The Philippine economy achieved GDP
growth of 7.3% in 2010, the strongest
since 1976. Economic expansion is
fuelled by the industry and services
sectors, and steady remittances from
Overseas Filipino Workers. Filipinos
working overseas remitted home
US$18.8 billion in 2010, 8.2% higher
than 2009 levels.
The Philippine government is expecting
another year of robust growth with a
target GDP growth of 7-7.4% for 2011.
Inflation remained manageable, averaging
3.8% in 2010 compared to 3.2% in 2009.
The government, which targets inflation
of 3-5% for 2011, will closely monitor
the inflation trend.
The central bank has maintained interest
rates at the current low levels of 4%
for overnight borrowing and 6% for
overnight lending since July 2009 to
support credit growth.
In 2010, a total of 1,100 and 760 residential
units were completed in Makati and
Ortigas respectively. This brought the
supply of condominiums in Makati and
Ortigas CBDs to 13,100 units and 7,500
units respectively as at end-2010.
Occupancy rate in Makati dipped slightly
to 91.2%. There was a decline in demand
for studio and 1-bedroom units that
target young professionals and start-up
families while demand for expatriate
quality 2-bedroom and 3-bedroom units
Rents of luxury units in Makati and
Ortigas were largely unchanged from
the previous year at an average of
P550 psm per month (psm/mth) and
P340 psm/mth respectively.
Capital values in Makati rose 2.5%
year-on-year to P102,000 psm, while
capital values in Ortigas increased
by 2% to P58,000 psm.
BPO Sector to Boost Demand
The supply of office space in Makati and
Ortigas CBDs remained relatively stable
at 2.7 million sm and 1.1 million sm
respectively as at the end of 2010.
There is no new office development in
the pipeline in Makati except for a
prime building with 65,000 sm of office
space due to be completed in 2012.
In Ortigas, about 28,000 sm of office
space will be completed over the
next three years.
Makati's overall office occupancy rate
increased to 94.5% as at end-2010.
However, occupancy rates of premium
and Grade A buildings declined due to
alternative office locations in Rockwell
and Fort Bonifacio. Ortigas also
recorded higher occupancy rate
of 96.8% in 2010.
Rental rates of premium-grade office
buildings in Makati declined by 2.3%
from the beginning of 2010 to P800
psm/mth. With growing demand from
the business process outsourcing
industry and limited new supply, rents
in Makati CBD are expected to increase
by 10-15% in 2011.
Meanwhile, Grade A rents in Ortigas
rose to P550 psm/mth in 2010.
Capital values in Makati and Ortigas
rose about 2% to P101,000 psm and
P55,000 psm respectively in 2010,
and are expected to increase
marginally in 2011.
Prospects for Rental Growth
Supply of retail space in Metro Manila
increased slightly to 5.1 million sm.
Current trend saw mall developers
expand through development of
small-scale community malls as well
as retrofitting and expansion of
Average occupancy rate remained
stable at 91.7%, a slight improvement
from 90.8% at the beginning of the year.
Effective rental rates in Makati
remained at P1,120 psm/mth while
rates in Ortigas stood P1,035 psm/mth.
As consumer sentiments continue
to improve, strong retail sales are
expected, which will likely push up
occupancy and effective rental rates
by between 3% and 5% in the
first half of 2011.