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Forecast Report
PHILIPPINES
3Q 2015
Office
Delays in planned completions resulted in only four new office
buildings being completed in the third quarter, adding 45,431
sq m of net useable office space in Metro Manila. Colliers still
expects an all-time high 503,000 sq m of new office space by
the end of 2015. In the meantime, office rents in major business
districts in Metro Manila grew by an average of 1.8% during the
quarter, continuing robust rental growth seen since the start
of the year. However, estimated completions in 2016 and 2017
will also reach new heights, putting pressure on both rents and
occupancy levels. Transactions with lower net effective rents
compared to the headline rates have already been observed.
Residential
Only three projects in the major CBDs were completed during
the third quarter, with two other projects sliding in their
delivery dates. In the fourth quarter, an additional 2,381 units
are expected, bringing the total to 6,209 units in 2015. With an
average of 7,466 units to be delivered annually from 2015 to
2019, total expected inventory in the five major submarkets will
amount to 100,622 units. Despite the slowdown in deliveries,
vacancies have been observed to increase across the board due
to recent completions which are now being put into the market.
Rental rates for premium residential condos in the major CBDs
meanwhile continues to grow, increasing by around 1.5% in
the theird quarter. Should the completion of an unprecedented
13,400 units in the major CBDs by the end of 2016 materialize,
Colliers foresees a downward correction in rental rates by as
much as 5%.
Retail
The retail stock in Metro Manila surpassed six million sq m as of
the 3rd quarter of 2015, growing by 0.69% from the first quarter.
The new supply comes from expansions in fringe areas such as
the developments in U.P. Town Center (16,100 sq m) Robinsons
Novaliches (5,037 sq m), SM Center Sangandaan (Caloocan),
and Circuit Lane (Makati). All-time highs in new retail supply will
be seen in 2016, when over 720,000 sq m of leasable space are
scheduled to come online.
Market Indicators
OFFICE
RESIDENTIAL
RETAIL
2Q 2015
3Q 2015
2008
2009
2010
2011
2012
2013
6.10
6.00
6.50
8.40
3.20
6.40
7.50
5.78
4.2
5.0
6.60
4.20
1.10
7.60
3.90
6.80
7.20
6.11
5.0
5.6
4.60
3.70
2.30
3.40
6.10
6.60
5.70
5.40
5.95
6.18
6.90
0.30
10.90
4.00
1.00
15.50
7.70
1.70
1.71
3.90
(0.50)
23.40
(8.70)
31.60
8.10
(5.30)
29.90
5.40
11.56
17.40
6.70
(2.70)
(7.80)
21.00
(4.20)
8.50
(1.10)
11.30
6.42
3.67
Capital Formation
Exports
2014*
1Q 2015*
2Q 2015
Imports
1.70
1.60
(8.10)
22.50
0.20
4.90
5.40
8.70
8.73
12.67
AHFF b
4.70
3.20
(0.70)
(0.20)
2.70
2.80
1.10
1.60
1.11
-0.55
Industry
5.80
4.80
(1.90)
11.60
2.30
7.30
9.30
7.90
5.52
6.15
Services
7.60
4.00
3.40
7.20
5.10
7.40
7.20
5.90
5.42
6.18
Average Inflation c
2.90
8.30
4.10
3.90
4.60
3.20
3.00
4.10
2.40
1.70
(12.40)
(68.10)
(298.50)
(314.40)
(197.70)
(242.80)
(164.10)
(73.09)
(33.50)
47.30
PhP:US$ (Average)
46.10
44.70
47.60
45.10
43.31
42.09
42.45
44.40
44.45
44.98
3.40
5.20
4.00
3.70
1.37
1.58
0.32
1.24
1.46
1.94
OFW Remittancesa
as of August 2015
Land Values
2Q 2015
3Q 2015
% CHANGE (QOQ)
3Q 2016F
% CHANGE (YOY)
Makati CBD
333,000 - 572,000
340,000 - 587,000
2.43%
357,000 617,000
5.09%
Ortigas Center
127,000 - 203,000
130,000 - 215,000
4.71%
135,000 -224,000
4.06%
Fort Bonifacio
277,000 - 511,000
281,000 - 519,000
1.52%
293,000 - 544,000
4.67%
% CHANGE YOY
17,350
9,430
-45.65%
Socialized Housing
9,495
19,107
101.23%
Economic Housing
34,007
34,242
0.69%
2,699
4,226
56.58%
18,702
15,822
-15.40%
Low-Cost Condominium
Mid- and High-End Condominium
Commercial Condominium
Farmlot
Memorial Park
2,124
2,595
22.18%
49,136
42,700
-13.10%
1,732
2,293
32.39%
40
123,446
91,378
-25.98%
-12.38%
Industrial Subdivision
202
177
Commercial Subdivision
216
302
39.81%
280,786
237,697
-15.35%
Total (Philippines)
Source: Housing and Land Use Regulatory Board
OFFICE
3Q 2015
3Q 2016F
0.69
0.35
0.11
Premium
Grade A
6.85
5.78
6.42
0.50
0.70
4.09
All Grades
1.85
2.14
4.06
While demand from both traditional and BPO office occupiers are
seen to grow steadily, all-time highs in office space completions
are slated each year from 2015 to 2017, surpassing the projected
demand. Thus, Colliers anticipates a rise in vacancies until 2017
if all planned office projects are completed according to schedule.
Makati CBD vacancies are anticipated to rise to 4.4% by the end
of 2016, while vacancies in Fort Bonifacio, where 43% of the new
stock for the year will be located, is seen to climb to 10.8%.
END OF 2014*
2015F
2016F
2017F
2018F
TOTAL
Makati CBD
2,847,397
2,287
60,200
Ortigas
1,298,773
81,509
60,287
14,393
39,290
1,494,252
975,157
186,910
315,370
339,656
183,227
2,000,320
300,264
300,264
378,271
91,106
35,004
23,268
527,648
Fort Bonifacio
Eastwood
Alabang
2,909,884
Mandaluyong
284,550
142,153
426,703
322,286
24,947
119,049
36,900
503,182
186,203
71,219
78,922
25,385
51,569
413,298
Other Locations**
399,886
136,360
69,032
189,035
220,473
1,014,786
6,992,787
503,231
733,765
782,526
578,027
9,590,337
Total
in place at lower rates today rather than risk having their spaces
vacant for an extended period of time. Thus, Colliers sees rents
to start correcting on a wider basis through 2016.
Premium
2Q 2015
3Q 2015
% CHANGE (QOQ)
3Q 2016F
%CHANGE (YOY)
1,035 1,369
1,100 1,400
4.0
1,076 1,350
-2.96
Grade A
717 - 1,071
717 - 1,093
1.2
698 1,067
-2.48
Grade B
568 - 797
574 - 810
1.4
569 - 807
-0.56
While office capital value growth slowed during the third quarter
in Makati CBD for both Premium (from 1.8% to 0.4%) and Grade
A (from 1.8% to 0.9%), strong capital appreciation was seen in
Ortigas Center, where strata-titled office spaces in the secondary
market had growth of about 3.3% for Grade A and 2.9% for
Grade B properties. Grade A office in Fort Bonifacio also grew by
around 2% during the quarter.
Even with the expected correction in rents, capital values are
forecasted to grow in some categories and areas, albeit at a
slower pace. While excess supply puts pressure on rents and
vacancy rates, the economy in general is still seen to grow,
counteracting any large declines in values. Furthermore, declining
land bank options within these areas will continue to place an
upward pressure on building values.
2Q 2015
3Q 2015
% CHANGE (QOQ)
3Q 2016F
%CHANGE (YOY)
Premium
150,000-171,000
150,000-173,000
0.40
151,000-176,000
1.26
Grade A
87,000-120,000
87,000-122,000
0.90
86,000-122,000
-0.15
Grade B
63,000 87,000
63,000 91,000
2.90
65,000 98,000
5.28
RESIDENTIAL
Expected delays in completion lowers
new supply forecast for end-2015
Makati CBD
Rockwell
END 2014*
2015F
2016F
18,337
1,000
4,148
2,962
2018F
1,072
2019F
TOTAL
598
28,117
346
492
269
5,266
Fort Bonifacio
19,427
2,779
6,931
4,125
2,831
2,482
38,575
Ortigas
13,820
2,430
1,355
899
422
570
19,496
Eastwood
Total
4,159
2017F
7,548
63,291
988
6,209
13,422
632
8,332
5,449
9,168
3,919
3Q 2015
Luxury
3.85
4.40
5.01
Others
4.65
8.84
10.92
All Grades
7.64
8.26
3Q 2016F
10.19
* revised figures
100,622
LOW
HIGH
Forbes Park
250,000
600,000
Dasmarinas Village
250,000
500,000
Urdaneta Village
230,000
350,000
Bel-air Village
200,000
300,000
120,000
250,000
Magallanes Village
150,000
250,000
130,000
280,000
Makati CBD
2Q 2015
3Q 2015
% CHANGE (QOQ)
1.57
3Q 2016F
595 - 1,155
Rockwell
769 - 1,099
804 - 1,098
1.82
792 - 1,076
-1.79
Fort Bonifacio
672 - 1,070
681 - 1,083
1.26
658 - 1,048
-3.25
573 - 1,118
%CHANGE (YOY)
588 - 1,135
-3.39
MINIMUM
AVERAGE
MAXIMUM
130,000
190,000
230,000
230
282
309
100,000
150,000
250,000
165
235
322
120,000
200,000
250,000
130
198
285
130,000
200,000
250,000
127
189
285
130,000
200,000
300,000
129
223
310
Salcedo Village
Rental Range (PhP/month)
Average Size (sq m)
Legaspi Village
Rental Range (PhP/month)
Average Size (sq m)
Rockwell
Rental Range (PhP/month)
Average Size (sq m)
Fort Bonifacio
Rental Range (PhP/month)
Average Size (sq m)
Source: Colliers International Philippines Research
Makati CBD
2Q 2015
104,000 - 194,000
3Q 2015
% CHANGE (QOQ)
3Q 2016F
106,000 - 196,000
1.12
106,000 - 196,000
%CHANGE (YOY)
-0.04
Rockwell
119,000 - 198,000
121,000 - 201,000
1.28
121,000 - 201,000
0.31
Fort Bonifacio
114,000 - 182,000
114,000 - 185,000
1.07
114,000 - 187,000
0.51
RETAIL
Retail stock reaches six million square
meters; record-high supply in 2016
The retail stock in Metro Manila surpassed six million sq m as
of the third quarter of 2015, growing by 0.69% from the first
quarter. The new supply comes from expansions in U.P. Town
Center (16,100 sq m) and Robinsons Novaliches (5,037
sq m) as well as from new developments such as Dragon8
Shopping Center (16,500 sq m) and BGC Stopover Pavilion
(3,500 sq m). Two recently opened developments in October
2015, SM Center Sangandaan (Caloocan) and Circuit Lane
(Makati), contributed over 35,000 sq m of new retail space and
are expected to wrap up completions for 2015.
The year 2016 will bring in an unprecedented influx of new retail
supply in Metro Manila. Over 720,000 sq m of leasable space
are scheduled to come online by the end of next year. Major
contributions include the expansion of SM Mall of Asia (200,000
sq m) and Ayala Lands new malls. The developer plans to open
over 180,000 sq m of retail space next year with the opening of
Paradigm in Pasig, South Park District Mall in Muntinlupa Vertis
Mall in Quezon City, Park Triangle Mall in Bonifacio Global City
and the second phase of U.P. Town Center also in Quezon City.
Megaworld, Federal Land and Filinvest Land are also expected to
contribute to the retail supply in 2016.
Metro Manila
Comparative Retail Vacancy Rates (%)
1Q 2015
3Q 2015
Super Regional
1.53
0.42
Regional
4.17
1.58
Rental rates for malls in both the Ayala Center and Ortigas
Center remained steady in the third quarter. Average rents in
Ayala Center reached PhP1,465 per sq m per month, higher
by only 2.81% compared to the first quarter. Malls in Ortigas
Center posted an average lease of PhP1,290 per sq m per month,
a growth of 1.18% from the first quarter. Colliers anticipates
a steady rental growth in 2016 as strong retailer demand
continues.
However, escalations are expected to be capped at 5% as the
large retail supply coming in next year will be taken into account.
10
Retail Stock
Metro Manila
CLASSIFICATION
1Q 2015*
3Q2015
%CHANGE (QOQ)
3Q2016 F
%CHANGE (YOY)
Super Regional
3,657,635
3,657,635
0.00
3,657,635
0.00
Regional
1,032,374
1,037,411
0.49
1,037,411
0.00
District/Neighborhood
1,280,909
1,317,087
2.82
1,463,357
11.11
All Levels
5,970,917
6,012,132
0.69
6,158,402
2.43
11
Julius Guevara
Director
Research and Advisory
+632 858 9050
julius.guevara@colliers.com
12
Randolf Ilawan
Research Assistant
Research and Advisory
+632 888 9988
randolf.ilawan@colliers.com
North American Research & Forecast Report | Q4 2014 | Office Market Outlook | Colliers International