Why Philippines Now
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Transcript of Why Philippines Now
Why Philippines Now?
KMC MAG Group January 2014
The Opportunity for Real Estate Investors
Presentation Structure
1
KMC MAG Group & Savills Introduction
2
The Investment Horizon
3
The Market Performance
Incorporated in 2009
Has offices in two major business
districts:
New Headquarters: Sun Life
Centre, Bonifacio Global City
Branch Office: Rufino Pacific
Tower, Makati
Has a pipeline of over 1 million square
feet
1.5 Billion (Php) in Capital Markets
transactions in 2013
About KMC MAG Group
KMC MAG Group key facts
Over 100 staff employed
Strong Media Exposure 600,000+
square feet of commercial & residential properties which were
leased and sold for 2013
300+ companies assisted in the last few years in their business set up in the Philippines
Recognized globally. #1 Best in Real Estate Agency awarded
KMC MAG Group is an international Associate of Savills
Savills is a leading international real estate services group
listed on the London Stock Exchange
Savills has approximately 25,000 employees and 500 offices
worldwide
The services of Savills include residential, office, industrial,
retail, leisure, healthcare, hotel and mixed use development
schemes
International Network
PHILIPPINES Manila
KMC MAG Group is an international Associate of Savills
Savills is a leading international real estate services group
listed on the London Stock Exchange
Savills has approximately 25,000 employees and 500 offices
worldwide
The services of Savills include residential, office, industrial,
retail, leisure, hotel and mixed use development schemes
Service lines overview
Valuation
Investments
Consulting & Research
Tenant Representation Asset Management
Property Management
Facilities Management
Residential Services
Hotels and Leisure
Project Marketing Project Management
Research & Development Construction Operation
Serviced Offices
Offshore Corporate Services
The Investment Horizon
More opportunities for global investors
Philippine key facts
100,000,000 2013 Philippine population
93.5 % Employment Rate as of
Oct 2013 95.4 % Literacy rate
108th 30 notches up in World
Bank International Finance Doing Business
2nd Fastest growing
economy in Asia after China in 2013
94th 11 notches up in
Transparency International Corruption Perception
Index
Scored its
1st investment grade
rating ever Fitch Rating last March 2013
129th 6 notches up in Global
Peace Index
Identified as the
5th hottest stock market
in the world in April 2013
Stable exchange rate since 2012
Philippine economy key figures
7.0% GDP growth
for Q3 2013
US$ 23.6B
Remittances projection for 2014
258 Companies
registered in PSE
US$ 3.4B
Total FDI Inflows for 2013
PHP 1.5 T Total retail sales
for 2013
258 Companies
registered in PSE
Gross domestic product (GDP)
0 2 4 6 8 10
China
Hong Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Vietnam
Japan
Source: Trading Economics
%
GDP growth (%) 2013 - Placed 2nd after China
GDP Growth
0%
2%
4%
6%
8%
10%2
00
4
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
H1
Source: National Statistical Coordination Board, NSCB
FDI attraction
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2010 2011 2012 2013
In M
illio
n U
S $ Source: Central Bank of the Philippines
Private Consumption
*Q1-Q3 2013 Private Consumption YoY, Growth rate
Source: Central Bank of the Philippines
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
In B
illio
n Pe
sos
Percentage (%)
0
1
2
3
4
5
2009 2010 2011 2012 2013
Inflation Rate
Source: Central Bank of the Philippines
T-Bill 91-day rates and T-Bond 10-year rates
Credit ratings from international rating agencies lowered the cost of debt
0
1
2
3
4
5
6
7
8
9
2009 2010 2011 2012 Q3 2013 T-Bill 91-day rates
In P
erce
nt (
%)
Source: Central Bank of the Philippines
T-Bond 10-year rates
Bank Lending Rates
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%2
00
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Source: BSP
Banks and their industry exposure
0
1
2
3
4
5
6
2009 2010 2011 2012 2013
Mill
ions
Tourist Arrivals Source: Department of Tourism
Department of tourism projects 10 million tourist arrivals by 2016
Tourism Awards & Recognitions for Philippines in 2013
Best Tourist Destination, China’s Oriental Morning Post – World Travel-Special Trips Awards
New Frontiers Award, Middle East’s Arabian Travel Market
Best Tropical Island Destination, Shanghai Morning Post Tourism Awards
No. 8 in CNN Travel’s World’s 50 Best Dive Sites
Ranked 8th in Lonely Planet’s Best in Travel 2013
Tourist Arrivals
Exchange Rate
40
41
42
43
44
45
12
-Jul
12
-Jul
12
-Aug
12
-Oct
12
-Nov
12
-Dec
13
-Jan
13
-Feb
13
-Mar
13
-Apr
13
-May
13
-Jun
13
-Jul
13
-Aug
Source: BSP
Peso per US Dollar
Philippine Stock Exchange Index
4,000
5,000
6,000
7,000
8,0001
2-J
ul
12
-Jul
12
-Aug
12
-Oct
12
-Nov
12
-Dec
13
-Jan
13
-Feb
13
-Mar
13
-Apr
13
-May
13
-Jun
13
-Jul
13
-Aug
Source: BSP, Philippine Stock Exchange (PSE)
Market Performance
Residential Market
0
5
10
15
20
25
Mon
thly
Ren
t (U
SD) p
er S
QM
Main CBDs are still significantly
more expensive than emerging
districts
High End locations such as
Rockwell, the lease rates can be
double the ones in emerging
markets like Quezon City which is
the largest city in Metro Manila
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Cap
ital V
alue
(U
SD) p
er S
QM
Average Residential Rent Levels and Capital Values (by Submarket)
Source: KMC MAG Group Research
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2013 2014 2015 2016
New Supply
Eastwood City
Rockwell Center
Ortigas CBD
BGC
Makati CBD
Residential New Supply Forecast
Location END-2012 2013 2014 2015 2016 Total Makati CBD 16,228 2,081 1,596 2,812 779 23,496 Rockwell Center 3,718 - 441 - - 4,159 BGC 15,491 3,798 1,276 2,977 3,741 27,283 Ortigas CBD 10,987 934 792 1,560 405 14,678 Eastwood City 6,830 440 278 - 988 8,536 Total 53,254 7,253 4,383 7,349 5,913 78,152
Source: KMC MAG Group Research
Market Performance
Office Market
Makati BGC Ortigas
Current Stock 1,100,000 650,000 450,000
Increase 70,000 140,000 100,000
Vacancy Rate 5.6% 2.9% 2.5%
Prime Yield 7.5% - 11.0% 6.5% - 8.5% 5.0% - 9.0%
Upcoming Commercial
Developments V Tower
RCBC Savings Bank Corporate Center,
SM Aura
Cyberscape Alpha & Beta
Makati City is the prime
central business district,
having the highest
concentration of the
country’s commercial
establishments
Bonifacio Global City
(BGC) is becoming the
most active business
district, generating
almost 50% of the
growth in the property
market
Source: KMC MAG Group Research
CBD’s: Stock, new supply and vacancy rates
CBD Office New Supply
Currently, there is
only one ongoing
office developments
in Makati
Developers are
mainly looking to
open projects in
BGC, four projects in
the pipeline at the
moment
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2008 2009 2010 2011 2012 2013 F2014
Prime Office Space (sqm)
Makati CBD
BGC
Ortigas CBD
Source: KMC MAG Group Research
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Q1 08
Q3 Q1 09
Q3 Q1 10
Q3 Q1 11
Q3 Q1 12
Q3 Q1 13
Q3
Vacancy rate increased
temporarily due to the
addition in supply but is
expected to decrease
Source: KMC MAG Group Research
Makati CBD Vacancy Rate
CBD Prime Office Rent Levels
Premium and Grade A Office Asking Rent Levels
District Grade Average Net Rent (Q4 2013)
Average Net Rent (Q2 2014F)
Monthly Dues
Average Escalation Rate
In PHP Makati CBD Premium 1,065.6 1,143.2 191.6 6.1% Makati CBD Grade A 759.4 747.6 148.3 7.7% BGC Grade A 735.3 790.5 146.1 6.0% Ortigas CBD Grade A 571.5 595.3 93.0 8.2% In USD* Makati CBD Premium 25.2 26.0 4.4 6.1% Makati CBD Grade A 16.3 17.0 3.4 7.7% BGC Grade A 17.4 18.0 3.3 6.0% Ortigas CBD Grade A 13.0 13.5 2.1 8.2% *Exchange rate: 1USD = 44PHP
Source: KMC MAG Group Research
-
20
40
60
80
100
120
140
160
Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13
Makati CBD BGC Ortigas CBD
Locations Prime Office Rental Index (2010Q2=100) Strong demand keeps rents
rising, which is backed by
high escalation rates
2013 Q4 QoQ growth was
recorded at 1.8% and 6.5%
YoY in Makati CBD
Rent levels will reach the
before financial crisis level
on the latter half of the year
CBD Prime Office Rent Levels
Source: KMC MAG Group Research
Prime Regional Benchmarking
Total
Hong Kong 1,023.5
Singapore 629.6 Taipei 262.0 Seoul 172.9
Hanoi 142.6
HCMC 126.6
Manila 61.5
0
200
400
600
800
1,000
1,200
HongKong Singapore Taipei Seoul Hanoi HCMC Manila
US$
per
sqm
/m
onth
Prime Retail
Source: Savills Research and KMC MAG Group Research
0
50
100
150
200
250
HongKong Singapore Seoul Taipei HCMC Hanoi Manila
US$
per
sqm
/m
onth
Total
Hong Kong 199.3
Singapore 113.2
Taipei 66.0
Seoul 89.1
Hanoi 49.1
HCMC 50.9
Manila 28.0
Prime Office Benchmark
Source: Savills Research and KMC MAG Group Research
Room rate (US$/Room/Night)
Hong Kong 509.8 Singapore 418.5 Taipei 325.0 Seoul 386.9 Hanoi 126.6 HCMC 155.8 Manila 248.8
0
100
200
300
400
500
600
Hong Kong Singapore Seoul Taipei HCMC Hanoi Manila
US$
per
roo
m p
er n
ight
Prime Hotels Benchmark
Source: Savills Research and KMC MAG Group Research
Total
Hong Kong 119.3
Singapore 114.6
Taipei 46.7
Seoul 108.4
Hanoi 39.9
HCMC 30.4
Manila 49.7
0
20
40
60
80
100
120
140
HongKong Seoul Singapore Taipei Hanoi HCMC Manila
US$
per
sqm
/m
onth
Luxury Serviced Apartments Benchmark
Source: Savills Research and KMC MAG Group Research
Looking to invest in the Philippines? Contact us today! kmcmaggroup.com (02) 403-5519