Philippines Real Estate Report Q3 2011
Includes 3 FREE quarterly updates
The Philippine economy is likely to cool in 2011 and 2012, following a stellar 2010 where full-year real GDP growth was 7.3% year-on-year (y-o-y), the highest in over two decades. We are predicting real GDP growth of 5.1% in 2011.
Business confidence is high as a result of the country’s economic performance. The Philippine government’s Business Expectations Survey for Q211 shows sustained business confidence. Positive factors included sound economic fundamentals, continuing foreign investment and seasonal increases in demand over summer. Negative factors included political turmoil in the Middle East and North Africa (MENA) region, rising energy and commodity prices and the natural disaster crisis in Japan. Domestic negative factors included delayed funding for government construction projects and slow business procedures.
Along with business confidence, the real estate sector is now showing signs of returning to strength, with 2011 so far demonstrating strong growth rates across the three cities analysed.
The Philippines is one of the fastest urbanising countries in East Asia. With an English-speaking and relatively low-cost labour market, it is ideally placed to participate in high-demand services such as Business Process Outsourcing (BPO). BPO is now the major driver across all office sub-sectors. It includes call centres, IT and back office functions. The Philippines is ranked ninth in the world as a centre for BPO. According to the Business Processing Association of the Philippines (BPAP), the Philippine IT and business process outsourcing (IT-BPO) industry increased in value by 26% y-o-y in 2010. At end- 2010 there had been a growth in employment of 24% y-o-y, and the industry aims to employ a further 500,000 over the next five years, which would require around 3mn sq m of extra office space. This presents opportunities for more office developments, especially in areas away from the already crowded main cities. It will also spur the residential property market.
Despite their contribution to the surging economy, many residents of cities in the Philippines continue to experience poverty, environmental degradation and living in slums or other inadequate housing arrangements. Economic development has created rural to urban migration. According to the government’s Housing and Urban Development Coordinating Council (HUDCC), there is a backlog of 3.6mn houses to be provided.
The government, through the Philippine Retirement Authority (PRA), is promoting the Philippines as a retirement destination. Foreign companies in Europe, the US and Japan are looking at investing in retirement facilities in the Philippines. Great Life Philippines Retirement Corporation is to spend around PHP1bn establishing a retirement village for at least 1,000 retirees from Japan in Cavite province.
The Philippine economy is likely to cool in 2011 and 2012, following a stellar 2010 where full-year real GDP growth was 7.3% year-on-year (y-o-y), the highest in over two decades. We are predicting real GDP growth of 5.1% in 2011.
Business confidence is high as a result of the country’s economic performance. The Philippine government’s Business Expectations Survey for Q211 shows sustained business confidence. Positive factors included sound economic fundamentals, continuing foreign investment and seasonal increases in demand over summer. Negative factors included political turmoil in the Middle East and North Africa (MENA) region, rising energy and commodity prices and the natural disaster crisis in Japan. Domestic negative factors included delayed funding for government construction projects and slow business procedures.
Along with business confidence, the real estate sector is now showing signs of returning to strength, with 2011 so far demonstrating strong growth rates across the three cities analysed.
The Philippines is one of the fastest urbanising countries in East Asia. With an English-speaking and relatively low-cost labour market, it is ideally placed to participate in high-demand services such as Business Process Outsourcing (BPO). BPO is now the major driver across all office sub-sectors. It includes call centres, IT and back office functions. The Philippines is ranked ninth in the world as a centre for BPO. According to the Business Processing Association of the Philippines (BPAP), the Philippine IT and business process outsourcing (IT-BPO) industry increased in value by 26% y-o-y in 2010. At end- 2010 there had been a growth in employment of 24% y-o-y, and the industry aims to employ a further 500,000 over the next five years, which would require around 3mn sq m of extra office space. This presents opportunities for more office developments, especially in areas away from the already crowded main cities. It will also spur the residential property market.
Despite their contribution to the surging economy, many residents of cities in the Philippines continue to experience poverty, environmental degradation and living in slums or other inadequate housing arrangements. Economic development has created rural to urban migration. According to the government’s Housing and Urban Development Coordinating Council (HUDCC), there is a backlog of 3.6mn houses to be provided.
The government, through the Philippine Retirement Authority (PRA), is promoting the Philippines as a retirement destination. Foreign companies in Europe, the US and Japan are looking at investing in retirement facilities in the Philippines. Great Life Philippines Retirement Corporation is to spend around PHP1bn establishing a retirement village for at least 1,000 retirees from Japan in Cavite province.
Contents
Executive SummarySWOT Analysis
Philippines Real Estate/Construction SWOT
Philippines Economic SWOT
Philippines Business Environment SWOT
Real Estate Market Overview
Table: Philippines’ Real Estate Market – Historic Rents, 2009-2010 (US$ per sq m/month)
Table: Philippines’ Real Estate Market – Net Yield, 2010-2012 (%)
Table: Philippines’ Real Estate Market – Terms of Rental Contract/Lease, Mid-2010
Real Estate Market Analysis
Industry Forecast Scenario
Real Estate Outlook
Table: Philippines’ Real Estate Market – Forecast Rents, 2010-2012 (US$ per sq m/month)
Table: Philippines’ Real Estate Market – Forecast Net Yield, 2008-2015 (%)
Construction And Infrastructure Outlook
Table: Philippines Construction And Infrastructure Industry Data
Table: Philippines Construction And Infrastructure Industry Data
Macroeconomic Outlook
Philippines – Economic Activity, 2008-2015
Business Environment
Real Estate/Construction Business Environment Rating
Table: Asia Real Estate/Construction Business Environment Ratings
The Philippines’ RECBER
Philippines’ Business Environment
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Table: Annual FDI Inflows Into Asia, 2006-2008
Table: Trade And Investment Ratings
Table: Philippines’ Top Export Destinations, 2001-2008 (US$mn)
Competitive Landscape
Company Profiles
Ayala Land Inc
EEI Corporation
Filinvest Land Incorporated (FLI)
First Philippine Balfour Beatty
Megaworld Corporation
Robinsons Land Corporation
Vista Land & Lifescapes Incorporation
BMI 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 Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
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