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Top10 Predictions 2015 FINAL

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  • Top 10 Predictions for 2015 Colliers International Philippines January 2015

  • Forecasts from key international financial

    institutions (WB, IMF, ADB) state that the country

    is set to rebound from the lower-than-expected

    GDP growth recorded in 2014, despite the

    downward adjustments that have been made the

    past year. Many economists and analysts are in

    consensus that the country will become the top

    performing economy in the ASEAN region in

    2015.

    The acceleration is seen to come from greater

    fiscal spending as the government adjusts to the

    new processes brought about by the DAP

    debacle. In addition, spending towards

    rehabilitation and recovery programs in areas

    affected by national calamities is seen to

    accelerate by in 2015, thereby aiding economic

    growth. Falling oil prices will also have a net

    positive effect on the economy.

    1. Economy to rebound from 2014s lower-than-expected growth

    2015 Forecasts

    IMF: 6.3%; WB: 6.7%; ADB: 6.5%

    Source: World Bank, International Monetary Fund, Asian Development Bank

  • Colliers observed a continuous decrease in

    condominium sales take-up in Metro Manila, which

    peaked in 2012. While take-up rates have generally

    stabilized and that some areas such as Fort Bonifacio

    remain popular with buyers, developers are seen to

    keep practicing cautious optimism in their residential

    launches particularly in Metro Manila.

    To compensate for the softer outlook in Metro Manila,

    developers will continue to venture into residential

    projects in second-tier and third-tier cities all over the

    country, where demand comes from end-user buyers.

    The markets may be smaller compared to Manila but

    more stable in terms of end user housing demand.

    Moves by the BSP to forestall a potential real estate

    bubble, such as the bank real estate stress tests and a

    cap on loan collaterals, may expand further to control

    the shadow banking activities of real estate

    developers, possibly making capital for home purchases

    less accessible.

    2. Residential developments move

    outwards of Metro Manila for growth

    Demand will remain strong in areas

    outside Metro Manila, where housing

    is much needed by end users.

    Source: Colliers International Philippines Research

  • Infrastructure plans of the national government

    shall continue to influence developer strategies in

    2015. The rollout of these projects are seen to be

    accelerated as the Aquino administration winds

    down in 2016.

    The Cavite-Laguna Expressway (CALAx) and the

    Laguna Lakeshore Expressway Dike (LLED) are

    two of the most anticipated infrastructure projects.

    These projects encourage future urbanization and

    development, thereby attracting developers to

    acquire land in strategic locations around the

    upcoming infrastructure.

    Developers with land banks in the vicinity of these

    projects will be motivated to proceed with their

    planned developments, as they stand to benefit not

    only from the ease of access the projects provide

    but also from the eventual increase in land values.

    3. Infrastructure plans in Mega Manila

    shape developer expansions

    Nine infrastructure projects are in the

    various stages of developments,

    from bidding to construction.

    Source: Colliers International Philippines Research, PPP Center

  • Well aware that the real estate industry is one of

    the most cyclical, major real estate developers

    have begun searching for other revenue streams

    to sustain the growth rates that they have enjoyed

    during the past few years.

    Among the developers with diverse real estate

    plays are Ayala Land, Megaworld and Filinvest.

    These developers have expanded their portfolios

    beyond residential developments to include retail,

    office, hotel, and industrial projects, and to some

    extent even medical and educational projects.

    This strategy proves pivotal to their sustained

    growth, since having a diversified portfolio of real

    estate products enables them to reap the benefits

    from growing sectors of the property market, while

    at the same time shields them from any corrections

    in other sectors that are experiencing stress.

    4. Developers to expand product

    offerings to sustain growth trajectory

    National developers have started to

    expand their portfolio into more

    sectors of the real estate market.

    Source: Colliers International Philippines Research

  • Renewed interest in the country as a

    manufacturing location has sprung this year

    due to an improved macroeconomic

    environment as well as increasing

    manufacturing costs in the region.

    Manufacturing firms are seen to expand in

    2015, as the country gains advantage from

    the ASEAN integration, particularly in light

    manufacturing, ship building, and

    automotive manufacturing.

    While provinces south of Manila have

    benefitted from the resurgence of the

    industrial sector, the completion of critical

    infrastructure that improve connections to

    the north will spur industrial activity in

    provinces such as Bulacan, Pampanga and

    Bataan.

    5. Industrial sector to sustain momentum

    as manufacturing surges ahead

    Industrial park developers have expanded

    their projects, either opening up new

    portions of their industrial estates or

    acquiring more land for development.

    Source: Colliers International Philippines Research

  • Mindanao has generally lagged the rest of

    the country in terms of investment due to the

    unstable peace and order situation. Hope is

    high that the environment will improve with

    the anticipated passage of the Bangsamoro

    Basic Law in 2015, which is seen to usher in

    long term stability, facilitating investment

    and the delivery of basic social services.

    Davao is emerging as the frontrunner to

    benefit from the passing of the law, as the

    local economy is ripe for further expansion

    and development.

    With a thriving real estate market, an

    abundant pool of quality labor, and a more

    stable political situation relative to the rest of

    Mindanao, Davao is set to attract future

    investors to operate in the area.

    6. Davao shows potential as the next

    property investment destination

    A landmark agreement between the

    government and the MILF will lead to

    long term progress.

    Source: Colliers International Philippines Research

  • The number of green building applications has

    been increasing since 2013, indicating that

    property developers have been responding to a

    global advocacy to reduce the environmental

    impacts of building construction and operations

    in light of worsening environmental conditions

    and climate change.

    Global companies that pursue green and

    sustainable building operations as part of their

    corporate social responsibility programs have

    convinced developers to consider incorporating

    environment-friendly features in their buildings.

    Out of the 89 pre-certified LEED projects in the

    Philippines, 61 projects located in Metro Manila

    are expected to be completed within the next

    three to five years, emphasizing the growing

    influence and importance of green buildings

    among building occupants and tenants.

    7. More green and innovative building

    projects will be seen in the metropolis

    25 buildings were certified as LEED

    by the US Green Building Council as

    of 2014.

    Source: US Green Building Council

  • Once known for its breathtaking sunset view, Manila Bay

    went through a series of land reclamations in the early 20th

    century, which for better or for worse have changed the

    landscape in the area. The construction of the Cultural

    Center of the Philippines (CCP) Complex in the 1960s has

    had the most impact, with most of the buildings in the

    complex relegated for artistic, government or civic use.

    Over the years, reclamation of the bay has turned to more

    commercial uses, the most famous of which is the SM Mall

    of Asia Complex which was officially launched in 2006. This

    was followed by the PAGCOR Entertainment City, a casino

    district housing four integrated leisure and gaming

    developments.

    Supported by four new infrastructure projects within the

    vicinity and coupled with better investment yield

    opportunities stemming from lower land values, the Bay

    Area is expected to transform into a fully developed

    business and leisure district, providing a viable alternative

    to the Makati and Fort Bonifacio CBDs.

    8. After a 50-year hiatus, Metro Manila

    development focuses on the Bay Area

    Reclamation projects within the

    Pasay-Paranaque portion of

    Manila Bay started in the 1990s.

    Source: Colliers International Philippines Research

  • Prominent retailers such as Robinsons Retail and SSI

    Group have had a successful year in the stock market

    as their revenues have reached record heights.

    With Double Dragon introducing neighborhood malls in

    underserved markets in secondary and tertiary cities,

    competition will shift to small format shopping centers

    as the top retail players grapple for market share.

    Eager to sustain their phenomenal growth, retailers will

    usher in more brands, both local and foreign. On the

    other hand, more foreign retailers will follow H&Ms

    strategy in establishing their own operations instead of

    seeking local partnerships, especially with the ASEAN

    integration opening up the market further.

    Competition among convenience store brands is also

    expected to heat up further, as local retail giants

    introduce foreign brands such as Lawson of Japan

    (Puregold) and Alfamart of Indonesia (SM).

    9. Retail development competition to

    further intensify

    Developers continue to be bullish

    on retail space development, with

    close to 180,000 sqm of retail space

    for completion in 2015.

    Source: Colliers International Philippines Research

  • More hotels are expected to be introduced

    in 2015, with close to 6,000 rooms slated for

    completion. A significant number of hotels

    slated to open in 2015 are in key business

    districts in Metro Manila, thereby addressing

    the need not only for leisure travelers in

    PAGCOR City but also for business

    travelers.

    Development of more resort hotels in tourist

    hotspots are anticipated.

    While the entry of more foreign hotel flags is

    encouraging, the government has to step up

    in attracting more international tourists after

    a lackluster performance in 2014, which

    Colliers estimates will only reach 4.8 million

    international tourists, far behind the 6-million

    target.

    10. Tourism growth projections further

    encourage hotel development

    International hotel brands have

    included the Philippines in their

    expansion plans.

    Source: Colliers International Philippines Research

  • As much as Colliers would like to be wrong, the

    problems that plague the airport system in Manila (as

    well as some airlines) will continue to dissuade

    international travelers and stifle tourism growth.

    Since 2010, the number of international flights

    arriving and departing at NAIA has risen by 8.7%

    annually, while as of November 2014 growth was

    almost 5% YoY. Meanwhile, no definite initiatives

    have been made to increase the number of runways.

    Without a clear and concrete plan to fix the capacity

    of NAIA or construct nearby airports, the country may

    not be able to accommodate more tourists, missing

    tremendous opportunities brought about by the

    current tourism boom.

    Meanwhile, direct flights to international airports in

    the provinces will continue to increase as a response

    to the lack of capacity, particularly in tourism hotspots

    such as Cebu and Boracay (via Kalibo).

    but airport woes will continue to impede actual tourist growth.

    As of November 2014, NAIA was

    able to accommodate 41,208

    arriving flights, with 6.87 million

    passengers.

    Source: Colliers International Philippines Research; Manila International Airport Authority

  • Thank you.

  • About Colliers International Colliers International is a leader in global real estate services, defined

    by our spirit of enterprise. Through a culture of service excellence and

    a shared sense of initiative, we integrate the resources of real estate

    specialists worldwide to accelerate the success of our partners.

    When you choose to work with Colliers, you choose to work with

    the best. Our highly skilled experts are passionate about what they

    do. We connect through a shared set of values which shapes a

    collaborative environment in our organization in ways that are

    unsurpassed in the industry.

    This is evident throughout our platform-from Colliers University,

    our proprietary education and professional development platform, to

    our client engagement strategy that encourages cross-functional

    service integration.

    Thats why we attract top recruits and have one of the highest retention rates in commercial real estate. Colliers International has

    been recognized as one of the best places to work by top business

    organizations across the globe.

    Its a world we care about too. At Colliers, were deeply committed to

    socially and environmentally responsible business practicesthe kind that keep our communities healthy, while supporting the long-term

    success of business. Its the Colliers way.

    Our Services The foundation of our service is based in the strength and depth of

    our specialists. Through careful listening and a system of

    uncovering client needs, we understand the subtle business drivers

    behind key real estate decisions. We design truly customized

    services to transform real estate--often one of the largest expenses

    for a businessinto a competitive advantage. We do that as

    professionals who know our communities and industries inside and

    out. Whether you are a local firm or a global organization, we

    provide creative solutions and ease in managing all of your real

    estate needs.

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  • Colliers International | Philippines

    11F Frabelle Business Center

    111 Rada Street Legaspi Village

    Makati City, Metro Manila | Philippines

    TEL +632 888 9988

    FAX +632 858 9001

    Romeo Arahan

    Research Analyst | Philippines

    +63 2 888 9988

    [email protected]

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    Julius Guevara

    Director | Philippines

    +63 2 888 9988

    [email protected]

  • 485 offices in 63 countries on 6 continents

    United States: 146

    Canada: 44

    Latin America: 25

    Asia Pacific: 186

    EMEA: 84

    $2.1 billion in annual revenue

    1.46 billion square feet under management

    15,800 professionals and staff

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