MANILA OFFICE REPORT

1Q11

ECONOMY BEAT ON THE STREET

The Philippines posted an annual GDP Growth Rate of 7.3% in 2010, the "Our contact-center sector grew over 20
highest in the post-Marcos era. The first quarter of 2011 has seen percent in 2010, overtaking India and
establishing itself as the largest in the world
economic growth experienced the previous year, albeit conservatively. on the back of the Philippines being
Leading Economic Indicators (LEI) as published by the NSCB has recognized as the most-preferred destination
increased to 0.012 percent from a revised minus 0.031 percent in fourth in the world for these [BPO] services.“ –
quarter of 2010. However, consumer sentiment has dipped. This decline Alfredo Ayala, BPAP chairman, in an
interview for BusinessWorld, 09 April 2011
resulted from the social unrest in the Middle East, which in turn resulted in
higher oil prices and a reduced remittance flow. Natural calamities, i.e., the
earthquakes that hit New Zealand and Japan, also contributed to the low
ECONOMIC INDICATORS
consumption growth. These events also weighed in on the stock market,
which saw a surge only in late March with PLDT’s purchase of Digitel, the 2009 2010 2011F
biggest telecom deal in decades. Meanwhile, the monetary board has GDP Growth 1.13% 7.3% 7-8%
increased overnight borrowing and lending rates by 25 basis points to
4.25% and 6.25% respectively, based on signs of stronger and broadening CPI Growth 3.4% 3.8% 3.5-5.5%
inflation pressures as well as a further upward shift in the balance of Unemployment 7.5% 7.3% 7.4%
inflation risks. Average inflation rate for the quarter is 4.1% and is well Rate
within the government target of 3 to 5 percent for the year. Foreign debt Employment Rate 92.5% 92.7% 92.6%
rose 9.5% to US$60.1 billion as of end-December 2010. The central bank
attributed the hike in the country’s external debt to foreign exchange Source: NSCB, NSO, NEDA, CFEI
revaluation due to the appreciation of the Japanese yen against the dollar MARKET FORECAST
and bigger net availment of both the public and private sectors.
ABSORPTON: Low absorption rates
OVERVIEW continue as an effect of a cautious global
economy due to recent social unrest and
The first quarter has seen only a handful of landlords conservatively natural calamities.
increase their lease rates. While the market remained relatively at the
bottom for the remaining part of 2010, 2011 is expected to see gradual CONSTRUCTION: Developers
increase as demand peaks and supply gradually diminish. Office market is continue bullish construction of office
spaces, however, only a small percentage
anticipated to be neutral later this year. The “wait-and-see” attitude of the are expected to be finished within the
market has ended shifting towards optimism as investor sentiment year.
improves. Low lease rates and high vacancy rates in most submarkets are
still enjoyed so far. Makati CBD’s prime rates averaged at Php850/sqm/mo, RENTAL RATES: Lease rates generally
whereas vacancy rate stood at 8.75%. remain stable, but gradual increase is
expected within the year , evident in few
landlords who hiked their rates.
OUTLOOK
Current world events show little negative effect on investor sentiment and
GRADE A RENTAL VS. VACANCY
economic indicators. 2011 is still expected to be a better year for the office RATES
market. The probability of a commencement of the general increases in
lease rates is still supported. While developers continue shoring up new
supply, only a small percentage of the projects are expected to be
completed within 2011. This may result to restrictions in supply, putting
pressure on vacancy rates.

Absorption rates are likely to increase late this year, particularly in non-CBD
areas such as Fort Bonifacio and Quezon City, as demand picks up, led by
BPOs, and business relocations from Japan are expected. From being
tenant-favorable in 2010, the market will shift to neutral come 2011 until
2012.
1 MANILA OFFICE REPORT 1Q11
 MANILA OFFICE REPORT 1Q11

MARKET / SUBMARKET STATISTICS

*Php/sqm/mth
Exchange Rate:
US$ = Php43.0750
EUR = Php61.8810
Source: CFEI

MARKET HIGHLIGHTS

FOR INDUSTRY-LEADING INTELLIGENCE TO SUPPORT YOUR REAL ESTATE AND BUSINESS DECISIONS, GO TO CUSHMAN & WAKEFIELD’S KNOWLEDGE CENTER AT: www.cushmanwakefield.com/knowledge
*Market terms & definitions based on BOMA and NAIOP standards.

This report contains information available to the public and has been relied upon by Cushman & Wakefield on the basis that it is accurate and complete.
Cushman & Wakefield accepts no responsibility if this should prove not to be the case. No warranty or representation, express or implied, is made to the
accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions,
withdrawal without notice, and to any special listing conditions imposed by our principals. Cushman & Wakefield of California, Inc.
Cuervo Far East, Inc. 601 South Figueroa Street, 47th Floor
©2010 Cushman & Wakefield, Inc. All rights reserved.
101 Esteban St. Cor. Dela Rosa St., Lic. # 00616335
Please consider your environmental responsibility before printing this report. Legaspi Village, Makati City, Philippines Los Angeles, California 90017
Trunk Line: (632) 750-6610 (213) 955-5100
Fax: (632) 750-6603
2 MANILA OFFICE REPORT 1Q11