8/9/2019 Manila Office Market Beat 1Q10

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MARKETBEAT

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For further information, please

contact

Josem a ri C. Cu ervo Cuervo Fa r Ea st Inc

5th floo r S&L Building , 101 Esteb an St c or. Dela Rosa

St.,

Ma kati C ity, Philipp ines 1229

Tel: (632) 750-6610

Ema il: josem ari_c ue rvo@c uervo.c om .ph

OVERALL GRADE A RENT AND VAC ANC Y (Ma ka ti CBD)

Sourc e:.,Nationa l Sta tistics Offic e, Natio na l Stat istica l Coo rdination Boa rdNote: 2009* = artial f i ures avera e

1Q 2010Econom y

The expec ta tion tha t 2010 will be a be tter year for the

Philippines is still the general sentiment. Election

spend ing and OFW Rem itta nc es have buoyed dom estic

c onsump tion, thereb y the ec ono my a s we ll. OFW

Remittances is seen to increase by 8%, according to

Mood ys forec ast. Desp ite rec ent c la ims by the IMF tha t

the world economy is still not out of the woods,

emerging economies like the Philippines has registered

economic growth. Policy makers have already

identified gradual exit-strategy options to beimplemented once economic growth is sustainable.

Inflation rate is still stable at 4.25% as of March, but it is

the highest in the 3-month period, the increase is

a ttributed to rising fuel and ut ility cost. The up c om ing

elections might cast a shadow of uncertainty in the

political climate but peaceful transition of power is

expec ted . The next ad ministration is expe c ted to hurdle

fisc a l wo es.

OverviewThe lease ra tes for most business areas ha ve remained

stable as expected, further supporting the general

consensus that the office market has already bottomedout. Makati CBDs prime rates stood at Php850/sqm/mo,

whe reas vac anc y rate is a t 8%. Supp ly is still expec ted to

increase as significant office building projects are

underway a nd a re expec ted to b e finished within the yea r.

OutlookLea se ra tes for mo st business areas are expe c ted to rem ain

stable at least until the 2nd Quarter of 2010. Gradual

increa ses are see n to happen shortly a fter. The suc cess

and results of the first automated election though may

have a lasting impact on investor sentiment which might

lea d to the prolonge d p eriod or trend of low lease rates. It

is still expected to be a tenants market since new supply is

still see n. The foresee n g rowth in OFW rem itta nc es isexpec ted to b uoy the sec tor, along with the REIT Law a s

soon as the implementing rules and regulations of the law

have been released. 2010 is still perceived to be a better

year tha n 2009, a return to pre-c risis levels in 2010 is still seen

MANILA OFFICE REPORT

A C USHMAN & WAKEFIELD RESEARCH PUBLICATION

Legend

Ma rket Rising Ma rket Sta b le Ma rket Fa lling

PREMIUM RENTS AS OF 1Q 2010

Loc ation Rent % Chang e from 6 mth(Net Effec tive on NLA) (Loc a l c urrenc y)

OutlookPHP US$ 3 1

/ sq.m. / sq.m. / sq.ft. mth yr /mth /mth /mth ago ago

Ma kati CBD 850 13.98 18.87 -10% -5.6% Ot iga s Ce nte r 550 9.17 12.27 37% -8.3% Fort Bon ifac io 600 9.85 13.32 0% -20% Filinvest 450 7.39 9.97 0% -10%

ECONOMIC INDICATORS

Lat est Relea se Ave rag eFY 2009 FY 2010*

Rea l GDP Grow th 4Q 09 1.80% 1.13% -Unem ployment 4Q 09 7.3% 7.48% -Infla tion Ra te Ma r-10 4.4% 3.35% 4.3%*

SIGNIFICANT NEW LEASE TRANSACTIONS

Building Tena nt Sq. M. Loc at ion

UP Aya la IBM Phil. 10,000 Quezon City

1880 Eastw oo d Siem ens 3,800 Quezon City

1880 Eastw oo d WNS 3,800 Quezon City

8/ 20 UMK TR 10,000 BGC

SIGNIFICANT PROJECTS UNDER CONSTRUCTION

Building Loc ation Office GFA Comp letion

(Sq. M.) Date

BGC BPO BGC 31,087 1Q 10

World Financ e Plaza BGC 24,254 2Q 10

One Glob a l Plac e Eastwood 34,334 2Q 10