Residential Property Market Overview

Philippines

General Economic Overview

Economic growth has averaged 5% since President MACAPAGAL-ARROYO took office in 2001.
MACAPAGAL-ARROYO averted a fiscal crisis by pushing for new revenue measures and, until
recently, tightening expenditures. Declining fiscal deficits, tapering debt and debt service ratios, and
increased spending on infrastructure and social services bolstered optimism over Philippine
economic prospects. Although the general macroeconomic outlook improved significantly in recent
years, the economy still faces several long term challenges. The Philippines must maintain the
reform momentum in order to catch up with regional competitors, improve employment
opportunities, and alleviate poverty.

The Philippine economy grew at its fastest pace in three decades in 2007 with real GDP growth
exceeding 7%, but growth slowed to 3.8% in 2008 as a result of the world financial crisis. High
government spending, a relatively small trade sector, a resilient service sector, and large remittances
from the four- to five-million Filipinos who work abroad have helped cushion the economy from
the current financial crisis.

Residential Property Market Overview

• With no new residential condominiums expected to complete this year, vacancy should
remain close to 10% until 2010. Nevertheless, CBD-wide vacancy continues to inch up, now
at 9%, as tenant movements observed late last year become more apparent. Non-luxury
condominiums led the rise in vacancies in Q1.
• CBD-wide rental rates for luxury 3BR units marginally declined by 1.4% to P575/sqm or
around P143,750 monthly for a 250-sqm unit. Rockwell and Bonifacio Global City luxury
condominium rents are unchanged.
• Makati CBD average prices of luxury residential condominiums are virtually flat at
P101,000/sqm. Prices of condominiums in the secondary market will be pressured in the
next few months as other developments complete. On the other hand, a downbeat trend in
the primary residential market will likely be observed in the next six months at least as well.

Supply
No residential condominium completion is expected in Makati CBD in 2009. The number of
condominium units in Makati CBD will remain at 12,015 units until next year when five
condominium projects are expected to complete. Most of the future residential developments in
Makati are luxury condominiums; most notable are Raffles Residences, which is under
construction, and the proposed Discovery Primea. From 2009 to 2012, Makati CBD will have added
more than 5,000 new residential condominium units.
Developments elsewhere are not slowing down either, with Bonifacio Global City filling up its open
space with at least 25 condominium projects completing in the next 48 months. Rockwell and
Ortigas Center are also expecting not less than eight new condominiums in the next three years
combined. While high-rise residential developers are showing prudence in their projects and plans
this year, building and completing over 20,000 units in the next 48 months is still very tough for
Metro Manila demand to accommodate.
Demand
CBD-wide residential condominium vacancy inched higher to 9% in Q1 from 7.7% at end-2008.
The notable increase in vacancy came from older buildings that are currently competing against
newer condominium developments. Non-luxury condominiums’ vacancy rose to 12.7% from 10.6%
in Q4. Tenant movements observed late last year are becoming more apparent as more units become
available. Vacancy is expected to maintain its current level, possibly hitting double digits at some
point, with no completions in the next nine months.

Rents
Residential rents for luxury 3-BR units in Makati CBD marginally declined by 1.4% to P575/sqm or
around P143,750 monthly for a 250-sqm unit. As anticipated, demand for larger sized condominium
units in Makati diminishes and adjustments in rents are starting to be seen. New residential projects
that are completing in many areas in Metro Manila will also continue to put downward pressure on
rents in older condominium buildings in Metro Manila.
On the other hand, luxury residential condominiums in posh Rockwell Center continue to enjoy the
same rental rates observed in Q4 2008. Vacancy in Rockwell remains below 5% and this has helped
sustain its average rental rates at P684/sqm that translates to P154,000 monthly for a 225-sqm unit.
On a per square meter basis, Rockwell has the most expensive condominiums to rent.
Luxury residential 3-BR average rent in Bonifacio Global City is barely unchanged over Q1 at an
average of P625/sqm or more than P180,000 per month. Big-sized 3-BR units in BGC are almost
fully occupied at any given time. Expectations remain positive for this segment; rentals for luxury
3-BR units in BGC are most likely to resist significant downward pressure this year. Smaller unit
rentals, however, are not immune to supply-induced downward pressures.

2009 – 2010 Estimation

The Housing and Urban Development Coordinating Council (HUDCC) estimated that there are
about 3.8 million housing backlog (including projected yearly new households) in the country for
the period 2005-2010.

This huge unmet demand will help sustain activities in the real estate sector in the coming years. In
fact, developers remain upbeat about residential property market. Phinma Properties Incorporated,
for instance, is scheduled to launch four residential projects targeted for middle-income earners this
year.

The low-income housing market is also thriving. One of the contributing factors to this is the
reduction in PAGIBIG Fund interest rates which has made housing much more accessible. For
instance, interest rate for a housing loan package amounting to P750,000 has been reduced to 7%
from 10%, translating to almost P1600 savings in monthly amortization. The Presidential
Management Staff estimates that every peso spent in the housing sector creates P16.61 expenditure
on other sectors of the economy.

In terms of job generation, it is estimated that 8.3 persons are employed for three weeks for every
house built.

However, analysts are one in saying that the high-end condominium segment would most likely be
affected by the economic slowdown. Most of the buyers of this segment come from the US which
has been severely affected by the crisis. Those who buy condominiums as an investment may also
postpone their purchases. Wage increases and profits from stock investments which have supported
housing price growth in 2007 have basically disappeared. Developers postpone the introduction of
new luxury projects as home-buying activity continues to weaken.
Online Residential Property Agents

Type Alexa Traffic Rank Approximate Size

olx.com general classifieds 14,578 69,600
sulit.com.ph general classifieds 1,781 11,600,000
buyandsell.com.ph general classifieds 291,012 No Data
ayosdito.ph general classifieds 10,899 62,300
craiglist.com general classifieds 19,430 69,600
roomrent.ph rent, share No Data No Data
housinginteractive.com rent, buy 751,303 821
kugli.com general classifieds 33,642 19,400
mondinion.com general classifieds 128,930 18,200
pinoyprofessionals.com general classifieds 246,067 89,700
88db.com general classifieds 1,610 4,260,000
ahyer.com rent, buy 130,480 21,300
wahoy.com general classifieds 268,005 7,190
pinas.ph general classifieds 388,634 107
moveinthecity.com rent, buy 282,776 26,200

References
• Real Estate Industry: Enduring the Effect of the Global Financial Crisis, Congressional
Planning and Budget Department House of Representatives
• Market Reports colliers.com
• Rent Accommodation Online – roomrent.ph