ColliersPH CebuPropertyMarket 17july2019

CEBU PROPERTY
MARKET BRIEFING
Research | Philippines
JULY 17, 2019 IN PARTNERSHIP WITH

SEDA AYALA CENTER, CEBU
MACROECONOMIC OVERVIEW
PHILIPPINE HISTORICAL GDP
Sustained growth in 2019
2019 GDP Growth Forecast Real GDP Growth (Constant 2000 Prices)
9% 7.1%
6.0% - 7.0% 8%
7%
6.9%
6%
6.3%
5%
2019
BBB+
6.7%
AGENCY 4%
FORECAST
3% 6.1%
Latest S&P Philippine World Bank 6.4 %
Credit Rating 2% 6.1%
S&P 6.4 %
1%
6.7%
11.5% Standard Chartered 6.4 % 0%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Fitch Solutions 6.1 % -1%
Private Construction Growth
In 2018 (vs. 3.8% in 2017) Oxford Economics 6.1 % -2%
Source: Philippine Statistics Authority
COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

OFW REMITTANCES
Up 3.7% YoY
• About 78% of 35
remittances during the
30 January – April
period are from the
United States, Saudi 25 2019 Remittances
Arabia, UAE, Singapore,
USD 10.8bn
USD (in billions)
20
Japan, UK, Qatar, and
Canada 15
10
• Government’s target is
3% growth in 2019 5
• Continue to drive Cebu -
2019*
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
retail and residential
demand 1Q 2Q 3Q 4Q
Source: Bangko Sentral ng Pilipinas

LENDING RATES
Inflation within the Central Bank’s target
January- June 2019 Overnight

18%
16% 3.4% inflation rate vs.
4.3% in 2018
5.0% Lending Facility
Rate – May 2019
14%
12% 8.6%
10%
8% 7.2%
6%
4% 5.8%
2% 3.0%
0%
1Q19
2Q19**
2006
2009
2012
2015
2018
2001
2002
2003
2004
2005
2007
2008
2010
2011
2013
2014
2016
2017
Lending Rate (Low) Lending Rate (High) Headline Inflation Rate Average Mortgage Rate
• Lending Rates: • Average Bank Mortgage Rate: • Average Inflation Rate:

2Q 2019: 5.8% - 8.6% 2Q 2019: 7.2%* 2Q 2017: 2.9%
2Q 2018: 4.2% - 7.0% 2Q 2018: 5.9% 2Q 2018: 4.8%
2Q 2019*: 3.1%
Source: Bangko Sentral ng Pilipinas; Colliers International Research
*Average of mortgage rates offered by major banks in the Philippines
COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019 **As of May 2019
CEBU ECONOMIC OVERVIEW
Gross domestic product of Central Visayas as of 2018
5% National Competitiveness
GDP Growth of Central Visayas Council Rank of Cebu City in
in 2018 vs. 5.2% in 2017 2018 from 9th in 2017
7.6% 8th
39% 56%
Construction growth of Central
Services sector as % of GDP Visayas in 2018
56% 14%
Services Industry AHFF (Agricultural, Hunting, Forestry & Fishing)


NATIONAL COMPETITIVENESS RANKING
Cities & Municipalities Competitive Index 2018
ECONOMIC GOVERNMENT
LOCATION OVERALL RANK INFRASTRUCTURE RESILIENCY
DYNAMISM EFFICIENCY
Quezon City 1 1 7 2 15
Manila City 2 5 6 1 16
Davao City 4 3 31 3 3
Makati City 5 4 5 9 5
Cebu City 8 8 39 7 4
Bacolod City 9 9 47 5 13
Iloilo City 13 11 3 69 19
Angeles City 122 128 109 108 88

GDP GROWTH PER REGION (2018)
Central Visayas among the leaders in GDP growth at 7.6%
10.0%
9.0% 8.6%
8.0% 7.6% 7.3% 7.1%
7.0%
6.1%
6.0%
5.0%
4.8%
4.0%
3.0%
2.0%
1.0%
0.0%
XI (Davao Region) VII (Central Visayas) IVA (CALABARZON) III (Central Luzon) VI (Western Visayas) NCR

SHARE TO GDP (2018)
Central Visayas share to Philippine GDP at 6%
4%
4% Gross Domestic Product of
6% the Philippines in 2018
NCR
Others
IVA (CALABARZON)
10%
36%
PHP9.2 Tn
III (Central Luzon)
VII (Central Visayas) Gross Domestic Product of
XI (Davao Region) Central Visayas in 2018
17%
VI (Western Visayas)
PHP594 Bn
22%

CEBU INFRASTRUCTURE
INFRASTRUCTURE PROJECTS
Upcoming infrastructure projects in the Philippines
NAIA Development Clark Railway

Completion date: 2020-2022 Completion date:
Phase 1 – Q4 2020 ; Phase 2 – Sept 2022
Metro Manila Bus Rapid Transit
Cavite-Laguna Expressway
Completion date: 2020
Metro Manila Subway Bicol Airport Expansion
Completion date: 2025 Completion date: 2020
Cebu Airport Expansion

Iloilo Airport Expansion Completion date: 2018
Cebu Bus Rapid Transit
Bacolod Airport Expansion Completion date: 2021
Bohol Airport Expansion
Cebu Cordova Bridge Completion date: 2018
Davao Airport Expansion

Mindanao Railway
Completion date: 2021 Davao City Bypass
Completion date: Sept 2022 2020
Laguingingan Airport Expansion
Completion date: 2020 Davao Sasa Port
Completion date: 2020-2022

CEBU AIRPORT EXPANSION PROJECT
A world-class airport facility in Ease access for local and foreign

2018 completion date Cebu that aims to accommodate employees in Cebu and improve
8-12 million passengers. connectivity between business hubs.

CEBU LRT PROJECT
A series of railway projects that will

2022 target completion Improve connectivity between Cebu
include the Lapu-Lapu City monorail
date residents and employees.
project, Carcar to Danao and
Mandaue to Airport Line.

ROAD PROJECTS
2021 - Cebu-Cordova Expressway 2022 – Metro Cebu Expressway
An 8.5km expressway that will connect the

An expressway that will traverse from Danao
Cebu South Reclamation area to the Mactan
City to Naga City in 1hr 25 mins.
island in the municipality of Cordova.
Improve connectivity between Cebu City and

Ease of access to 2nd and 3rd tier cities.
Cordova residents and employees.

CEBU BUS RAPID TRANSIT
A 23-kilometer corridor that traverses Connectivity between Cebu's CBDs.

2021 target completion
through Cebu City’s central business To benefit employees and residents.
date
district (CBD), from Bulacao in the South
West and Talamban in the North East.

OFFICE SECTOR
IN A NUTSHELL | OFFICE
Sustained demand Mandaue an offshore PEZA delays threaten

from BPOs and ESLs gaming hub ex-Mactan occupancy

PROVINCIAL LOCATION HIGHLIGHTS - CEBU
Cebu Quickstat
Breakdown of Graduates
KEY DEMOGRAPHICS
4.6M Business
Population 24%
(2015 PSA Census)
Others
47%
160,000
IT-BPM employees Engineering
(as of 4Q18) 15%
39,500 Medical
Math & IT
Graduates 7%
(A.Y. 2017-18) 7%
Source: Philippine Statistics Authority (population); Cebu Daily News
COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019 (employees); Local ICT council and Colliers International (trends)
DEMOGRAPHICS
Talent Pool
NUMBER OF GRADUATES PER YEAR METRO MANILA CEBU
Accountancy and Business Admin 46,180 9,603

Education 10,680 6,959
Engineering and Mathematics 17,693 8,906
Information Technology 17,507 3,549
Law and Jurisprudence 883 252
Mass Communications 3,316 291
Medical and Allied 13,773 2,913
Service Trades 4,562 557
Other Disciplines 23,466 6,453
Total Higher Education Graduates 138,060 39,483
Notes/Sources: DigitalCitiesPH (2018)

OFFICE STOCK AS OF Q1 2019 (in SQM)
Bulk of supply located in Cebu City
CEBU BUSINESS PARK | 31% | 328,500 SQM
1.05 Mn CBP FRINGE | 6% | 59,600 SQM
Total office stock in

CEBU IT PARK | 34% | 1.7M
Cebu as of Q1 2019
CEBU IT FRINGE | 2% | 20,900 SQM
MANDAUE CITY | 5% | 55,800 SQM
MANDAUE FRINGE | 2% | 22,100 SQM
UPTOWN | 8% | 78,800 SQM
MACTAN | 8% | 84,700 SQM
RECLAMATION | 4% | 45,400 SQM

OFFICE SUPPLY AND DEMAND
Overall vacancy in Cebu stands at 7.0%
Vacancy for Q1 2019 Net take-up for Q1 2019
7.0% 39K sqm

up from 6.7% in Q4 2018
200,000 14.0%
180,000
12.0%
160,000
140,000 10.0%
120,000
7.9% 8.4% 8.0%
100,000
6.7% 6.9% 6.0%
80,000
60,000 4.0%
40,000
2.0%
20,000
- 0.0%
2013 2014 2015 2016 2017 2018 2019F 2020F 2021F
Supply Net Take Up Vacancy Rate

COMPARATIVE OFFICE VACANCY RATES
Per sub-market
LOCATION Q1 2019
• Most of the demand is seen in Cebu’s primary Cebu Business Park 0.6%
business districts – Cebu Business Park (CBP)
and Cebu IT Park (CITP) and their fringes – Cebu Business Park Fringe -
given the following: Cebu IT Park 7.4%
Cebu IT Park Fringe 3.2%
‒ Critical Mass;
‒ Presence of support facilities such as 24/7 Mactan 4.9%
transportation hubs and retail options; Mandaue 30.0%
and
‒ Available quality office spaces. Mandaue Fringe 37.1%
Reclamation Area 31.0%
• Mactan and Mandaue vacancy to drop as more
Uptown -
offshore gaming firms open shop.
F. Cabahug -
Overall 7.0%

Q1 2019 TRANSACTIONS
Gaming covered 45% of transactions
5% 2,300 SQM 11,900 SQM
18%
45%
1,129 SQM 4,258 SQM
32%
Gaming Non-BPO Voice KPO

ESL CENTERS
Market segment with high growth potential
SUBMARKET ENGLISH SCHOOL SIZE (SQ M)
QQ English 9,500
Newtype International Language School 472

Cebu IT Park
TOMAS English Training Center 412
Access E-Talk Plus Inc. 663
Cebu Business Park

Winkey Online English Academy 661
Nexseed 563

OFFICE FORECAST SUPPLY, GLA (SQM)
By sub-market
LOCATION END-2018 2019F 2020F 2021F TOTAL

CBP 328,500 17,800 23,000 17,900 387,200
• Cebu IT Park and Cebu CBP Fringe 59,600 49,100 14,700 - 123,400
Business Park and their CITP 354,600 67,800 - 58,300 480,700
fringes to cover 85% of new
CITP Fringe 20,900 - 111,300 - 132,200
supply.
F. Cabahug - - - 22,100 22,100
• An average of 142,400 sq m Mactan 84,700 - - - 84,700
of office space due to be
completed per year from Mandaue 55,800 20,900 - - 76,700
2019 to 2021. Mandaue
22,100 - - - 22,100
Fringe
Reclamation
45,400 24,400 - - 69,800
Area
Uptown 78,800 - - - 78,800
Overall 1,050,400 180,000 149,000 98,300 1,477,700

NEW BUILDINGS FOR 2H2018 – Q1 2019
Cebu IT Park covered 49% of completions from 2H2018 – Q1 2019
Submarket Building Name Leasable Area

2H2018 – Q1 2019 Completions
Cebu IT Park HM Tower 18,000
Mactan Pacific World Tower 11,900 37K sqm
Mandaue The Space 7,100

UPCOMING SUPPLY FOR 2019 TO 2021
Per sub-market
CEBU BUSINESS PARK

2019: Mabuhay Tower 2, Latitude Corporate Center
2020: PNB Tower
2021: Johndorf Tower
CEBU BUSINESS PARK FRINGE

2019: One Montage
2020: JEG Tower
CEBU IT PARK DISTRICT

2019: Skyrise 4B, Central Bloc BPO 1
2021: Central Bloc 2, Skyrise 3B
CEBU IT PARK FRINGE

2020: Cebu Exchange
MANDAUE
2019: Oakridge IT Center 3
F. CABAHUG
2021: Faustina Center
RECLAMATION AREA
2019: Grand Tower Cebu Condo Office
COMPARATIVE OFFICE RENTAL RATES
Per sub-market
LOCATION Q1 2019
• CBP continues to command the highest lease Cebu Business Park Php 600 – Php 1,300
rates as it attracts both BPO and Traditional Cebu Business Park Fringe Php 550 – Php 675
Offices.
Cebu IT Park Php 550 – Php 800
• Much of office demand still gravitates towards Cebu IT Park Fringe Php 600 – Php 675
the 2 business districts.
Mactan Php 500 – Php 550
• Fastest growth in rates recorded in CITP. Mandaue Php 500 – Php 850
Mandaue Fringe Php 400 – Php 450

• Rates in Mactan and Mandaue will likely
increase as the LGUs of these cities allow POGO Reclamation Area Php 400 – Php 500
companies to operate. Uptown Php 300 – Php 700
F. Cabahug Php 380 – Php 450

OFFICE LEASE RATE GROWTH
Cebu vs Metro Manila
14.0%
12.0%
10.0%
10.7% 10.5% 10.3%
8.0% 8.4% 8.2% 7.8%
7.4%
6.0% 6.5%
4.0% 4.5% 4.0%
2.0%
0.0% 0.2%
-2.0% -1.8%
-4.0%
2013 2014 2015 2016 2017 2018
CEBU METRO MANILA
Note: Metro Manila office rents composed of Makati P+A, Fort and Ortigas buildings

CEBU VS. OTHER OFFICE HOTSPOTS
Office overview
CLARK METRO MANILA

Office stock (GLA sqm) 331,000 sqm Office stock (GLA sqm) 10,989,700 sqm
Forecast 2019-2021 (p.a.) 23,000 sqm Forecast 2019-2021 (p.a.) 960,000 sqm
Office Vacancy 6.0% Office Vacancy 5.0%
Forecast 2019-2021 (p.a.) 7.0 p Forecast 2019-2021 (p.a.) 6.0% p
Tholons Ranking - Tholons Ranking 2nd tu
METRO CEBU ILOILO

Office stock (GLA sqm) 1,050,400 sqm Office stock (GLA sqm) 109,400 sqm
Forecast 2019-2021 (p.a.) 7.7% p Forecast 2019-2021 (p.a.) 9.2% p
Tholons Ranking 12th Tholons Ranking -
BACOLOD DAVAO
Office stock (GLA sqm) 161,300 sqm Office stock (GLA sqm) 27,500 sqm
Forecast 2019-2021 (p.a.) 7.0% p Forecast 2019-2021 (p.a.) 15% q
Tholons Ranking - Tholons Ranking 95th

PEZA MORATORIUM
Ecozone moratorium to stifle BPO growth
93% 36%
PEZA-accredited supply by end-2018 Upcoming PEZA-accredited supply
(972,900 sq m) from 2019-2021 (153,103 sq m)
96% 29%
Occupancy rate of PEZA-accredited Pre-leasing rate of upcoming PEZA-
supply by end-2018 accredited supply (2019-2021)

PEZA MORATORIUM
Ecozone moratorium to stifle BPO growth
Demand &
Opportunity Decentralization
Supply
To complicate office space Landlords with PEZA space to Administrative order to result
demand and supply situation take advantage of the situation in faster approval of PEZA
in Metro Manila space outside Manila

CEBU RECOMMEDATIONS | OFFICE
1 Provide flexible office cuts to ESLs.
2 Explore parcels of developable land around proposed infrastructure.
3 Lock in available space in Cebu IT and Business Park.
4 Consider new space in Mandaue, especially for non-outsourcing firms.

RESIDENTIAL SECTOR
IN A NUTSHELL | RESIDENTIAL
Largest condominium Preference for vertical Mid-income sweet

market ex-Manila projects spot

CEBU CONDOMINIUM
Vertical Residential Market in Cebu

CONDOMINIUM STOCK AS OF Q1 2019
Bulk of supply located in Cebu city
42.1K
Overall condominium stock
in Cebu as of Q1 2019 CEBU CITY | 76% | 32,050 UNITS
MANDAUE CITY | 7% | 2,813 UNITS
LAPU-LAPU CITY | 17% | 7,232 UNITS

CONDOMINIUM STOCK BY END-2021
Overall stock to grow by 27% with largest growth in Mandaue City
51.9K
Overall condominium stock
in Cebu by end-2021 CEBU CITY | 73% | 38,100 UNITS

CONDOMINIUM LAUNCHES AND TAKE UP
Metro Cebu, Q1 2019
7 6,718 6,746 6,590

6,521
6,129 6,248 6,083
6
5,497 5,525
5,158 5,086
Units in Thousand
4,077 3,994
4
2,054
2
-
2013 2014 2015 2016 2017 2018 Q1 2019
Launch Take-up
BREAKDOWN OF LAUNCHES PER YEAR
Breakdown of 2016 – 2018 launches per segment
4,500 4,251
4,000
3,500
2,955
3,000
Units Launched
2,500
2,046
2,000
1,500
1,000
500
-
2016 2017 2018
Economic Affordable Mid-Income Upscale Luxury

BREAKDOWN OF LAUNCHES
Breakdown by segment of launches for Q1 2019
MID-INCOME
(3.2M to 5.99M) 2,468 units
34%
AFFORDABLE
(1.7M to 3.19M) 1,340 units
62% 5%
LUXURY | 5%
(8M and above) 186 units

BREAKDOWN OF TAKE-UP PER YEAR
Breakdown of 2016 – 2018 take-up per segment
3,500
3,011
3,000 2,808
2,500
2,436
Units Launched
2,000
1,500
1,000
500
-
2016 2017 2018
Economic Affordable Mid-Income Upscale Luxury

BREAKDOWN OF TAKE-UP
Breakdown by segment of take-up for Q1 2019
MID-INCOME
(3.2M to 5.99M) 21,000 units
AFFORDABLE
76%
(1.7M to 3.19M) 17,300 units
LUXURY
(8M and above) 7,500 units
ECONOMIC
(450k to 1.69M) 2,400 units
3%
UPSCALE 3% 4% 14%
(6M to 7.99M) 5,400 units

MANDANI QUAY TOWER 1
By HT Land
Price Segment Mid-Income
Developer HT Land
Location F.E. Zuellig Avenue, Mandaue City
MANDANI BAY QUAY TOWER 1

Launch October 2017
Total No. of Units 1,119
Unit Type Studios 1BR 2BR 3BR
Unit Mix 68% 17% 14% 2%
Ave. Unit Size (sqm) 32 55 85 130
Ave. Price/sqm 129,760
Ave. TCP 5,824,400 (Q1 2019)
% Sold 91% (Q1 2019)
Ave. Monthly Sales 56

38 PARK AVENUE
By Cebu Landmasters
Price Segment Upscale
Developer Cebu Landmasters
Location Cebu IT Park, Cebu City
38 PARK AVENUE
Launch March 2017
Total No. of Units 745
Unit Type Studio 1BR 2BR 3BR
Unit Mix 59% 28% 10% 1%
Ave. Unit Size (sqm) 25 56 86 128
Ave. Price/sqm 145, 870
Ave. TCP 6,832,800 (Q1 2019)
% Sold 95% (Q1 2019)
Ave. Monthly Sales 28

UPCOMING DEVELOPMENTS
Upcoming vertical projects
The Residences at The Sheraton Cebu Mactan Resort

- Courtyard Villas
• Located within Mactan Island
• 22-storey tower with 154 units (villas)
• Will consist of 2 bedroom units ranging from 161
sqm to 199 sqm. Each will have its own private
pool.
• The project is expected to open in 2020.
Mactan Plains Residences

• Located in Angasil Road, Barangay Mactan, Lapu-
Lapu City
• 18-storey condominium composed of 340 units
• Will include amenities such as a fitness gym,
multi-purpose court, and a swimming pool within
the clubhouse
• This project is estimated to be completed by 2023.

CEBU’S MOST EXPENSIVE VS. OTHER MARKETS
*USD5,010
*USD3,620
Aruga by Rockwell *USD2,870
The Residences - *USD2,520
Azuela Cove South One Madison Place *USD2,340
The Upper East
Two Regis The Loop at
Limketkai Center
27.8% lower than Cebu

BACOLOD
CAGAYAN
DAVAO
DE ORO
ILOILO
CEBU
*Price is per square metre

CEBU VS. OTHER RESIDENTIAL HOTSPOTS
Residential overview
CLARK METRO MANILA

Condominium 2,200 units Condominium 118,870 units
New supply (2019-2021) 1,020 units New supply (2019-2021) 21,300 units
METRO CEBU ILOILO

METRO CEBU ILOILO

Note: Figures are as of 2018

CEBU HOUSE & LOT
Horizontal residential market in Cebu

HORIZONTAL MARKET OVERVIEW IN CEBU
Annual launches for open lot and H&L projects
Annual Launches for House and Lot Projects Annual Launches for Open Lot Projects
4000
450
3500
Units Launched
400
3000 350
Units Launched
2500 300
2000 250
1500 200
150
1000
100
500 50
0 -
2016 2017 2018 Q1 2019 2016 2017 2018
Units Launched Units Launched
Socialized Economic Affordable Mid-Income Upscale Luxury Economic Affordable Mid-Income Upscale Luxury
TOP DEVELOPERS IN CEBU (2016-2018)

Open Lot Market House and Lot Market
Priland Aboitiz Land
Aboitiz Land Johndorf
Genvi Development Corp. Priland

TAKE-UP OF HOUSE AND LOT
Top 3 developers in 2018
600
508 Top 3 Developers in 2018

500
460
400
#1 Priland
- Breeza Palms (202u)
300
293
#2 Johndorf
200 - Tierra Nava (415u)
132 114
100
#3 Vista Land
- Camella Bogo (270u)
0
Priland Johndorf Vista Land Castille Aboitiz Land
Resources
Realty Dev't Inc.

TAKE-UP OF HOUSE AND LOT
Tope 3 developers in Q1 2019
200
180 173
Top 3 Developers in Q1 2019
160
140
#1 Vista Land
120 109 - Camella Bogo (173u)
99
100
80 #2 Johndorf
- Tierra Nava (109u)
60
47
40
36
20 #3 Aboitiz Land
- Amoa (99u)
0
Vista Land Johndorf Aboitiz Land Priland Castille
Resources Realty
Dev't Inc.

HISTORICAL PRICES IN CEBU
Historical pricing of Lot Only projects in Cebu
6,000
5,000
4,771 4,840
Total Contract Price (in '000s)
4,000
3,725
3,365
3,000
2,000
1,498 1,498
1,000
0
2013 2014 2015 2016 2017 2018 1Q 2019
Cebu City Mandaue City Lapu-Lapu

HISTORICAL PRICES IN CEBU
Historical pricing of H&L projects in Cebu
8,000
7,000
6,000 6,029 6,044

Total Contract Price (in '000s)
5,000
4,000 3,982 3,992

3,000
2,596 2,596
2,000
1,000
0
2013 2014 2015 2016 2017 2018 1Q 2019
Cebu City Mandaue City Lapu-Lapu

CEBU HORIZONTAL MARKET
New Projects
Launched November 2018

80% sold as of Q1 2019
PRIVEYA HILLS PHASE 5
Developer Aboitiz Land
Location Bacayan, Cebu City
Price Segment Luxury
Units 44 Units
Development Type Lot Only
Overall Ave. Unit Size 533 sq m (Average LA)
Average Pricing Php 13,198,600

New Projects
Launched January 2018

75% sold as of Q1 2019
BELIZE NORTH
Developer Priland
Location Nangka, Consolacion Cebu
Price Segment Mid-Income
Units 178 Units
Development Type House and Lot
72 sq m (Average LA) ;
Overall Ave. Unit Size
94 sq m (Average FA)

New Projects
Launched December 2017

87% sold
CAMELLA BOGO
Developer Vista Land
Brgy. Cayang, Bogo City, Cebu

Location
City
Price Segment Affordable
Units 528 Units
Development Type House and Lot
98 sq m (Average LA) ; 84 sq m
Overall Ave. Unit Size
(Average FA)

CEBU RECOMMEDATIONS | RESIDENTIAL
1 Target foreign tourists and further explore Mactan’s potential for

residential projects.
2 Explore alternative House and Lot (H&L) sites.
3 Capitalize on upcoming infrastructure projects.
4 Launch more resort-style condominiums.

RETAIL SECTOR
IN A NUTSHELL | RETAIL
New malls within F&B dominates Diverse drivers

townships

METRO CEBU
Current retails supply as of Q1 2019
1.05Mn
Total retail leasable space
in Cebu as of Q1 2019 CEBU CITY | 87% | 915,100 SQM
LAPU-LAPU CITY | 6% | 65,700 SQM

RETAIL STOCK BY END-2021
Overall stock to grow by 25% with largest growth in Mandaue City
1.30Mn
Total leasable space in
Cebu by end-2021 CEBU CITY | 77% | 1,013,000 SQM
LAPU-LAPU CITY | 8% | 103,300 SQM

SELECTED UPCOMING PROJECTS
IL CORSO LIFESTYLE MALL CENTRAL BLOC MALL GATEWALK CENTRAL MALL

FILINVEST LAND CEBU HOLDINGS, INC. AYALA LAND + ABOITIZ LAND
• South Road Properties (SRP), Cebu City • Jose del Maria St., Cebu IT Park • Lopez Jaena St. & Ouano Avenue,
• 38,800 sq meters (417,500 sq feet) of • 43,000 sq meters (462,700 sq feet) of Mandaue City
leasable space leasable space • 115,000 sq meters (1.2 million sq feet) of
• Situated in Filinvest’s City di Mare • A five-level mall development located at leasable space.
township the Cebu IT Park. • 17.5-hectare business district in
• To offer a mix of recreation, retail and • A 500-store mall consisting of a fashion Subangdaku, Mandaue City.
dining concepts. gallery, indoor activity center and four • Featuring entertainment concepts, popular
• Completed June 2019 digital cinemas. global and local brands, and a BPO office.
• Completion by Q4 2019. • Completion: 2020.
COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019 Sources: Filinvest City di Mare, Cebu Holdings, Aboitiz Land
RETAIL VACANCY FORECAST
Marginal rise in vacancy from 2019 to 2021
350,000 16.0%
300,000 14.0%
12.0%
250,000
10.0%
200,000
8.0%
150,000
6.0%
105K
100,000
4.0% 4.0%
50,000 2.0%
- 0.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
New Supply During Year (LHS) Vacancy at Year-End (RHS)

COMPARATIVE RENTAL RATES
PHP / SQM / month, as of Q1 2019
Colliers sees 4% annual growth in

lease rates from 2019-2021
% CHANGE
LOCATION Q4 2018 Q1 2019* LOCATION Q1 2019*
(QoQ)
PHP640 PHP 650 Cebu City 300-995
Overall 1.6%
(USD 12.1) (USD 12.3)
Mandaue City 660-900
*USD1 = PHP53 as of the end of Q1 2019
Lapu-Lapu City 400-900

CEBU VS. OTHER RETAIL HOTSPOTS
Retail overview
METRO MANILA
Retail stock 6,850,000 sqm
Forecast 2019-2021 650,000 sqm
Retail Vacancy 8.5%
Forecast 2019-2021 8.9% p
METRO CEBU ILOILO

Retail stock 1,049,400 sqm Retail stock 324,600 sqm
Forecast 2019-2021 86,200 sqm Forecast 2019-2021 8,200 sqm
Retail Vacancy 2.5% Retail Vacancy 7.9%
Forecast 2019-2021 4.5% p Forecast 2019-2021 6.5% q
BACOLOD
Retail stock 410,000 sqm
Forecast 2019-2021 24,700 sqm
Retail Vacancy 3.6%
Forecast 2019-2021 2.8% q

CEBU RETAIL TRENDS
PLAYLAB
LEFT BEHIND: THE GREAT ESCAPE
ROBINSONS GALLERIA CEBU
• Consists of 14 set of attractions, 12 interactive and 2 non- • Left Behind is a real-life role-playing escape experience where
interactive. players are immersed in uniquely themed challenges that calls
for teamwork and wit.
• Innovative idea of combining the traditional playground and
high technologies. • An escape room experience where participants must solve
puzzles by finding clues before the time expires.

KEY TRENDS | RETAIL
Food, glorious food
30% to 50% 7%
Share of F&B to total retail space Average growth of F&B spending
per annum
68% Single Product

Share of household spending to food specialization
GDP
41% USD34 billion

Share of F&B to household Projected OFW remittances in
spending 2019

KEY TRENDS | RETAIL
Mi Casa
70% new condominium units are studio and 1BR units
Entry of foreign brands: Crate & Barrel, H&M Home, Pottery Barn,
West Elm. IKEA to enter Philippine market
Expanding middle class with incomes buoyed by BPO sector and

OFW remittances
Increased demand for worker housing facilities in CBDs
Condominium living is increasingly being accepted by the market

KEY TRENDS | RETAIL
Planes, trains and automobiles
Opportunities for transit-oriented retail developments (along train

nodes and depot).
Cheaper domestic and international flights as airlines compete for

bigger market share
Higher disposable incomes. Yuppies allotting a bigger fraction of

their salaries for travel
Travel among the status symbols of the selfie generation
cheaper airfare means more travels abroad, resulting in increased

exposure to foreign brands

DIGITAL EXPERIENCE
Mall operators cashing in on online shopping, growing debit/credit card use
30.5% 49%
SM Group’s stake in 2Go Ayala Group’s stake in Zalora
Philippines
45% 70%
Smartphone penetration in the Projected smartphone ownership
Philippine in 2018 rate by 2020
11% 21%
Credit card penetration of which Share of Filipino adults with debit
9.9% make purchases online cards

CEBU RECOMMEDATIONS | RETAIL
1 Explore retail demand of developments in townships.
2 Build more retail space in Mandaue to complement office and residential.
3 Differentiate retail offerings.
4 Explore partnerships between national and homegrown firms.

HOTEL SECTOR
IN A NUTSHELL | HOTEL
Expanded airport to Healthy occupancy to China to remain a

spur Cebu leisure be sustained major market

MACTAN-CEBU INTERNATIONAL AIRPORT
Annual passenger arrivals from 2010 – 2018 (in millions)
MCIA Terminal 1 & 2 Airport

Capacity after expansion
12.0 11.4
10.0
12.5 Mn 10.1
8.8
8.0
7.8
6.8 7.0 6.8
6.2
6.0 5.4
MCIA
Terminal 1
4.0
Capacity
2.0
-
2010 2011 2012 2013 2014 2015 2016 2017 2018

MCIA TERMINAL 2: BY THE NUMBERS
Cebu airport’s expanded capacity
12.5 million 12 750 PHP 34 billion

Annual capacity Escalators Car park capacity Construction investment
72 25 years 12 12
Check-in counters GMR-Megawide and Passenger boarding Elevators
government agreement bridges

CEBU REGIONAL COMPARISON
Versus other Asian and local markets
BALI PHUKET CEBU BORACAY
Land Area (sq km) 5,780 576 4,933 10.3
Population (million) 4.29 0.39 4.63 0.05
Visitors (million) 6.5 8.4 5.6 0.9
Hotel rooms 59,685 51,875 12,805 15,000
Visitors per hotel room 109 162 437 60

METRO CEBU
Bulk of supply located in Cebu
12.8K
Overall hotel room keys in
Cebu CEBU CITY | 59% | 7,540 UNITS

METRO CEBU HOTEL STOCK BY END-2021
Overall stock to grow by 26% with largest growth in Lapu-Lapu CIty
16.1K
Overall hotel room keys in
Cebu by end-2021 CEBU CITY | 59% | 8,530 KEYS
MANDAUE CITY | 13% | 1,836 KEYS
LAPU-LAPU CITY | 28% | 5,751 KEYS

AVERAGE DAILY EXPENDITURE (IN USD)
GROWTH
MARKET 2016 2017 RATE
China 63 233 270%
South Korea 193 247 28%
Japan 111 121 9%
USA 72 64 -11%
Returning OFW* 54 31 -43%

Source: Department of Tourism, *Overseas Filipino Workers

AVERAGE LENGTH OF STAY
GROWTH
MARKET 2016 2017 RATE
China 4.2 6.3 50%
South Korea 5.1 5.9 16%
Japan 5.9 6.8 15%
USA 11.2 12.4 11%
Returning OFW* 15.7 19.2 22%

Source: Department of Tourism, *Overseas Filipino Workers

CEBU HOTEL OCCUPANCY RATE AND STOCK
Occupancy per star rating
MARKET Q1 2018 Q1 2019
 63% 64%
 64% 71%
 90% 90%
 94% 94%
Overall average 75% 78%
Source: Colliers International

LOCALS BRING IN GLOBAL
Selected upcoming projects by local players
PROJECT Holiday Inn Cebu Citadines Apart’ Hotel The Suites at Gorordo The Sheraton Mactan Dusit Princess Cebu Radisson RED Cebu
Samar Loop, Juana Osmena St., Gorordo Ave., Punta Engaño, Cebu North AS Fortuna,
LOCATION
Cebu Business Park Cebu City Cebu City Lapu-Lapu City Reclamation Mandaue
Worldwide Central
LOCAL PARTNER Erawan Company PCL Cebu Landmasters AppleOne Properties Grand Land Cebu Landmasters
Properties
NUMBER OF
180 180 150 250 295 146
ROOMS
EXPECTED
2022 Q3 2019 2021 2Q 2020 2020 4Q 2021
COMPLETION

NATIONALS MAXIMIZE HOMEGROWNS
Selected upcoming projects by national developers
PROJECT Aruga by Rockwell Seda Hotel at Central Bloc Grafik Resort Mactan
Punta Engaño, Duawon Beach,

LOCATION Cebu IT Park, Cebu City
Lapu-Lapu City Lapu-Lapu City
DEVELOPER Rockwell Land Ayala Land Filinvest Group
NUMBER OF ROOMS 300 214 308
EXPECTED COMPLETION 2023 2020 2020

KEY TRENDS | HOTEL
Enter the Dragon: Chinese tourists dominating foreign arrivals
149 million 15%

Outbound travelers from China in Annual growth in Chinese
2018 outbound tourism in 2018
USD 120 billion 12%

Tourism expenditure of Chinese Annual growth of tourism
tourists, number one globally expenditure of China
1.3 million Less than 1%

Inbound Chinese tourists recorded Tourism capture of the Philippines
in the Philippines in 2018 in total outbound

KEY TRENDS | HOTEL
Co-everything | Airbnb: Friend or Foe?
6 million 191 countries

Number of Airbnb listings Number of countries Airbnb is
active
150 million USD 2.8 billion

Number of users of Airbnb Estimated Airbnb revenue for 2017
640,000 100 million

Number of Airbnb hosts Projected Airbnb guest arrivals in
2017

KEY TRENDS | HOTEL
Going local: Big players develop homegrown
Seda 3,500 rooms

Homegrown brand of Ayala Land Expected growth of Seda brand by
2019 in 15 locations from the
current 1,409 rooms in 7 locations
Go Hotels Quest, Crimson

Homegrown brand of Robinsons Homegrown brand of Filinvest
Land Land
Aruga
Homegrown brand of Rockwell
Land

KEY TRENDS | HOTEL
Smart hotel
Handy Keyless entry No Front Desk
Offers 24/7 mobile connectivity Introduced by Starwood in 2014 in Upper House in Hong Kong uses
and smart room control to guests Aloft, Element and W. Also iPad to check in guests instead of
adopted by Hilton and Marriott the traditional front desk.

CEBU RECOMMEDATIONS | HOTEL
1 More resort-oriented projects.
2 Emphasis on heritage.
3 More MICE facilities.
4 Introduce more foreign brands.
5 Integrate health and retirement facilities.

REIT IN THE PHILIPPINES

CEBU PROPERTY
MARKET BRIEFING
Research | Philippines
JULY 17, 2019 IN PARTNERSHIP WITH

SEDA AYALA CENTER, CEBU

ColliersPH CebuPropertyMarket 17july2019

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CEBU PROPERTY

JULY 17, 2019 IN PARTNERSHIP WITH

11.5% Standard Chartered 6.4 % 0%

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

• Continue to drive Cebu -

Source: Bangko Sentral ng Pilipinas

January- June 2019 Overnight

• Lending Rates: • Average Bank Mortgage Rate: • Average Inflation Rate:

Services Industry AHFF (Agricultural, Hunting, Forestry & Fishing)

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Angeles City 122 128 109 108 88

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Source: Philippine Statistics Authority

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Source: Philippine Statistics Authority

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

NAIA Development Clark Railway

Cebu Airport Expansion

Davao Airport Expansion

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

A world-class airport facility in Ease access for local and foreign

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

A series of railway projects that will

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

2021 - Cebu-Cordova Expressway 2022 – Metro Cebu Expressway

An 8.5km expressway that will connect the

Improve connectivity between Cebu City and

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

A 23-kilometer corridor that traverses Connectivity between Cebu's CBDs.

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Sustained demand Mandaue an offshore PEZA delays threaten

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

NUMBER OF GRADUATES PER YEAR METRO MANILA CEBU

Accountancy and Business Admin 46,180 9,603

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

CEBU BUSINESS PARK | 31% | 328,500 SQM

1.05 Mn CBP FRINGE | 6% | 59,600 SQM

Total office stock in

MANDAUE CITY | 5% | 55,800 SQM

MANDAUE FRINGE | 2% | 22,100 SQM

UPTOWN | 8% | 78,800 SQM

MACTAN | 8% | 84,700 SQM

RECLAMATION | 4% | 45,400 SQM

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Vacancy for Q1 2019 Net take-up for Q1 2019

7.0% 39K sqm

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

5% 2,300 SQM 11,900 SQM

1,129 SQM 4,258 SQM

Gaming Non-BPO Voice KPO

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

SUBMARKET ENGLISH SCHOOL SIZE (SQ M)

Newtype International Language School 472

TOMAS English Training Center 412

Access E-Talk Plus Inc. 663

Cebu Business Park

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

LOCATION END-2018 2019F 2020F 2021F TOTAL

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

Submarket Building Name Leasable Area

COLLIERS INTERNATIONAL | CEBU PROPERTY MARKET BRIEFING 2019

CEBU BUSINESS PARK