http://www.colliersinternational.com...rt_1Q_2011.pdf Abstract: Executive Summary ECONOMY: VULNERABLE TO GLO BAL CONDITIONS Despite the recent tragedy in Japan and the political unrest in the Middle East, the Philippine government is still optimistic in achieving a GDP growth of 7% - 8% for 2011. Inflation has also started to accelerate, with March at 4.3%, a nine-month high. The ADB recently upgraded its forecast for the Philippines to reach 5% at the end of the year. Land values are still inching up, albeit at a slower pace than the last quarter of 2010. With the current planned developments in the traditional business districts, land values are expected to grow at an average of 3% - 5% for 2011. For the full year of 2010, the HLURB issued more than 324,000 licenses, lower than in 2009 by more than 100,000 licenses issued. Leading the pack, high-rise residential licenses continued to rise, accounting for 17% of all licenses issued. The low cost segment, where the majority of the backlog for housing is coming from, increased by only 6%. OFFICE: BPOs SHIFTING TO NON-CBDs; LO CATION STILL TRANSIT-ORIENTED Bonifacio Global City increased its office stock by 30,000 sq m, with three office buildings completed in the First Quarter. Other areas with new supply are Alabang, Eastwood City, Pasay City and Quezon City. Rents in the Makati CBD continued to climb by 1.2% for Premium buildings, to P820 per sq m, and 2.4% for Grade A buildings, averaging P680 per sq m. With a high take-up of about 40,000 sq m, the vacancy rates in the Makati CBD decreased further, to 3.8% from the previous quarter’s 5.4%. The Outsourcing & Off-shoring industry is still the major driver in occupying space across all submarkets tracked by Colliers, although Makati is still the preferred address of traditional offices. RESIDENTIAL : SURGE OF SMALLER UNITS DRIVES OCCUPANCIES LOW For the First Quarter, Bonifacio Global City has about 500 units recently completed and about 2,500 more in the pipeline, more than 30% of the total inventory expected for 2011. For the Luxury segment, the market is awaiting the anticipated Raffles Residences in Makati, which is set to be complete by year-end. Vacancies in the Makati CBD and Bonifacio Global City continually widens at the 9% level for the First Quarter, compared to 6% in the previous Quarter. In the other major CBDs, vacancies remain stable at the 3% to 4% level. In Makati, Ortigas, and Rockwell considered as prime locations, and with an availability of Luxury Three Bedroom units, average rents continue to rise and, although there will be no new supply coming in the medium term, long-term prices are still expected to rise, due to the limited supply for expatriate requirements. RETAIL : GEOGRA PHIC EXPANSION TO TA P PRO VINCIAL MARKETS Retail continues to grow, with new expansion plans of mall developers gearing towards the provinces. The current trend in Metro Manila are the redevelopment or small-scale expansion of existing malls, there are also new community malls that are seen as a support component for the BPO offices and the residential community. Vacancies across the super-regional and regional malls continue to be at an all-time low, with occupancy rates at the 99% level, thus pushing rental rates to P1,180 per sq m in the Makati CBD.