Asia CEO Forum-Leechiu Property Market

Real Estate
Real Estate
Market Overview
30 September 2009
Outline
• Market Overview: Retail, Residential, Office

• Philippine Economic Overview
• Market Overview: BPO
• Tourism and Hotel Overview
• Jones Lang LaSalle Leechiu: Who We Are, What We Do
2
Market Overview
Retail
4,500,000
Sector 1,600
4,000,000
1,400
3,500,000
1,200
Rent in Php/sqm/month
Area in Square Meters
3,000,000
1,000
2,500,000
800
2,000,000
600
1,500,000
400
1,000,000
200
500,000
0 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Prime Rental Rates
Average Rental Rates
Supply of Real Estate
Demand (Take Up)
Market Overview
Residential
35,000
Condominium Sector 600
Rents peaked in 2008, now
softening due to additional supply
30,000
500
25,000
400
No. of Units
Lowest vacancy rate of 1%

20,000
300
15,000
200
10,000
100
5,000
0 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Demand (Take Up)
Average Rental Rates
Market Overview
Residential Sector
• Luxury and prime sector holding well

• Enclosed villages up 10 – 15% in the last 12 months
• Recommended buys in luxury condominium projects – i.e., West Block Rockwell, Pacific
Plaza Towers, Essensa, One McKinley Place, Regent Parkway
• Selling below replacement cost
• Growth of OFW remittances will determine future direction of middle-end
market
• Banks are still lending at favorable rates, providing easy access to financing –
both for buyers and developers
Market Overview
Office Sector
7,000,000 TODAY: Vacancy of 14%, or 1,000
500,000 square meters
900
6,000,000
Highest vacancy of 1.5 million Lowest vacancy rate of 4%,
or 193,000 square meters 800
square meters
5,000,000
700
Area in Square Meters
600
4,000,000
500
3,000,000
400
300
2,000,000
200
1,000,000
100
0 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Makati Prime Rental Rates
Makati Average Rental Rates
Demand (Take Up)
Market Overview
Office - Quarterly Supply vs Leased / Pre-Committed Space
375,000 Leased / Pre-Committed Supply Supply Reduction

350,000
325,000
Total of 1,707,244 sqm supply from 2008 - 2014
300,000 Oversupply Period Reduced by 341,867 sqm or 17%
275,000
250,000
225,000
Dramatic drop in supply may result
200,000 in rapid rise in rents.
175,000
150,000
125,000
100,000
75,000
50,000
25,000
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2012 2014
2008
2008 2009
2009 2010
2010 2011
2011
593,086
593,086 sqm.
sqm. 575,009
575,009 sqm.
sqm. 176,770
176,770 sqm.
sqm. 213,380
213,380 sqm.
sqm.
Average Demand
Market Overview
Office - Supply vs Leased / Pre-Committed Space (2008 - 2009)
Total
TotalSupply:
Supply:593,086
593,086sqm Total
sqm TotalSupply:
Supply:575,009
575,009sqm
sqm
Leased: 77.97%
Leased: 77.97% Leased/Pre-Committed: 41.09%
Leased/Pre-Committed: 41.09%
Makati Makati
Fort Bonifacio Fort Bonifacio
Ortigas Ortigas
Quezon City Quezon City
McKinley Hill McKinley Hill
Eastwood City Eastwood City
Pioneer Complex Pioneer Complex
Northgate Cyberzone Northgate Cyberzone
Bay City Bay City
Others Others
0
0
00
00
00
0
2 5 ,0 0
5 0 ,0 0
7 5 ,0 0
25,00
50,00
75,00
1 0 0 ,0
1 2 5 ,0
1 5 0 ,0
100,0
125,0
150,0
2008 2009
Market Overview
Office - Supply vs Pre-Committed Space (2010 – 2011)
Total
TotalSupply:
Supply:176,770
176,770sqm
sqm Total
TotalSupply:
Supply:213,380
213,380sqm
sqm
Pre-Committed: 13.69%
Pre-Committed: 13.69% Pre-Committed: 0%
Pre-Committed: 0%
Makati Makati
Fort Bonifacio Fort Bonifacio
Ortigas Ortigas
Quezon City Quezon City
McKinley Hill McKinley Hill
Eastwood Eastwood
Pioneer Complex Pioneer Complex
Northgate Cyberzone Northgate Cyberzone
Bay City Bay City
Others Others
0
00
00
00
00
00
00
25,00
50,00
75,00
25, 00
50, 00
75, 00
100,0
125,0
150,0
100, 0
125, 0
150, 0
2010 2011
BPO Industry Overview
Number of Seats
Total Number of BPO Seats: 240,714
LUZON
209,060 Seats Metro Manila – 188,425
(78%)
% of Total No. of BPO Seats
VISAYAS
29,284 Seats Cebu – 22,569
(9%)
% of Total No. of BPO Seats
MINDANAO
2,370 Seats
10
Metro Manila Seat Distribution
Parañaque
Manila
Las Piñas
Total Number of Seats in
Metro Manila: 188,425
Marikina
Bay City
Alabang Northgate Cyberzone
Fort Bonifacio McKinley
Mandaluyong Pioneer
Ortigas
Makati
Quezon City Eastwood UP-Ayala

No. of Seats
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
11
Provincial Seat Distribution
General Santos
Tarlac
Camarines Sur
Cagayan De Oro Total Number of Seats Outside

Leyte Metro Manila: 52,287
Dumaguete
Cavite
Davao
Rizal
Batangas
Baguio
Bacolod / Iloilo Iloilo
Laguna
Pampanga
Cebu
No. of Seats
0 5,000 10,000 15,000 20,000 25,000
12
Philippine Economic Overview
1997 vs. 2008 Crisis vis-à-vis Property Market
1997 Asian Financial Crisis 2008 Global Financial Crisis

Rapid climb in interest rates plus Falling rates forcing mobilization of capital
appreciation of the US Dollar forced loan into real estate investments; credit still free-
Interest Rates
defaults, bankruptcies and unfinished flowing
buildings
2.3 million square meters of Prime, Grade 1.4 million square meters of largely Grade
Supply A and B stock, 60% of which is in Makati, B stock, spread across Metro Manila
and 40% in Ortigas
Severe contraction as companies closed BPO industry growing in the Philippines as
Demand a result of cost-cutting measures of
multinational companies
Long "U" shape recovery after 5 years "V" shape recovery after 18 months to 2
Rents
years
Market Overview
Demand By Big Movers
Big Movers (By Industry) Required Size (sqm) Reasons
Banking / Financial Services 6,000 Expansion
3,000 Disaster Recovery Site
BPO 26,000 Expansion
21,000 Expansion
14,000 Expansion
14,000 Expansion
12,000 Expansion
10,000 First Facility in the Philippines
IT 40,000 Relocation
Consumer Goods 3,000 Relocation
Various transactions ranging from 1,000 - 46,000 Relocation / Expansion
7,000 sqm
TOTAL 195,000
• Demand coming mostly from the BPO industry

• Timing to commit – 4Q 2009 to 1H 2010
• If these are successfully transacted, it will set a floor price on rentals
14
Market Overview
BPO
16,000
/ Call Center Industry 7,000
14,000
6,000
12,000
5,000
10,000
4,000
8,000
3,000
6,000
2,000
4,000
1,000
2,000
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008
BPO Industry Revenues

Call Center Industry Revenues
Number of Call Center Seats
Source: BPAP, DOT Call Center Seats
100,000
120,000
140,000
160,000
Country Risk, Visitor Arrival and Call Center Seat Growth
20,000
40,000
60,000
80,000
0
1997 Asian Financial Crisis
2000
Tech Bubble / US Stock Market Crash
2000
ERAP Impeachment
Glorietta Mall Bombing
SM Megamall Cinema Restroom Bombing
Synchronized Bombing in Metro Manila
2001
2001
Philippine General Elections
Dos Palmas Kidnapping
911
EDSA Dos
EDSA 3
Gracia and Martin Burnham Kidnapping
2002
2002
Zamboanga Bombing
Captured Jemaah Islamiyah
Sentenced Jemaah Islamiyah
2003
SARS Outbreak
2003
Davao Airport Bombing

Jemaah Islamiyah escape
Jose Pidal Plunder Case
Oakwood Mutiny
"In The Presence of my Enemies"
2004
2004

Infanta Mud Slide
SuperFerry Bombing
General Santos Christmas Bombing
2005
Davao Bus Terminal
2005
General Santos City Mall Bombing

Hello "Garci" Scandal
"To Fly Again"
Valentine's Day Bombing
V-Day Bombing Masterminds Death Sentence
2006
2006
State of Emergency Declaration

Milenyo
Southern Leyte Mud Slide
2007
Cotabato Bus Station Bombing
ERAP Conviction
2007
ZTE Scandal
Glorietta 2 Bombing
Congress Bombing
Manila Peninsula Incident
2008
Cotabato City Bombing
2008
Tourist Arrivals
Call Center Seats
ZTE-NBN Irregularities
US Financial Crisis
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
16
Tourist Arrivals
Source: BPAP, Google Finance Call Center Seats
NASDAQ, Dow Jones and Call Center Seat Growth

100,000
120,000
140,000
160,000
20,000
40,000
60,000
80,000
0
2000
1998
ERAP Impeachment
1999
2001
911
EDSA Dos
2000
EDSA 3
2002
Zamboanga Bombing
2001

2003
SARS Outbreak
2002

Oakwood Mutiny
2004
2003

Infanta Mud Slide
SuperFerry Bombing
2005
2004
Davao Bus Terminal

"To Fly Again"
2005
V-Day Bombing Masterminds Death Sentence

2006
Milenyo
2006
2007
ERAP Conviction
ZTE Scandal
Glorietta 2 Bombing
2007
Congress Bombing
2008
Dow Jones
NASDAQ
Call Center Seats
2008
US Financial Crisis
17
Tourism
Tourism The Next Big Thing
Global Tourism Overview 2008
• Total international tourist arrivals: 922 million

• Total tourism receipts of USD 944 billion, of which the Philippines got:
50% of 1% (USD 5 billion in tourist receipts), or
32% of 1% (3.2 million tourist arrivals in 2008)
• 80% of international travel takes place within the same region
• Top international tourism spenders
Expenditure Expenditure
Country Country
(USD billion) (USD billion)
1. Germany 91.0 7. Japan 27.9
2. United States 79.7 8. Canada 26.9
3. United Kingdom 68.5 9. Russian Federation 24.9
4. France 43.1 10. Netherlands 21.7
5. China 36.2 11. South Korea 20.9
Source: WTO
6. Italy 30.8
19
Philippine Tourism Overview
Asia and the Pacific - Philippines 2008 Tourist Arrivals
(in '000)
1 China 53,049
2 Hong Kong 29,506
3 Malaysia 22,052
4 Thailand 14,584
5 Macau 10,605
• Total international tourist 6 Japan 8,351
arrivals: 922 million 7 Singapore 7,778
8 Korea 6,891
• Of the 922 million arrivals, 184.1 9 Indonesia 6,234
10 Australia 5,586
million were in Asia and the 11 India 5,367
Pacific 12 Vietnam 4,236
13 Taiwan 3,845
14 Philippines 3,139
15 New Zealand 2,459
16 Cambodia 2,001
17 Laos 1,295
18 Guam 1,142
19 Pakistan 823
20 Maldives 683
21 Fiji 585
22 Nepal 500
Source: WTO, HKTC 23 Sri Lanka 438
20
Top 15 Tourist Destinations in the Philippines
2009 Rank 2008 Rank
Camarines Sur 1 6
Cebu 2 1
Boracay 3 3
Baguio 4 2
Davao 5 5
Puerto Galera 6 7
Bohol 7 8
Bacolod 8 4
Dumaguete 9 9
Ilocos Norte 10 10
Masbate 11 11
Camarines Norte 12 15
Puerto Princesa 13 14
Legaspi 14 13
Catanduanes 15 16
Source: DOT
Tourist
3,500,000
Arrivals and Tourist Receipts 6,000
3,000,000
5,000
2,500,000
Tourist Receipts (in USD millions)

4,000
Tourist Arrivals
2,000,000
3,000
1,500,000
2,000
1,000,000
1,000
500,000
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: WTO
Arrivals to Phils. Receipts (in $M)
Source: WTO Tourist Arrivals
Tourist Arrivals and Tourist Receipts

1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
500,000
0
2000
1999
ERAP Impeachment
2001
2000
911
EDSA Dos
EDSA 3
2001
2002
Zamboanga Bombing
2003
2002
SARS Outbreak
Arrivals to Phils.

Oakwood Mutiny
2003

2004
Infanta Mud Slide
SuperFerry Bombing
2004
Receipts (in $M)

2005
Davao Bus Terminal
2005
"To Fly Again"

V-Day Bombing Masterminds Death
Sentence
2006
2006

Milenyo
2007
2007
ERAP Conviction
ZTE Scandal
Glorietta 2 Bombing
Congress Bombing
2008
2008
US Financial Crisis
0
1,000
2,000
3,000
4,000
5,000
6,000
Tourist Receipts (in USD millions)

Tourism Arrivals in the Philippines
By Country of Residence
700,000
South Korea United States Japan China Australia Taiwan
600,000
500,000
Tourist Arrivals
400,000
300,000
200,000
100,000
0
Source: DOT
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
24
Thailand and Philippines
Thailand Philippines
Population 67 million 90 million
Tourist Arrivals 14.54 million 3.4 million
Tourism Receipts USD 16 billion USD 5 billion
% of GDP 6.50% 6.20%
Malaysia Korea
Japan USA
Top 5 Tourists Korea Japan
China China
United Kingdom Australia
Source: Thailand Tourism, DOT
25
China and Taiwan Tourists To The Philippines
300,000
The Taiwanese preferred Hong Kong

and Japan as tourist destinations
250,000
200,000 Increased DOT

marketing efforts—
14-day special Visa
Tourist Arrivals
for Chinese tourists

(171.5% increase in
150,000
Chinese tourists)
100,000
50,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: DOT China Taiwan
26
China’s Top Tourist Destinations
18,000,000
16,000,000
14,000,000
12,000,000
Tourist Arrivals
10,000,000
8,000,000
6,000,000
In 2007, 157,601 tourists from
4,000,000
China came to the Philippines
2,000,000
0
2001 2002 2003 2004 2005 2006 2007
Source: WTO Hong Kong Macau Thailand Vietnam Singapore
27
Total Hotel Supply and Occupancy in Metro Manila
16,000 80
40% increase in hotel room supply in the last Crowne
Expansion Plaza
15 years, or 2.6% per annum on average of Makati Manila
14,000 Shangri-La 70
Pan Pacific and Westin
Manila Philippine Bellevue
Some major
Plaza Manila
hotels
Manila closed down
12,000 60
Diamond
Hotel and
Makati
Shangri-La
No. of Hotel Rooms
10,000 50
Occupancy Rate
8,000 40
6,000 30
4,000 20
2,000 10
0 0
Source: DOT 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
28
Future Hotel Supply in Metro Manila (2009 – 2013)
1,400
1,200
Future Hotel Supply in Metro Manila:
2,674 hotel rooms across 8 hotels
1,000
Shangri-La
No. of Hotel Rooms
(Fort
800 Bonifacio)
600
Maxims
Hotel
(Newport
City) Grand Hyatt
400
Picasso (Fort
Serviced Raffles Bonifacio)
Residences
Residences
(Makati) Marriott
Manila and
Hotel
200 Ocean Park Fairmont
(Newport
(Manila) Hotel
City)
The Eastwood
(Makati)
Park Hotel
(Eastwood)
0
Source: DOT 2009 2010 2011 2013
29
Hotel Supply in Provincial Areas By Year-End 2009
1,000
900
Grand
Water
Future Hotel Supply in Provincial Areas:
800
Seven
1,539 hotel rooms across 9 hotels
Stones
700
Boracay
Regency
No. of Hotel Rooms
600 Lagoon
Phoenex
500 Hotel
400
Crowne
300 Regency
Expansion
Radisson
Hotel
200
100
Summer
Discovery
Ridge
Bay Misibis Microtel
0
Source: DOT Boracay Cebu Tagaytay Albay Puerto Prinsesa
30
Who We Are, What We Do
• JLLL is the most prominent real estate services firm in the country
- Sales and Leasing
- Facilities & Property Management
- Project Management
- Research, Consultancy and Valuation
• JLLL is at the forefront of the BPO industry—serviced
industry 10 of the top 12
BPOs in the Philippines, handled more than 45 contact center clients,
and acquired a total of 102 sites for these clients.
• Serviced around 50% of all office space occupied by the outsourcing
industry.
• Negotiated about 110,000 sqm of build-to-suit buildings, and about 90%
of BPO office lease transactions outside Metro Manila.
A Track Record of Achievement
Fortune’s World’s Most Best Overall Global Advisor The Global Outsourcing
Admired Companies (2009) and Consultant (2009) 100 List (2009)
CRO’s “100 Best World’s Most Ethical Sustainable Cities Awards

Corporate Citizens (2009) Companies (2008, 2009) (2008)
P&G’s External Business Forbes 400 List of Best Asia MS 100 List
Partner of the Year Big Companies (2008) (2008)
Thank you!
Copyright © Jones Lang LaSalle IP, Inc. 2008

Asia CEO Forum-Leechiu Property Market

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Real Estate

• Market Overview: Retail, Residential, Office

Lowest vacancy rate of 1%

• Luxury and prime sector holding well

375,000 Leased / Pre-Committed Supply Supply Reduction

Fort Bonifacio Fort Bonifacio

Quezon City Quezon City

McKinley Hill McKinley Hill

Eastwood City Eastwood City

Pioneer Complex Pioneer Complex

Northgate Cyberzone Northgate Cyberzone

Bay City Bay City

Fort Bonifacio Fort Bonifacio

Quezon City Quezon City

McKinley Hill McKinley Hill

Pioneer Complex Pioneer Complex

Northgate Cyberzone Northgate Cyberzone

Bay City Bay City

Alabang Northgate Cyberzone

Fort Bonifacio McKinley

Quezon City Eastwood UP-Ayala

Cagayan De Oro Total Number of Seats Outside

Bacolod / Iloilo Iloilo

0 5,000 10,000 15,000 20,000 25,000

1997 Asian Financial Crisis 2008 Global Financial Crisis

• Demand coming mostly from the BPO industry

BPO Industry Revenues

Davao Airport Bombing

Philippine General Elections

General Santos City Mall Bombing

State of Emergency Declaration

NASDAQ, Dow Jones and Call Center Seat Growth

Captured Jemaah Islamiyah

Jemaah Islamiyah escape

Philippine General Elections

Davao Bus Terminal

V-Day Bombing Masterminds Death Sentence

• Total international tourist arrivals: 922 million

Tourist Receipts (in USD millions)

Tourist Arrivals and Tourist Receipts

Jose Pidal Plunder Case

"In The Presence of my Enemies"

General Santos Christmas Bombing

"To Fly Again"

State of Emergency Declaration

Tourist Receipts (in USD millions)

Source: Thailand Tourism, DOT

The Taiwanese preferred Hong Kong

200,000 Increased DOT

for Chinese tourists

Source: DOT China Taiwan

Source: WTO Hong Kong Macau Thailand Vietnam Singapore

CRO’s “100 Best World’s Most Ethical Sustainable Cities Awards

Copyright © Jones Lang LaSalle IP, Inc. 2008

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