporated
- First Philippine Balfour Beatty
- Megaworld Corporation
- Robinsons Land Corporation
- Vista Land & Lifescapes Incorporation
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