More Cheese in Real Estate: Year of the Rat 2008 1

Bus. Econ. Briefing for Eton Properties Phils.,

Phils., Inc.

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City

Business Economic Indicators

(Year Averages) at Constant Prices

2006 2007 2008

GDP (Growth Rate %) 5.4 7.2 5.2
GNP (Growth Rate %) 6.1 8.0 7.3
OFW Remittances ($ Billion) 12.8 14.4 16.0
AGR Sector (Growth Rate %) 3.8 4.9 3.0
IND. Sector (Growth Rate %) 4.5 7.1 3.9
Services Sector (Growth Rate%) 6.7 8.1 6.9
Personal Cons. (Growth Rate %) 5.5 5.8 5.1

Source: NSCB, BSP

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 2
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Business Economic Indicators

(Year Averages) at Constant Prices

2006 2007 2008

Inflation Rate (%) 6.2 2.8 9.9
Gov't Exp. (Growth Rate %) 6.1 8.3 1.0
Budget Deficit (P) 58.3 12.4 75.0
Exports (Growth Rate %) 11.2 5.6 -5.0
Imports (Growth Rate %) 1.9 -4.5 -3.0
Exchange Rate (P/$) 51.3 46.1 43.50
Rice per Kilo (P) 24.7 29
Oil per Barrel ($) WTI 66.02 72.32 120

Source: NSCB, BSP, BEC Estimates

GDP GAWA DITO SA PILIPINAS

GNP GAWA NATING PILIPINO

NET FACTOR INCOME FROM ABROAD

$ 15.9 Billion OFW Remittances

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 3
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

TOTAL OFW REMITTANCES (average % shares by Region)

Region Ave % Share*

NCR 22.2
CALABARZON/MIMAROPA 20.3
Central Luzon 13.4
Western Visayas 9.2
Ilocos 8.0
Central Visayas 5.1
Cagayan Valley 4.0
Southern Mindanao/Davao 3.4
Bicol Region 3.4
Eastern Visayas 2.1
Western Mindanao 1.6
Soccsksargen 1.3
CAR 2.3
ARMM 0.9
Caraga 0.5

*Average of % shares for 1995, 2000 & 2004. Figures will not total 100.0% 5
Source: NSO, Survey of Overseas Filipinos, various years

GROSS REGIONAL DOMESTIC PRODUCT (GRDP), 2008

GRDP (PhP Million) % (Cumulative)

METRO MANILA 2732 36.77
CALABARZON 814.5 47.74
CENTRAL LUZON 562.1 55.30
CENTRAL VISAYAS 535.8 62.52
WESTERN VISAYAS 480.9 68.99
NORTHERN MINDANAO 351 73.71
DAVAO REGION 347.6 78.39
SOCCSKSARGEN 258.7 81.88
ILOCOS 206.5 84.66
BICOL 183.1 87.12
EASTERN VISAYAS 178.7 89.53
CAR 168.7 91.80
ZAMBOANGA PENINSULA 165.4 94.02
MIMAROPA 143.7 95.96
CAGAYAN VALLEY 142.5 97.88
CARAGA 89.4 99.08
MUSLIM MINDANAO 68.4 100
PHILIPPINES P7,428.8
6
Source: NSCB

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 4
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

PER CAPITA GRDP PHILIPPINES

Region Per Capita GRDP (US $)
Metro Manila 5,646

CAR 2,413
N. Mindanao 1,956
Davao 1,914
C. Visayas 1,845
CALABARZON 1,661
SOCCSKSARGEN 1,541
W. Visayas 1,534
C. Luzon 1,338
MIMAROPA 1,166
Zamboanga 1148
C. Valley 1020

E. Visayas 972
Ilocos 965
CARAGA 847
Bicol 774
ARMM 469
Source: NSCB, BEC Estimates, 2008
7

TOP 10 PROVINCES
RANK PROVINCE
1 Bulacan
2 Pangasinan
3 Pampanga
4 Laguna
5 Batangas
6 Isabela
7 Cebu
8 Cavite
9 Iloilo
10 Nueva Ecija
Source: FIES, BEC Estimates 2008
8

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 5
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

TOP 10 CITIES

RANK CITY
1 Antipolo
2 Davao
3 Cebu
4 Iloilo
5 Cagayan de Oro
6 Cainta
7 Bacolod
8 Bacoor
9 General Santos
10 Baguio
Source: FIES, BEC Estimates 2008

Percent Breakdown of Consumption in Philippines

TOTAL % share
Food 44.0
Rent/rental value of dwelling unit 15.7
Transportation and communication 7.2
Fuel, light and water 6.4
Education 3.9
Personal care and effects 3.8
Clothing, footwear and other wear 2.8
Medical care 2.2
Non-alcoholic beverages 1.5
Tobacco 1.1
Alcoholic beverages 0.7
Source: FIES, 2006 10

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 6
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Global Rice Ending Stocks

Year Ending Stock

(Million Tons)
2003 103.5
2004 82.0
2005 74.4
2006 76.5
2007 e 76.1
2008 f 77.2

Source: USDA

11

Mekong River Vietnam

Laos

Burma
Thailand

Cambodia

ASIA NET SURPLUS

OREC 10.24 MILLION

METRIC TONS
12
Source: CFA, UA&P, 2008

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 7
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Impact of a 10% increase in price of grains

in the Philippines

Category Income Reduction

Poorest 30% 2.80%

Upper 70% 1.40%
Phils. Average 1.70%

Source: UA&P Estimates

13

Palay Production by Region, 1990-

1990-2007
AVERAGE GROWTH
2007 % Share (2007)
RATE (1990-
(1990-2007)
PHILIPPINES (M.T.) 16,240,194 4.37

CENTRAL LUZON 2,942,113 2.93 18.12

CAGAYAN VALLEY 2,025,245 4.35 12.47
WESTERN VISAYAS 1,992,426 7.33 12.27
ILOCOS 1,642,301 5.51 10.11
SOCCSKSARGEN 1,186,688 7.60 7.31
BICOL 991,430 2.61 6.10
EASTERN VISAYAS 948,827 10.66 5.84
MIMAROPA 877,180 4.80 5.40
ARMM 615,780 11.26 3.79
ZAMBOANGA PENINSULA 553,759 3.62 3.41
NORTHERN MINDANAO 501,892 2.19 3.09
CARAGA 455,838 5.99 2.81
CAR 436,311 9.62 2.69
DAVAO 427,184 -1.01 2.63
CALABARZON 391,418 -0.42 2.41
CENTRAL VISAYAS 251,802 2.21 1.55

Note: From palay to corn, conversion rates from 63 can be applied. Source: BAS
14

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 8
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Rice: Projected Supply-

Supply-Demand Scenario for 2008
(in thousand tons)

Supply Jan-Mar Apr-Jun July-Sept Oct.-Dec. Total

Begin Stock 2,119 1,901 1,819 1,801 2,119

Production (1) 2,529 2,056 2,122 4,290 10,997

Total Before
Imports 4,648 3,957 3,941 6,101 13,116

NFA Imports 300 900 900 0 2100

Total Supply 4,948 4,857 4,841 6,101 15,216

Consumption (2) 3,000 3,000 3,000 3,000 12,000

Ending Stock 1,948 1,857 1,841 3,101 3,101

Days in stock 59 56 56 91

1. assumed 63% milling recovery and production up by 7% over last year

2. At 33,000 tons per day (NFA). This is high at 134 kg per capita at 90 million people compared to over
110 kg five years ago.
Source: Dr. Rolando T. Dy, UA&P
15

AEROBIC RICE

16

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 9
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Philippines GDP Value Added 2007, 2008

Growth Rate (at 1985

Constant Prices) Forecast
SECTOR % Share 2007 Ave. 04-07 07-08
AGRI. FISHERY, FORESTRY 18.4 3.5 3.0%
INDUSTRY SECTOR 32.5 5.2 3.9%
a. Mining & Quarrying 1.7 9.7 18.0%
b. Manufacturing 23.2 4.4 2.0%
c. Construction 4.5 9.1 7.0%
d. Elect, Gas and Water 3.1 5.2 5.0%
SERVICE SECTOR 49.1 7.2 6.9%
a. Transport., Comm., Stor. 8.8 7.3 6.2%
b. Trade 17.1 6.6 8.2%
c. Finance 5.9 12.6 6.0%
d. O. Dwellings & R. Estate 4.6 5.6 5.5%
e. Private Services 8.5 7.6 6.5%
f. Government Services 4.1 3.3 2.5%
GROSS DOMESTIC PRODUCT 100.0 5.8 5.2%

Source: NSCB, BSP, UA&P/BEC Estimates

17

Infrastructure/Transportation

18

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 10
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

International
Laoag
Airports

Clark
SubicNAIA

Iloilo
Bacolod
CEBU

Davao
nga General Santos
am boa
Z

Downside: ATO Budget, NAIA 3, Promises 19

• Manila

• Batangas
• Calapan

• Roxas

Boracay Island •
• Caticlan

20

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 11
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

HIGHWAYS

SLEX NLEX

MRT
LRT
NORTHRAIL
SOUTHRAIL
21
STAR

Tarlac
Clark
Subic

Subic-Clark-Tarlac
Road *
*EDC Priority 22

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 12
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Business Economic Variables that Influence Real Estate

Development

Variables When?
Interest Rate (T-Bills Rate) After 6 months
Inflation After 6 months
GDP After 1.5 years
GNP After 1.5 years
Business Expectations After 1 year

Christmas Spirit After 4 months

Source: Winston Padojinog Estimates 23

Real Growth Rates: Real Estate, GNP, GDP, 91-

91-day t-
t-Bills,
and Inflation (Year 1998-
1998-2010)

55.00

50.00

45.00

40.00

35.00

30.00
Value (%)

25.00

20.00

15.00

10.00

5.00

0.00

-5.00

-10.00
80

82

84

86

88

90

92

94

96

98

00

02

04

06

08

10
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

GDP Growth Year 1980-2010

GNP Growth Inflation 91-day T-bill Real Estate

Source: NSCB. NSO. BSP, and Padojinog 24

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 13
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Real Estate Values (per square meter in pesos)

Comparing Selected Philippine Cities

Lot Condominiums
Res sale Com sale Res sale Com sale Res rent Com rent
peso/psm peso/psm peso/psm peso/psm peso/psm/ peso/psm/
mo mo

Metro 10,000- 50,000- 120,000 65,000 550 600-

Manila 50,000 200,000 800
Cebu 8,000-15,000 30,000- 65,000 50,000 350 500-
45,000 700
Davao 12,000 40,000 40,000
Iloilo 10,000 30,000 250 330
Angeles 9,000 25,000 200 250
Laoag 6,000 25,000 400
(OLD)
San 4,000 (New) 16,000 450
Nicolas (NEW)
(Ilocos
Norte)

Source: BEC Survey 2007 25

MINING
Metallic and Non-metallic
Mineral Resources

26

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 14
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Gold Bentonite
Copper Limestone
Silver Marble

Nickel Silica

Iron

Mining Map
Source: Mines and
Geosciences Bureau
27

Mining
PROSPECTS

Abundant Resources

Best Practices

Filipino Expertise

CONSIDERATIONS

Tribal and Ancestral Land

Mining Disasters

Benefits to Local Community

28

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 15
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

ENERGY
Natural Sources Of Power

Geothermal
Hydropower
Wind
Natural Gas
Gas Turbine
Coal
Diesel
Oil Thermal
Power Barge
29

Tourism
Natural Resources

30

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 16
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

Philippine Tourist Arrivals

Region Local Residents Foreigners Overseas Filipinos Total
CALABARZON/MIMAROPA 5,852,860 434,530 7,021 6,294,411
CENTRAL VISAYAS 1,081,903 542,159 7,383 1,631,445
WESTERN VISAYAS 1,259,332 266,891 84,454 1,610,677
CAR 902,917 76,812 13,191 992,920
NORTHERN MINDANAO 837,851 46,284 8,947 893,082
SOUTHERN MINDANAO 699,552 52,756 8,875 761,183
BICOL 587,823 31,153 18,151 637,127
CAGAYAN VALLEY 610,715 24,453 - 635,168
CENTRAL MINDANAO 618,077 4,606 4,443 627,126
WESTERN MINDANAO 480,297 13,647 13,415 507,359
CENTRAL LUZON 251,634 155,394 1,208 408,236
CARAGA 341,844 16,200 4,792 362,836
METRO MANILA 68,694 262,364 28,395 359,453
ILOCOS 281,582 52,786 1,793 336,161
EASTERN VISAYAS 189,643 13,329 597 203,569
16,260,75
GRAND TOTAL 14,064,724 1,993,364 202,665 3

Source: DOT 31

Downside: Tourism
 Lack of Preservation in the Ecology Balance
 Distortions in Benefits to Local People
 Threat to Culture & Values
 Lack of Facilities
 Threats to Peace & Order
 Illegal Status of Foreigners

32

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City
More Cheese in Real Estate: Year of the Rat 2008 17
Bus. Econ. Briefing for Eton Properties Phils.,
Phils., Inc.

BATANES

33
Pictures: R.M. Quesada, Internet

SUMMARY/CONCLUSIONS

K2008 Consolidation Year

K DRAMATIC EVENTS:
OIL-Demand (US-China) and Supply (OPEC, non-OPEC)
- Philippines: Indigenous
SUBPRIME-US Economy, Main Trading Partner
-US $ still main currency
- Election Year
RICE- Our own Doing
K Year-end Averages/recovery
K Start 2009 with new hope
K PAMANA

34

Dr. Ramon M. Quesada

July 30, 2008
Allied Bank Center, Makati City