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JLL Reveals Philippine Property Market Will Remain Vigorous for the Second Half of 2019

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JLL, leading Philippine real estate consultancy firm, just released its property market report for the 2nd quarter of 2019. This report coincided with “Know the Point ~ Predictions, Opportunities, Insights, News, and Trends”, an event organized by JLL in cooperation with the European Chamber of Commerce of the Philippines (ECCP) which featured Janlo de Los Reyes, Head of Research and Consultancy, JLL Philippines and Eric Manuel, Philippine Representative, ARCH Capital Management as speakers.

JLL’s thorough research and expert analysis cover the 2ndQ 2019 Metro Manila, Cebu Real Estate and Davao property markets and the 1st H 2019 Calaba (Cavite-Laguna-Batangas) industrial property market. And based on JLL’s comprehensive study, the state of the Philippine real estate industry remains dynamic- and poised to attract more investments in the ensuing months.

An estimate of 156,100 square meters of office space was added to the total stock owing to the completion of eight (8) buildings, bringing in the aggregate supply added for 2019 to 336,700 square meters of office space. Development completions in 2Q19 are spread in several locations across the districts of Metro Manila within the Cities of Makati, Muntinlupa, Paranaque, Pasay, Quezon, and Taguig. The biggest of this development is MWM Terminal Inc.’s PITX Tower 4 in Paranaque City, which spans 19,200 square meters. This is followed by Double Dragon Center West with 17,600 square meters; 100 West Building in Filinvest Makati with 14,300 square meters and SM City Fairview Tower 1 with 12,600 square meters.

As of 2Q19, the supply of office spaces from Grade B to A developments approximately totals to 8.1 million square meters of office space with the majority located in Taguig City followed by Makati City backed by the presence of established CBDs – Makati and Bonifacio Global City (BGC). The high demand and concentration of office developments have spilled to its fringe areas with the presence of Mckinley Hill and Mckinley West in Taguig City and office developments rising along Chino Roces Avenue and other townships.


Metro Manila maintained a manageable vacancy level at 6% amid continuous additional office spaces from development completions. Taguig City holds the majority of the office spaces untenanted as the majority of the recent development completions are in BGC. Coming in second is Makati City, followed by Quezon City.

Offshoring and Outsourcing (O&O) remain as the major demand driver, taking-up approximately 128,100 square meters of office space in 2Q19. For the whole of 1H19, around 181,000 square meters of office space was absorbed by O&O firms. However, there has been a slow q-o-q take-up of office spaces from O&O firms in Metro Manila as they have expanded more in the provinces, owing to the limited PEZA approvals for IT centers especially in Metro Manila.

In 2Q19, only two buildings were granted PEZA accreditation with one located in Taguig City and the other in Iloilo City. Moreover, the government’s Administrative Order No. 18 for 2019 imposes prohibition of reviewing and granting PEZA applications for properties located in Metro Manila to allow the creation of more special economic zones in the provinces.

Online Gaming remains the second top office space occupier in the whole of 1H19 leasing a total of 160,000 square meters of office space in Metro Manila with around 119,200 square meters of office space transacted in 2Q19. For the said quarter, a POGO leased a whole building in Quezon City with a Gross Leasable Area (GLA) of 10,400 square meters and also leased significant amount of office spaces in two buildings within Paranaque City. As of June 2019, 56 POGOs have been registered with PAGCOR.

Pharmaceutical companies came as a surprise as a major demand driver to leased office spaces in 1H19, taking up an estimate of 45,100 square meters mainly due to their expansions within Metro Manila. Fourth top office space occupier for 1H19 are flexible workspace operators leasing 14,400 square meters of office space in Metro Manila.

Major foreign and local operators remain to be aggressive in their expansion plans and are seeking to increase footprint both in CBD areas and secondary business hubs. In 2Q19, WeWork opened its second facility in the country at RCBC Plaza in Makati CBD.


Makati City remains to have the highest quoted rent mainly due to the presence of Prime Office buildings within Makati CBD. Limited available office supply in Makati CBD, robust demand and presence of prime office buildings pushed landlords to command higher rents. Next would be Taguig City due to robust space demand in BGC with up-to-date building facilities. On the other hand, buoyant occupancy from online gaming in the Bay Area pushed rental rates further.

Meanwhile, asking rents of developments to complete from 2H19-2022E are close to the range of rents of existing developments with Taguig City leading the higher end of the spectrum due to more construction of Grade A developments in BGC. Buildings that are registered with USA’s LEED (Leadership in Energy and Environmental Design) or the Philippine Green Building Council’s BERDE certifications have been influencing the increase in the value of rents due to quality technology and equipment used for buildings to be environmentally sustainable in the long run.



More than 2,000 units are completed in 2Q19, mostly coming from Makati City and Taguig City. The latter half of the year is expected to deliver around 35,500 units more, recording a peak, should there be no construction delays. Makati City and Quezon City house majority of both existing and future condominium supply. Growth is noticeable in Pasay City in the next three years due to the uptick of investments in Bay City. SM Prime Holdings, Inc. holds the majority of both existing and future supply, on the back of being the lead contributor in various cities, particularly Pasay City where more than 90% of the pipeline belongs to the developer.


The average vacancy rate in Metro Manila is recorded at 2%, with Pasay City and Paranaque City pulling down the rate due to online gaming tenants, while employees and students drive the leasing activities for Makati City and Quezon City. A solid preselling market in Metro Manila is observed, evident from high sales take-up figures of future developments. Paranaque City is lagging behind other districts, primarily due to a large number of available units in a development located in the city’s outskirts.

Another demand driver comes from the leasing market. The leasing market for upper-mid to luxury developments source demand from corporate housing needs of expatriate employees of O&O firms, MNCs, and embassies.

Additionally, local and foreign high-net-worth investors continue to drive the sales market for upper-mid to luxury developments – with the purpose of either renting out the units or flipping them upon capital appreciation. Meanwhile, individuals that makeup starting families, young professionals, and upgraders make up the end-user demand profile of mostly mid-range developments.


The strong leasing market, driven by expatriate employees, stimulated rents in Makati City and Taguig City, becoming the highest across districts. On the other hand, rents in Pasay City and Parañaque City are influenced by healthy demand from online gaming employees.

As far as selling prices go, Makati City commands the highest prices for both existing and future supply, while prices in Paranaque City have continuously gone up, evidenced by the prices of future supply, due to the large interest in Bay City.



Total existing stock as of 2Q19 stood at 6.5M square meters. Quezon City leads all markets with a share of 27%, followed by Manila City and Pasay City with 13% and 11%, respectively. Forecast supply to add 673,500 square meters (2019E-2022E) with Paranaque City cornering majority of the future stock at 29% (Ayala Malls Bay Area – 192,000 square meters).


Average vacancy registered at around 3.0%, with Taguig City market posting strong occupancy (at around 98%) and Pasig City having the highest vacancy (at around 8-9%) due to the expansion of The Podium.

F&B brands continued to lead the retail demand. Some of the new foreign Food and Beverage (F&B) brands that entered in 2Q19 are Shake Shack in Central Square in BGC, Original Cake in SM San Lazaro, Famous Amos in S Maison, and Taiwan’s One Zo in Promenade Food Court Greenhills.

F&B brands that expanded during the quarter include Tiger Sugar, Botejyu, J.Co, Soban, Pound by Todd English and Pho Hoa.

Fast fashion brands in the like of clothing and apparel, shoes and bags also dominated the retail market in 2Q19. Known brands that had expansion include Parfois, Charles and Keith, Onesimus, Ever New, Terranova, Superga, and Daniel Wellington.

Several skincare brands, especially Korean brands opened in 2Q19. Known brands include The Saem, the Face Shop, and Innisfree. As part of re-entering the Philippine market, Innisfree opened the second branch in SM Megamall.


Average rentals range PHP 1,100 to 2,700 per square meter per month.



One hotel opened in 2Q19, providing an additional 93 rooms to the total hotel stock, specifically in Manila. 1H19 additions are at 486 rooms, brought upon by Sheraton Manila City and Hotel Lucky Chinatown. 2H19 is expected to bring an additional 4,800 rooms to the market, pushing up stock to over 41,000 rooms. Key hotels are multiple Red Planet hotels, Aruga by Rockwell Phase 3, Dusit D2 the Fort, multiple Seda developments, Novotel Manila, Hotel Okura, and Park Inn North EDSA.

Succeeding years look to taper off, with a significant increase in stock in Paranaque, Makati, Quezon City, and Taguig. The bay area (Pasay + Paranaque) and Makati take up the majority of hotel stock, with future supply still dominated by the three cities.


Paranaque commands the highest occupancy, brought about by strong pull of casino gamers and supplemented by its location near NAIA, pushing occupancy to above 90%. Other areas are seen to have occupancy within the 70 to 80% range.

Makati and BGC, meanwhile, remain a strong business/ corporate, as well as MICE-destination.

In Quezon City, demand is driven mostly by MICE events from local companies and government.


Based on Deluxe room category rates, Manila City and Muntinlupa City hold the largest price per room because of The Manila Hotel and Crimson Hotel. Taguig room rates start at 11,000 because of the more upscale nature of hotels in the city and the profile it commands, specifically in BGC.METRO CEBU PROPERTY MARKET OVERVIEW (1H19)



Total existing stock as of 2Q19 stands at 1.1M square meters. Cebu City leads all markets with a share of 87%, followed by Lapu-Lapu with a 7% share and Mandaue with a 6% share. Forecast supply to add 301,000 square meters (2019E-2022E) with Cebu City cornering majority of the future stock. Among the largest gross leasable areas are Central Bloc 2 by Ayala Land, Inc. and Cebu Holdings, Inc. (42,600 square meters) and One Montage by Innoland Development Corporation (42,000 square meters)


Total vacancy for Metro Cebu registered at 6%, with Cebu City posting strong occupancy and Mandaue City having the highest vacancy at 23% due to the demand being concentrated in Cebu Park districts. A total of 36,500 square meters were taken up in Q2 2019 with the biggest share being in Cebu City at 51%.

Demand drivers are Online Gaming in Lapu-Lapu City and ESL schools in Cebu. Cebu has around 150 ESL schools with students from South Korea, Japan, China, Vietnam, and Russia. Of the upcoming supply for Metro Cebu, 26%% has been pre-committed. Only Cebu City has known pre-commitments totaling to 27.%.


Average rentals range from PHP400-PHP1,100 per square meters per month. Specific examples are the J Centre in Mandaue City with rental at PHP400 per square meters per month, and the Calyx Centre in Cebu City with rental at PHP1,100 per square meter per month for a fully fitted office space.



Additional new supply of 585 units with the completion of 32 Sanson – Buri, Brentwood by Primary Homes, Inc., and Reef Residences by Landcaster Estate Ventures, Inc. bringing total units to 24,500. Cebu City leads all markets with a share of 63%, followed by Mandaue City with a 28% share.

Forecast supply to add 20,220 rooms (2019E-2022E) with the Cebu City market cornering a 63% majority of the future stock (12,647 units). 7,509 units are set to be completed by the end of 2019.



In Cebu City, the market is driven by high salaried employees working in CBDs. These employees typically originate from neighboring provinces of Cebu.

In Mandaue City, the market caters to employees from various industrial developments.

In Lapu-Lapu City, the market is mostly driven by tourists who lease in developments located in Mactan.


In Cebu City, the market is dominated by investors over end-users. These investors are typically local and foreign buyers who plan to enter their units in the leasing market or wait for capital appreciation and flip their properties. In Mandaue City, typical buyers are local and foreign investors with the presence of some upgraders, who buy from mid-rise developments. In Lapu-Lapu City, the market is being spilled over by the presence of nearby hotels and resorts, especially branded developments.


Average rental rates range from PHP 500 to PHP 1,520 per square meter per month. Mandaue City has the highest rental rates due to increased business activity as it is becoming an attractive location for POGOs.


For existing developments, average selling prices range from PHP52,000 to PHP 316,000 per square meter. Cebu City has higher average selling prices while Mandaue City has lower average selling prices. For future developments, average selling prices range from PHP 53,000 to PHP 177,000 per square meter.



Total existing stock as of 2Q19 stands at 1.7M square meters. Cebu City leads all markets with a share of 83%, followed by Mandaue City with 11%. Forecast supply to add 63,000 square meters (2019E-2022E) with Cebu City cornering majority of the future stock at 88% (Ayala Malls Central Bloc – 42,000 square meters).

There are 3 upcoming developments in Lapu-Lapu City – City Times Square, Gaisano Paseo Grande, and Mactan Town Center which are set to be completed by the end of 2019. These developments are leveraging on the potential catchment from the new terminal of Cebu-Mactan International Airport. There is no upcoming supply for Mandaue City.


Metro Cebu continues to be the largest retail hub outside Metro Manila. Demand drivers are the F&B sector – dominated by Korean owned restaurants, and tourists. One of the strategies being employed by F&B players is partnering with local travel agencies to direct tourists to their businesses.


Average rentals range PHP 500 to 1,500 per square meter per month.



Additional new supply of 300 rooms with the completion of Dusit Thani Resort Mactan Cebu Resort by Robinsons Land Corporation bringing total rooms to 16,703. Cebu City market leads all markets with a share of 55%, this is followed by Lapu-Lapu City with 30%.

Forecast supply to add 5,074 rooms (2019E-2022E) with Lapu-Lapu City market cornering majority of the future stock at 59% (3,000 rooms). 2,080 rooms are set to be completed by the end of 2019.


Stable occupancy within Metro Cebu registered at 75%. Lapu-Lapu City posting strong occupancy with 77% due to the presence of the airport in the city and its proximity to nearby beaches Demand drivers are the MICE market and local and foreign tourists. 5.5M foreign and domestic tourists visited Cebu in 2018, up from the 4.9 million tourists received in 2017 (data from DOT Region 7). Central Visayas earned P44.2 billion from tourism in 2018.


Average room rates range from PHP890 to PHP47,500 in Cebu City, PHP940 to PHP 60,000 in Mandaue City, and from PHP900 to PHP134,000 in Lapu-Lapu City. The presence of high-end hotel resorts such as Crimson, Movenpick, and others in Lapu-Lapu City is what causes premium room rates to be more expensive in Lapu-Lapu City.




Total supply is at 220,000 square meters. Full take-up is noted for all Grade A/PEZA accredited office spaces except for Davao Finance Center, which was only completed by the end of 2018. A total of 87,000 square meters coming from 7 office building projects is anticipated over the next two years.

Developer share is spread across developers with Plaza de Luisa Development Corporation leading the market with 15% of office stock.DEMAND

Main demand drivers are O&O firms. A slowdown in take up was noted in 2017 and early 2018 due to the declaration and extension of martial law. However, a firm from the O&O industry took up the majority of available supply in 4Q 2018.

PEZA accredited projects are already fully occupied.

Flexible workspaces are noted, with Regus having two offices and Skynora locating in Davao City last 2018. Davao Finance Centre started out slow but has since reached around 50% in 6 months of operations. Strong office market take-up is anticipated.

O&O expansion is foreseen as the main driver moving forward, supported by the large, healthy labor pool of skilled workers in Davao City. There is very high demand for PEZA approved office buildings as current PEZA stock is at 0% vacancy. Upcoming supply is still low and is a good opportunity for developers to take advantage of.



Total supply at 6,900 units, but is expected to increase to 21,300 units by 2022, driven by the continuous expansion of existing residential projects and large pipeline from new entrants in Davao City. Current market leaders are the Ayala group and Filinvest Land Inc. Leader for a market share of future units is SMDC with their massive Lane Residences development bringing in a total of 3,700 units. Following them is Filinvest Land Inc. which already has multiple projects and Cebu Landmasters Inc. which are venturing into three township developments.


Main demand drivers are local HNWIs, with OF Workers purchasing as well. Developments are mostly multiple tower mid-rise condominiums, with high rise condos gravitating towards the stretch of JP Laurel and the Poblacion District. Large jump in residential supply (6,900 units to 21,000 units). Main drivers will still be HNWIs, OF workers as secondary market. Condos primarily for investment purposes has potential adaptation of condos into condotels/BnBs with the strong hotel sector.



Total stock is currently at 865,000 square meters GFA, dominated by SM Prime, with 31% share and DSG Sons, with 22% share. Cebu Landmasters Inc. is anticipated to bring in two retail malls as part of their announced townships in Matina. Vista Mall is looking to enter the market in Maa, far from the city proper, with 35,000 square meters of GFA. Developments are gearing away from the downtown and JP Laurel areas because of the already strong presence of SM, Ayala, and DSG Sons in the area. LTS Malls Inc. has an upcoming redevelopment project along JP Laurel aAvenue as well.


Main demand drivers are expansion from local brands and locators with existing operations in Davao City. Retail development branching outside of the city proper of Davao City. Developers are starting retail projects outside the stretch of JP Laurel and the downtown area (Poblacion), due to high saturation in the said areas. Investors looking to consider retail developments have potential in the surrounding areas of Bajada, Matina, Maa, and Buhangin are anticipated.



250 additional hotel rooms from two hotel developments within 1H19. Of the total supply, only 1,097 rooms are 4-Star, the rest being 3-star and lower. Forecast supply to reach 6,000 up to 2022, coming from 3 and 4-star hotels. Major supply is expected in the next two years, with 747 more units set for completion in 2019, due to slippages in anticipated hotel completions within 2018, and 663 units in 2020, dominated by the anticipated completion of the 519-room Hotel 101. Cebu Landmasters Inc. and LTS Malls Inc. have announced plans to put up convention centers in their upcoming projects.


MICE and Business Travelers are the main market drivers, along with local tourist arrivals. Monitoring tourist arrivals in 2018, the only lean month was in January. There is a healthy hotel sector, providing investment potential from developers and hotel operators. LGU provides MICE incentives. Lower-tier hotels are able to achieve high occupancy because of the spillover of demand from hotels with convention facilities. Low growth in 4-star hotel rooms and absence of 5-star hotels are seen as opportunities for the developer. LGU is looking for convention centers that can accommodate large events, with SMX convention center as the only one that can accommodate over 5,000 pax. There is also potential in reaching and serving the needs and wants of the growing influx of business and leisure tourists from international direct flights to Davao City to supplement the hotel sector.

JLL continues to be optimistic and excited about the future of the Philippine real estate industry and expects the 2nd half of 2019 and beyond to provide many opportunities for real estate stakeholders, that will surely redound to the country’s economic good.



There have been no recorded additions to total existing industrial supply since 2018. On the other hand, the completion of AG&P Special Economic Zone 2 in Batangas for the rest of 2019 is expected to add about 40 hectares of industrial land.

As of 1H19, majority of existing industrial parks are found in Batangas with 38% share to total supply. The dominance of the province is anticipated to continue with the development of more parcels of industrial land in the next three years, increasing the share to 63%.

In terms of accumulated industrial land, First Philippine Industrial Park, Inc. outweighed the others, with developments located in Batangas. This is followed by Lima Land, Inc. and Laguna Technopark, Inc. On the other hand, Filinvest Land, Inc. is expected to lead among developers of future industrial parks in the next three years, owning 42% share total future supply.


Overall average occupancy rate of industrial parks in Cavite, Laguna, and Batangas is at 97% as of 1H19. Locators under the industry of Radio, Television, and Communication Equipment and Apparatus primarily drive the healthy take-up in the last six months. This is expected to soar, due to a number of demand drivers in the area.

First is the improving infrastructure system that will link Cavite, Laguna, and Batangas to neighboring areas, especially Metro Manila, which is expected to attract more foreign investments, taking advantage of an improving transportation system and increasing land value.

Second, the growing transactions built through the internet is significantly becoming a driver of demand for industrial space (i.e. warehouse space) amid the increasing requirement of locators for distribution centers. Consequently, the logistics sector is taking advantage of the advent of e-commerce industry, looking for more expansion facilities.

Third, the manufacturing sector recently regained its strength. The manufacturing sector of the Philippines outperformed other ASEAN countries evidenced by recovering business conditions and expanding operations. This is anticipated to stimulate demand for more industrial space.


Warehouse rents are highest in Batangas, ranging between PHP 220 and PHP 320 per square meter per month. Meanwhile, relatively cheaper warehouse rents are observed in Cavite. Average warehouse rent across Cavite, Laguna, and Batangas increased by 1.6% h-o-h, as supported by the growing logistics sector.

Industrial land prices are highest in Cavite, ranging from PHP 5,000 to as high as PHP 7,500 per square meter. The insufficiency of available land for sale in a particular development created the upward pressure, on the back of strong demand. The growth rate of average selling price across Cavite, Laguna, and Batangas are recorded at 1.3% h-o-h, which is projected to increase further with the completion of infrastructure developments in the area such as Cavite-Laguna Expressway (CALAX).

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