Q3 2020 Property Briefing 12102020

Q3 2020 PROPERTY
MARKET BRIEFING
Research | Philippines
OCTOBER 29, 2020

MACROECONOMIC OVERVIEW
DEEPEST GDP CONTRACTION SINCE WORLD WAR 2
Multilateral lenders and credit rating firms forecasting slower growth due to COVID-19
2020 GDP Growth Forecast Real GDP Growth (Constant 2018 Prices)
-3.4% to -9.5%
10%
6.3%
5% 6.0%
0%
-0.7%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q1 2020
Q2 2020
PREVIOUS 2020
AGENCY
FORECAST FORECAST -5%
World Bank -1.9% -6.9%

-10%
Moody ’s -4.5% -7.0%
-15%
Fitch Ratings -4.0% -8.0%
Oxford Economics -6.9% -8.2% -20% -16.5%

S&P -3.0% -9.5%
ADB -3.8% -7.3% GDP contraction in 1998,

NEDA -2.0 to -3.4% -3.4 to -5.5% -0.6% slowest in 22 years
COLLIERS INTE RNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Philippine Statistics Authority
PROJECTED ECONOMIC RECOVERY IN 2021
Government agencies, multilateral and credit rating firms bullish on the Philippine economy
12.0%
10.0% 9.6%
8.0% 7.5% 7.5%

6.8%
6.0% 5.3%
4.0%
2.0%
0.0%
S&P BSP NEDA Moody's World Bank
BSP: BSP: Early recovery signs point to strong 2021 economic rebound
NEDA: DBCC Revisits Macroeconomic Assumptions and Fiscal Program for the 2021 President’s Budget
Moody’s: Moody’s sees steeper Philippine economic contraction
S&P: S&P sees PHL economy performing worst in SE Asia
COLLIERS INTE RNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW World Bank: Philippine Economy to recover slowest vs most peers – World Bank
ECONOMIC INDICATORS LOOK DIM
Property demand drivers in Q3 2020
Construction Growth Unemployment Household Consumption
-32.9% in Q2 2020 vs. 10% in July 2020 vs. 5.4% -15.5% in Q2 2020 vs.
1.3% in Q2 2019 in July 2019 5.6% in Q2 2019
COLLIERS INTE RNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Philippine Statistics Authority
OFW REMITTANCES’ SLOW RECOVERY
Drop in remittances slowing down, grew in June-July
• Decline from Saudi Arabia, 40 8M 2020 Remittances,

Japan and the UAE;
increase from US, 35 down 2.6% YOY
Singapore, Malaysia
USD 21.4bn
30
USD (in Billions)

• Number of repatriated 25
OFWs projected to reach 20
300,000 by December1 Projected drop in
15
remittances of the
• Land-based OFWs 10 central bank in 2020
accounted for 79% of cash 5
remittances while sea-based
workers at 21% 0
2%
2020*
2002
2003
2007
2008
2012
2013
2017
2018
2001
2004
2005
2006
2009
2010
2011
2014
2015
2016
2019
1Q 2Q 3Q 4Q
Source: Bangko Sentral ng Pilipinas
1 Cash remittances drop anew in Aug.
COLLIERS INTE RNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW
LENDING RATES REMAIN LOW
Central Bank has been cutting interest rates to prop up spending
Overnight Reverse
2.25%
25%
2.5%
Q3 2020 inflation rate
Repurchase Rate – July
vs. 1.7% in Q3 2019
20% 2020
15%
10.8%
10% 10%
6.0%
5%
2.5%
0%
Q1 2020
Q2 2020
Q3 2020
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Lending Rate (Low) Lending Rate (High) Headline Inflation Rate Average Mortgage Rate Unemployment Rate
• Lending Rates: • Average Bank Mortgage Rate: • Average Inflation Rate:

3Q 2020: ----- 3Q 2020: 7.4% 3Q 2020: 2.5%
3Q 2019: 4.5% - 7.1% 3Q 2019: 7.2% 3Q 2019: 1.7%
3Q 2018: 5.2% - 8.1% 3Q 2018: 6.2% 3Q 2018: 6.3%
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Bangko Sentral ng Pilipinas; Colliers International
LAND VALUES TO SOFTEN BY 2% TO 10%
Manila Bay Area declines further in Q3 2020
1000K
900K
830K 830K
800K
3Q 2020 4Q 2020F* 800K 800K
LOCATION AV** 700K
PER SQ M (YoY)
600K
PHP / sq m
Makati CBD 830,200 -3.3% 51,900 500K
400K 352K 352K

Fort Bonifacio 800,200 -3.3% 66,700
300K 348K
Manila Bay Area 352,100 -9.8% 58,700 348K
200K
Ortigas Center 348,300 -1.7% 34,800 100K
K
Source: Colliers International
2Q18
4Q18
2Q19
4Q19
2Q20
4Q20F
2001
2003
2005
2007
2009
2011
2013
2015
2017
*Forecast **Accommodation Value
Makati CBD Fort Bonifacio Ortigas Center Manila Bay Area
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW

OFFICE SECTOR
IN A NUTSHELL | OFFICE
2020 supply down 65% Rising vacancies due to tenant 17% rental correction in 2020;
from our initial estimate rightsizing and pre-terminations slow recovery starting 2021

STAGNANT METRO MANILA OFFICE STOCK
Ortigas CBD office stock up 7% YOY
QUEZON CITY 1,518,200 12%
ORTIGAS CBD 1,952,600 16%
ORTIGAS FRINGE 565,000 5%
Total office stock in Metro Manila MAKATI CBD 3,355,400 28%

as of Q3 2020
MAKATI FRINGE 438,000 4%
12.1 million sqm
FORT BONIFACIO 2,231,400 18%
BAY AREA 837,400 7%
ALABANG 738,800 6%
OTHERS 472,300 4%
Source: Colliers International Location End Q3 2020 stock % share to total

LIMITED NEW STOCK
77,700 sq metres of new office space in Q3 2020
ORTIGAS CBD | 54K
LEASABLE
SUBMARKET BUILDING NAME
AREA ORTIGAS FRINGE| 10K
Bay Area Prestige Bay Mall 7,400

MAKATI FRINGE| 6K
Makati Fringe One Oculus Center 6,000
BAY AREA | 7K
Ortigas Fringe Sta. Lucia Business Center 10,100
Ortigas CBD Jollibee Tower 54,200 9M 2020 Completion vs.

666K sqm in 9M 2019
235k sqm
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International, Google Images
DISRUPTION IN PRIVATE CONSTRUCTION
2020 supply pared down by 65%
CHANGE
LOCATION END 2019 2020F 2021F 2022F END 2022
(2022 vs. 2019)
Makati CBD 3,355,400 - 70,700 75,400 3,501,500 4%
Makati Fringe 417,700 32,800 33,900 27,700 512,100 53%
Fort Bonifacio 2,231,400 26,600 188,000 112,000 2,558,800 15%
Ortigas Center 1,840,900 154,700 71,500 132,600 2,199,700 19%
Ortigas Fringe 535,800 29,300 22,600 18,600 606,300 13%
Bay Area 798,600 100,400 224,900 35,200 1,159,100 45%
Alabang 731,900 11,800 8,500 77,600 829,800 13%
Quezon City 1,489,500 28,600 12,500 - 1,530,600 3%
Others 472,300 - - - 472,300 0%
Total 11,873,500 384,200 632,600 479,100 13,369,400 13%

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International
RISING VACANCY AMID UNCERTAINTY
Several POGOs are exiting while other tenants are rationalizing office real estate
Vacancy forecast for 2020 from
4.3% in 2019
1,400,000
1,200,000
9.1% 14.0%
12.0%
11.6% 11.5%
1,000,000
10.0%
800,000
9.1%
8.6% 8.0%
600,000
400,000 6.0%
5.6% 5.3%
200,000
4.4% 4.7% 4.3%
3.5% 4.1% 4.0%
- 3.1% 2.9% 3.4%
2.4% 2.0%
-200,000
-400,000 0.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F
Source: Colliers International Supply Net Take Up Vacancy Rate (RHS)
-113K sq m
Net take-up for 9M 2020,
down 120% YOY
NET TAKE-UP DOWN 120%
Lowest take up in 11 years; two consecutive quarters of negative take-up in 2020
Net take-up for 9M 2019
700
606K sq m
606
600
500
400
Net take-up for 9M 2020
300 271
THOUSANDS
200
100
-113K sq m
-
% decline in net take-up YOY
(100)
(113)
(200)
(300)
(191)
120%
Q3 2019 Q3 2020 9M 2019 9M 2020
-30K sq m Net take-up in Q2 2009, during

the Global Financial Crisis (GFC)

LEASING STATUS OF 2020 BUILDINGS
Q1–Q4 2020
180,000
160,000
140,000
14%
49%
Leasing status as of Q3
120,000 2020
100,000
80,000 66%
60,000
40,000
100% 90% 86% 59%
20,000 60%
-
Ortigas Center Fort Bonifacio Bay Area Alabang Ortigas Fringe QC Makati Fringe
GLA COMMITTED

VACANCY RISES TO 7.1% FROM 4.9% IN Q2
Increase in vacancy across all sub-markets puts downward pressure on rents
QUEZON CITY | 15% ORTIGAS CENTER | 11%
650 – 1,100 800 – 1,200
600 – 1,000 750 – 1,100
MANDALUYONG | 13% MAKATI FRINGE | 7%

700 – 1,000 800 – 1,600
650 – 950 700 – 1,600
MAKATI CBD (P) | 4% BGC/NORTH BONIFACIO | 7%

1,400 – 1,950 1,000 – 1,800
1,300 – 1,850 900 – 1,500
MAKATI CBD (A) | 2% MCKINLEY | 3%
1,000 – 1,700 1,000 - 1,300
950 – 1,600 950 – 1,200
BAY AREA | 4% ALABANG | 9%

1,000 – 1,500 600 – 975
900 – 1,400 550 – 950
Headline / Transacted
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Vacancy (QoQ decrease, stable, increase) Source: Colliers International
LANDLORDS NOW OFFERING BIGGER DISCOUNTS
Asking rents are starting to be adjusted; 15-25% legroom for negotiated rents
ORTIGAS FRINGE ORTIGAS CBD

Q2 2020 = 850
Q2 2020 = 900
Q3 2020 = 800
Q3 2020 = 850
MAKATI CBD FORT BONIFACIO

Q2 2020 = 1,800 Q2 2020 = 1,500
Q3 2020 = 1,500 Q3 2020 = 1,200
Note: Headline Rates Source: Colliers International

PRIME AND GRADE A OFFICE RENTS IN KEY ASIAN CITIES
USD per sqm as of Q3 2020 and YOY
Hong Kong -16.6%
Singapore CBD -3.1%
Beijing -8.2%
Guangzhou -3.8%
Seoul +2.4%
Manila Rents as
Difference
Mumbai -4.2% compared to
Singapore +308%
Manila -9.7%
Beijing +181%
Chengdu -3.4%
Hong Kong +370%
Bengaluru +3.6%
2nd
Pune +1.5% Fastest drop in Prime and Grade A
Chennai +0.7%
Office Rents in Asia (Manila)
Hyderabad +1.2%
$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0

ASIAN OFFICE MARKETS
Position in property cycle in Q3 2020

LESS DIVERSITY IN OCCUPANCY
No POGO transaction in Q3 2020
QUEZON CITY | 66K
ORTIGAS FRINGE | 13K
7,900 sqm
1,200 sqm
6,800 sqm
2,300 sqm
ORTIGAS CENTER | 53K
1,100 sqm 1,300 sqm
MAKATI CBD | 61K 500 sqm
25,000 sqm FORT BONIFACIO | 44K
5,700 sqm
3,000 sqm
1,700 sqm
BAY AREA | 9K
ALABANG | 47K
800 sqm 2,100 sqm
3,400 sqm 5,700 sqm

2,400 sqm
OFFICE TRANSACTIONS ACROSS METRO MANILA DOWN 71%
9M 2019 vs. 9M 2020 Transactions
500
82%
450 431 Drop in Gaming transactions
409 9M 2020 vs. 9M 2019
400
350
66%
300 Drop in KPO+Voice transactions
9M 2020 vs. 9M 2019
Thousands
250
200 184
146
64%
Drop in Traditional transactions
150 125
9M 2020 vs. 9M 2019
100 70 79
50 35
71%
Drop in office transactions
- 9M 2020 vs. 9M 2019
Voice KPO Gaming Traditional*
9M 2019 9M 2020
*Includes traditional firms, government agencies, and flexible workspace operators
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Note: in per sqm
MAKATI TRANSACTIONS DOWN 53%
9M 2020 transactions
120
97%
Drop in Gaming transactions
102
9M 2020 vs. 9M 2019
100
80
484%
Growth in KPO+Voice transactions
9M 2020 vs. 9M 2019
Thousands
60
74%
40 Drop in Traditional transactions
31
27 9M 2020 vs. 9M 2019
21
20
6
1 - 2
Office transactions in
- 61K sqm 9M 2020 vs. 129K sqm in 9M 2019
Gaming KPO Traditional Voice
2019 2020
COLLIERS INTE RNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International
MAKATI FRINGE TRANSACTIONS DOWN 44%
45 43
47%
40
9M 2020 vs. 9M 2019
35
30
100%
Drop in KPO+Voice transactions
25 22
Thousands
9M 2020 vs. 9M 2019
20
15 12
19%
9 9M 2020 vs. 9M 2019
10
5 3
0
- 32K sqm 9M 2020 vs. 57K sqm in 9M 2019
2019 2020
QUEZON CITY TRANSACTIONS DOWN 66%
90
81
53%
80 Drop in Gaming transactions
9M 2020 vs. 9M 2019
70
60
79%
Thousands
50 9M 2020 vs. 9M 2019

42
40
26%
30 25 Drop in Traditional transactions
22
9M 2020 vs. 9M 2019
20 15 17
10
10
- 66K sqm 9M 2020 vs. 197K sqm in 9M 2019
2019 2020
ORTIGAS CBD TRANSACTIONS DOWN 55%
70 66
87%
60 9M 2020 vs. 9M 2019
50
39
65%
40 9M 2020 vs. 9M 2019
Thousands
30
22
19
40%
20
9M 2020 vs. 9M 2019
10 9
10
2 2
- 53K sqm 9M 2020 vs. 116K sqm in 9M 2019
2019 2020
ORTIGAS FRINGE TRANSACTIONS DOWN 84%
50
43
45
100%
9M 2020 vs. 9M 2019
40
35
30
63%
Thousands
9M 2020 vs. 9M 2019

25
20
67%
15
9M 2020 vs. 9M 2019
10
10 7
5 1 2
1
- 13K sqm 9M 2020 vs. 82K sqm in 9M 2019
2019 2020
BAY AREA TRANSACTIONS DOWN 96%
250
225
100%
9M 2020 vs. 9M 2019
200
90%
150
9M 2020 vs. 9M 2019
Thousands
100
52%
9M 2020 vs. 9M 2019
50
18
8 9
1 1 0 Office transactions in
- 9K sqm 9M 2020 vs. 252K sqm in 9M 2019
2019 2020
FORT BONIFACIO TRANSACTIONS DOWN 79%
140
120 115
0 Still no Gaming transaction
100
89
78%
Thousands
80
9M 2020 vs. 9M 2019
60
80%
9M 2020 vs. 9M 2019
23
20 12
7 9
- 44K sqm 9M 2020 vs. 210K sqm in 9M 2019
KPO Traditional Voice
2019 2020
ALABANG TRANSACTIONS DOWN 26%
30 29
98%
Growth in Gaming transactions
9M 2020 vs. 9M 2019
25
21
20 18
62%
Thousands
9M 2020 vs. 9M 2019

15 14
10
10 9
61%
9M 2020 vs. 9M 2019
5
2
- Office transactions in
48K sqm 9M 2020 vs. 64K sqm in 9M 2019
2019 2020
BANKS, COWORKING, AND GOVERNMENT AGENCIES
Office space take up from the Traditional segment
5K sqm 4K sqm 9K sqm

Take-up of banks in 9M Take-up of flexible Take-up of government
2020, up 3% YOY workspace in 9M 2020, agencies in 9M 2020, up
down 92% YOY 44% YOY

IMPACTS OF COVID-19 ON PHILIPPINE FIRMS
Pandemic induced lockdowns to hurt MSMEs
6%
MSMEs (1.4 million) that remain
closed in September, from 38%
in April and 11% in July
2.9 Mn
Employed in IT, Financial and
Insurance, Real Estate,
Professional activities and
Administrative and support (July
2020) from 2.6 Mn in April 2020
Source: World Bank, NEDA, and Department of Finance (DOF)
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: BusinessWorld; 6% of 1.4M MSMEs remain cl osed ; Phi lippine Statistics Authority
IT-BPM INDUSTRY ADJUSTS TO THE PANDEMIC
IT-BPM industry able to increase productivity since the start of lockdown
IT-BPM Industry
Productive Capacity
100%
10%
90%
27%
80%
70% 40%
60%
Onsite
50%
WFH
Surge in demand in e-commerce, logistics, 40% 63%
Unproductive
medical coding and healthcare 30%
50%
20%
10%
10%
0%
April July
ECQ GCQ
Source: IBPAP; BPOs hit 90% capacity
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW ITBPM sector still ‘cautiously optimistic’ despite pockets of growth
MANILA’S BPO COMPETITIVENESS DROPS
Only Manila and Cebu in Top 100
Tholons Global Innovation Index 2020

Top 100 Super Cities
4th
IBPAP looking to tap Singapore, Manila
Malaysia, Japan and Sri Lanka for new From 2nd in 2019
investments
Cebu
15th From 12th in 2019
IBPAP to upskill up to 1,000

employees in 2020
Source: BusinessWorld. Outsourcing industry eyes new overseas markets ;

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Tholons; IBPAP
REMAINING PEZA OFFICE SUPPLY IN METRO MANILA
PEZA space crucial in attracting BPOs amid COVID-19
1,747,600 sqm
new supply for 2020-2022

594,900sqm Available PEZA
space per location
PEZA-proclaimed
space
361,700 233,200 34% - Ba y Area
30% - Orti gas CBD
Pre-leased Availablespace 23% - Al a bang
for pre-leasing 7% - Ma ka ti CBD
4% - Fort Boni facio
1% - Quezon Ci ty
PEZA SUPPLY OUTSIDE METRO MANILA
PEZA availability in key provinces
PAMPANGA BACOLOD
350,000 160,000
300,000 89K sqm 140,000

0 sqm
120,000
250,000
Remaining PEZA Remaining PEZA
100,000
200,000 supply up to 2022 supply up to 2022
80,000
150,000
60,000
100,000
40,000
50,000 20,000
- -
End Q3 2020 Q4 2020 2021 2022 End Q3 2020 Q4 2020 2021 2022
Total Stock Occupied Stock New Supply PEZA Supply Available PEZA Total Stock Occupied Stock New Supply PEZA Supply Available PEZA

CEBU ILOILO
1,400,000 160,000
1,200,000
123K sqm 140,000
71K sqm
Remaining PEZA supply 120,000 Remaining PEZA supply
1,000,000
up to 2022 100,000
up to 2022
800,000
80,000
600,000
60,000
400,000
40,000
200,000 20,000
- -
End Q3 2020 Q4 2020 2021 2022 End Q3 2020 Q4 2020 2021 2022
Total Stock Occupied Stock New Supply PEZA Supply Available PEZA Total Stock Occupied Stock New Supply PEZA Supply Available PEZA

DAVAO
350,000
15K sqm
300,000
250,000
Remaining PEZA supply
200,000
up to 2022
150,000
100,000
50,000
-
End Q3 2020 Q4 2020 2021 2022
Total Stock Occupied Stock New Supply PEZA Supply Available PEZA

POGO TRANSACTIONS SINCE 2016
PEZA space occupied by POGO firms
600,000 5%
500,000
27%
Share of PEZA space to
400,000
total occupied by POGOs
Square meters
since 2016
300,000
31%
200,000 56%
38% 21%
100,000
56%
69% 18% 100% 0%
-
Bay Area Makati Alabang Quezon City Ortigas Makati CBD Ortigas CBD Others McKinley BGC
Fringe Fringe
POGO Transactions Since 2016 POGO-Committed PEZA
POGO VACATED SPACES IN METRO MANILA
Total vacated space by POGOs reached 154,000 sq metres (PEZA + Non-PEZA)
ORTIGAS FRINGE QUEZON CITY

7K sqm 61K sqm
ORTIGAS CBD
10K sqm
MAKATI CBD
13K sqm
FORT BONIFACIO
2K sqm
BAY AREA
41K sqm ALABANG
20K sqm

POGO-VACATED PEZA SPACE
54,000 sq metres of PEZA space vacated by POGOs as of Q3 2020
54K sqm
ORTIGAS FRINGE
PEZA space vacated by
7,400 sqm
POGOs as of Q3 2020
QUEZON CITY
10K sqm
MAKATI CBD
6,600 sqm
ORTIGAS CBD
9,900 sqm
BAY AREA
2K sqm ALABANG
18K sqm
PEZA SUPPLY LIKELY TO BE VACATED BY POGOs
More PEZA supply likely to be returned to the market due to POGO sector slowdown
120,000
297K sqm 9.3%

100,000
Remaining POGO-occupied Share of POGO transactions
Spaces in PEZA Buildings to total office stock as of Q3
80,000 2020 from 10.9% in Q2 2020
square meters
60,000
40,000
20,000
-
Bay Area Alabang Ortigas CBD Makati CBD Makati Fringe Quezon City North McKinley Ortigas Fringe Others BGC
Bonifacio
Vacated POGO PEZA Remaining POGO PEZA Remaining PEZA Supply Until 2022

COVID-19 IMPACT ON POGOs
Slower absorption from POGOs due to COVID-19, tax issues
137 / 286 73,640

POGO firms granted authority AEPs issued in 9M 2020 vs.
to resume operations as of the 158,710 in 9M 2019, down 54%
end of September, down 52%
50% 62,196
Decline in PAGCOR’s income AEPs issued to POGOs in 9M
from regulatory fees in 9M 2020 vs. 123,649 in 9M 2019,
2020 down 50%
Source: Inquirer. Pagcor revenue plummets as pandemic pummels Pogos ; The Philippine Star Fewer Chinese seek POGO
work
THE POGO TAX STORY
Tax issues compelling POGOs to close shop
5% franchise tax based on gross Bureau of Internal Revenue (BIR) Bayanihan 2 provision on
gaming revenues instructed POGOs to pay franchise gross bets as tax basis to
tax to reopen during the pandemic result in closure of POGOs

OFFICE LEASING RECOVERY ENABLERS
Why the office would remain relevant post-pandemic
Easing of lockdowns Easing of public Improving employment rate

transportation
Recovery of other Sustained growth of some Expansion outside

economies BPO subsegments Metro Manila

WHY THE OFFICE IS STILL RELEVANT
Office’s key role in promoting corporate culture and collaboration
Corporate Culture Collaboration Reliable internet connectivity
Increased productivity Data security

HOW LANDLORDS AND TENANTS ARE ADJUSTING
Office sector amid pandemic and lockdown
PRE-COVID 19 Market Situation CURRENT AND POST-COVID 19

Landlord’s market due to low vacancy and strong Less leasing activity and deferred real estate
demand brought by a diversified tenancy mix plans as firms wait-and-see
Transactions
Diverse tenancy across Metro Manila Deals from POGOs almost non-existent
Supply
Large office supply and strong pre-leasing for upcoming Significantly pared down due to COVID-19
buildings. Peaked at 1.18 million sq m in 2018 related disruptions in private construction
Rental Movements
Consistent increase in rents due to low vacancy.
Exponential growth (+21%) in the Bay Area due Rents to correct by 17% in 2020
to demand from gaming
Incentives
Fit-out period of 1-6 months, depending Landlords flexible with extending fit-out periods
on size of transactions and becoming lenient with payment terms.
RECOMMENDATIONS FOR TENANTS
How should occupiers regain lost ground post-pandemic
Be mindful of developers converting or

repurposing asset classes to cater to
various tenants
Monitor key policy and health

developments
Occupy PEZA space vacated by POGOs
Complement office set-up with remote

working
Consider hub-and-spoke model

RECOMMENDATIONS FOR LANDLORDS
How should developers respond to occupiers’ concerns
Offer POGO-vacated PEZA spaces to

occupants with immediate space
requirements Conversion of vacant mall spaces into
flexible workspaces
Be mindful of tenants’ leasing

strategies amid the pandemic Aim to achieve stable occupancy and
highlight office’s key role in promoting
collaboration and corporate culture
Alternative leasing schemes and

expansion sites

RESIDENTIAL SECTOR
IN A NUTSHELL | RESIDENTIAL
Anemic office leasing market 2020 completion down by 59% Softer drop in prices and rents
affects residential sector from our initial forecast due to delayed completion

SUPPLY IN METRO MANILA AS OF Q3 2020
New completions in Q3 2020
ARANETA CENTER 4,500 3%
EASTWOOD CITY 9,600 7%
ORTIGAS CENTER 18,700 14%
ROCKWELL 5,300 4%
Condominium units in MAKATI CBD 28,200 21%

Metro Manila CBDs
132.4K
BAY AREA 22,600 17%
FORT BONIFACIO 39,000 29%
ALABANG 4,400 3%
Location End 2019 stock % Share to total
SLOWER PROJECT COMPLETION YOY
Construction delays continue to hamper completion
EASTWOOD | 74%
Eastwood Global Plaza Luxury
464 units
Residence
FORT BONIFACIO | 26%

The Florence at McKinley Hill
161 units
Tower 3
Units delivered in Q3 2020 Completion in Q3 2019
625 1,915
SELECTED PROJECTS IN 2020
Down from our initial projection of 14,720 units pre-pandemic (Q4 2019)
FORT BONIFACIO | 35%

East Gallery Place 407 units
EASTWOOD | 8%
Avida Towers Turf BGC (T1) 540 units
Eastwood Global Plaza
The Venice Luxury Residences - 464 units
235 units Luxury Residence
St. Mark Residences
Times Square West 738 units
The Florence at McKinley Hill T3 161 units MAKATI CBD | 6%
Garden Towers Tower 2 334 units
BAY AREA | 45%

Coast Residences Tower 1 2,197 units
ALABANG | 7%
Kingsford Hotel 331 units
Studio City Tower 5 450 units
Six Senses Resort I-Sight Tower 152 units
6,009 Units expected

to be delivered 59%
Drop in new supply
from our initial forecast
pre-pandemic
PARED DOWN SUPPLY
Projects scheduled in Q4 2020 delayed to H1 2021, especially in the Bay Area
LOCATION END 2019 2020F 2021F 2022F END 2022 CHANGE

(2022 vs end-2019)
Alabang 4,430 450 500 5,380 21.4%

Araneta Center 4,550 4,550 0.0%
Eastwood City 9,170 460 9,630 5.0%
Fort Bonifacio 37,290 2,080 810 1,000 41,180 10.4%
Makati CBD 28,220 330 210 210 28,970 2.7%
Bay Area 22,430 2,680 5,520 6,420 37,050 65.2%
Ortigas Center 18,730 230 230 19,190 2.5%
Rockwell Center 5,270 560 5,830 10.6%
Total 130,090 6,000 7,270 8,420 151,780 16.7%
SUPPLY PRE-PANDEMIC AND CURRENT
Significant delays in the Bay Area
Q4 2019 (Pre-pandemic) Q3 2020 (Current)

Bay Area 11,592 Bay Area 2,680
Fort Bonifacio 1,749 Fort Bonifacio 2,081
Alabang 450 Eastwood City 464
Makati CBD 334 Alabang 450
Ortigas CBD 601 Makati CBD 334

Fort Bonifacio 1,750
Fort Bonifacio 810
Alabang 503
Alabang 503
Rockwell Center 540
Ortigas CBD 232 Ortigas CBD 229
Eastwood City 123 Makati CBD 212
Fort Bonifacio 934 Fort Bonifacio 1,004
Alabang 272 Rockwell Center 560
Ortigas CBD 632 Ortigas CBD 232
Makati CBD 797 Makati CBD 209
VACANCY RISES FOR SIXTH CONSECUTIVE QUARTER
Increase in vacancy across all submarkets due to subdued leasing and secondary market sales
EASTWOOD CITY
ORTIGAS CENTER 2Q20 3Q20 4Q20F
2Q20 3Q20 4Q20F 4.6% 5.4% 6.2%
4.9% 5.5% 6.1%
MAKATI CBD ROCKWELL CENTER
2Q20 3Q20 4Q20F 2Q20 3Q20 4Q20F
11.4% 12.1% 13.6% 10.4% 10.9% 11.5%
FORT BONIFACIO
2Q20 3Q20 4Q20F
BAY AREA 15.8% 16.8% 19.8%
2Q20 3Q20 4Q20F Overall Metro Manila Vacancy Projected vacancy end-2020
12.9% 15.3%
14.1% 17.1% 21.2%
HIGHER OFFICE VACANCY AFFECTING RESIDENTIAL LEASING
Historical office vacancy per submarket
Makati CBD Ortigas Center

12.2% 2.5% 6.0% 5.5% 12.0%
12.1%
12.0% 10.6%
2.1%
11.8% 5.0% 10.0%
2.0% 4.9%
4.5% 4.6%
11.6% 4.4%
4.0% 8.0%
11.4% 11.4% 7.2%
1.5%
11.2% 1.3%
1.1% 1.1% 11.1% 1.1% 3.0% 6.0%
11.0%
1.0%
4.6%
10.8%
10.9% 3.9%
10.8% 2.0% 3.7% 4.0%
10.6%
0.5%
10.4% 1.0% 2.0%
10.2%
10.0% 0.0% 0.0% 0.0%

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Office (RHS) Residential (LHS) Office (RHS) Residential (LHS)
HIGHER OFFICE VACANCY AFFECTING RESIDENTIAL LEASING
Historical office vacancy per submarket
Bay Area Fort Bonifacio

18.0% 3.8% 4.00% 17.0% 6.00%
17.1% 5.2%
16.0% 3.50%
16.5%
5.0%
3.1% 16.8% 5.00%
14.0% 3.0%
14.1% 3.00%
13.0% 12.8% 13.2% 16.0% 4.1%
12.0% 4.00%
2.50% 3.5% 3.4% 15.8%
10.0% 15.5%
2.00% 3.00%
8.0%
15.2%
15.0% 15.0%
1.50%
6.0% 14.7% 2.00%
14.5%
1.00%
4.0%
0.5% 1.00%
2.0% 0.3% 0.50%
14.0%
0.0% 0.00% 13.5% 0.00%

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Office (RHS) Residential (LHS) Office (RHS) Residential (LHS)
PRICE CORRECTION IN THE OFFING
Prices to slightly recover starting 2021; pace of correction varies per location
350,000
300,000 13% 2.1% 281K

286K
268K 273K
Projected price drop in 2020 Projected annual price
250,000
increase from 2021-2022
237K 241K
PHP / sq m
200,000
150,000
100,000
50,000
-
2001
2002
2005
2006
2009
2013
2016
2017
2003
2004
2007
2008
2010
2011
2012
2014
2015
2018
2019
2020F
2021F
2022F
Makati Fort Bonifacio Rockwell

FASTER RENTAL CORRECTION
Pace of correction depends on location and condominium type
1,200
937
1,000 916
843 861
800
807 824
PHP / sq m
600
7.7% 2.5%
400
200 Projected rent drop in 2020 Projected annual rent increase

from 2021-2022
-
2003
2006
2009
2012
2015
2017
2018
2020F
2001
2002
2004
2005
2007
2008
2010
2011
2013
2014
2016
2019
2021F
2022F
Mak P3BR Fort P3BR Rock P3BR

TRENDS ON CONDOMINIUM LEASING
Key trends in the current leasing market
Pre-terminations as foreign tenants Waived annual rent increase for A number of expatriates eyeing H&L
cannot go back to the Philippines lease renewals (selected projects) near offices
(Expats and POGOs)
Increase in inquiry for residential Selected H&L properties for sale Owners of mid-market properties
asset management services offer appliances are more negotiable
AREZZO PLACE BLDG 22 BY PHINMA PROPERTIES
Alfonso Sandoval Avenue, Pasig City
Average total
Units launched
36 since 2Q20 2.7mn contract
price
Average
100% Sold as of
Q3 2020 84k price per sq
metre
10% Required down payment, 15 months to pay
15K Reservation fee
5% Cash discount

SIERRA VALLEY GARDENS BLDG 2 BY RLC
Ortigas Avenue Extension corner Suburban Drive, Cainta, Rizal
Average total
Units launched
price
Average
53% Sold as of
metre
25K Reservation fee
2% Cash discount

ALDER RESIDENCES ANDREA BY DMCI
Acacia Ave., Acacia Estates, Taguig City
Average total
Units launched
price
Average
86% Sold as of
metre
20K Reservation fee

GEM RESIDENCES BY SMDC
E. Rodriguez Ave., corner Jose Cruz Sts., Brgy. Ugong, Pasig City
Average total
Units launched
1,452 since 3Q20 6.2mn contract
price
Average
45% Sold as of
metre
25K Reservation fee

BLOOM RESIDENCES BLDG 12 BY SMDC
San Antonio, Parañaque (along Sucat Road)
Average total
Units launched
price
Average
80% Sold as of
metre
15K Reservation fee
20% Cash discount

SLOWER PRE-SELLING TAKE-UP IN Q3
9M 2020 take-up down by 28% YOY
60,000
57K
50,000 54K 53K 52K
49K 47K
40,000
43K 42K
40K
37K 38K
36K 35K
30,000 34K
20,000
25K
16K
10,000
2013 2014 2015 2016 2017 2018 2019 9M 2020

Launch Take-Up

COMPARISON OF TAKE-UP AND LAUNCHES
Launches rose significantly in Q3 as developers try to capture demand for the remainder of 2020
14,000
12,500
12,000
10,000
9,800
8,600
8,000
6,800
6,000
5,000
4,000
2,000
1,200
Q3 2019 Q2 2020 Q3 2020

Launch Take-up
BREAKDOWN OF LAUNCHES AND TAKE-UP
Breakdown of launches and take-up according to price for 9M 2020
100%
5% LUXURY
90% 16% 8M and Above
80%
32%
UPSCALE
70% 25%
6M to 7.99M
60%
50% MID-INCOME
3.2M to 5.99M
40%
53% 44%
30%
AFFORDABLE
20%
1.7M to 3.19M
10%
12% ECONOMIC
11% 3%
0% 580K to 1.69M
Launches Take-Up
SHARE OF MID-INCOME TO LUXURY HAS BEEN RISING
Share of mid-income to luxury at 85% from 72% a year ago
100%
LUXURY
90%
20% 16%
8M and Above
80%
7% UPSCALE
70% 25%
6M to 7.99M
60%
MID-INCOME
50%
44%
3.2M to 5.99M
40%
44%
30% AFFORDABLE
1.7M to 3.19M
20%
25%
10%
12% ECONOMIC
3% 3% 580K to 1.69M
0%
9M 2019 9M 2020
TAKE-UP OF MID-INCOME PROJECTS
Top 3 submarkets
TAKE-UP (9M 2020)

AREA
(units)
16%
Paranaque 2,109
Pasig City 1,747

19%
20%
Alabang - LP 1,320
12%
TAKE-UP OF UPSCALE PROJECTS
Top 3 submarkets
17%
TAKE-UP (9M 2020)
AREA
31% (units)
Mandaluyong City 1,948
28%
Paranaque 1,777
C-5 Pasig 1,082

TAKE-UP OF LUXURY PROJECTS
Top 3 submarkets
TAKE-UP (9M 2020)

AREA
(units)
13%
40%
Reclamation 1,611
15%
Paranaque 582
Ortigas Center 517

PRE-SELLING SITUATION IN METRO MANILA
Status of pre-selling projects offered in market
Payment terms are extended
16-20%
Discount on pricing* No reservation fees
Rebates for selected projects
20% Free appliance/gadget promo for

selected developers
Required down payment
(previously 30%)
(some offer no down payment) Selected developers offering gift
certificates
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Note: *covers affordable to mid-income projects
REMAINING INVENTORY INCREASE IN Q3
Slight rise in remaining inventory
MID-INCOME | 18,376 units AFFORDABLE | 14,429 units LUXURY | 7,760 units
41% 32% 17%
UPSCALE | 4,072 units ECONOMIC | 475 units 45,112

Remaining inventory as of
the end of Q3 2020 (units)
from 44,400 in Q2 2020
9% 1%
37%
Share of RFO projects
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International. Google Images.
DISCOUNTS IN THE PRE-SELLING MARKET
Mid-income and lower priced projects offer bigger discounts
QUEZON CITY
MIN MAX
4% 17%
MANDALUYONG AND PASIG

MIN MAX
5% 16%
MAKATI AND TAGUIG
MIN MAX
PASAY 3% 16%
MIN MAX
6% 16%
PARAÑAQUE AND MUNTINLUPA

MIN MAX
10% 16%
Source: Colliers International Source: Colliers International
DISCOUNTS IN THE SECONDARY MARKET
Price reductions now all over Metro Manila
QUEZON CITY
AVG
16%
PASIG AND MANDALUYONG

MIN MAX
5% 15%
BAY AREA
MIN MAX
10% 24%
PARAÑAQUE AND MUNTINLUPA

MIN MAX
14% 22%

CONSUMER EXPECTATIONS SURVEY
Results of the Q3 2020 CES of the Bangko Sentral ng Pilipinas (BSP)
4.5%
-54.5% Households that considered the next 12 months as
favorable to buy big-ticket items. Down from 6.5%
in Q1 2020
Consumer confidence in Q3 2020. A record-
low since the poll started in Q1 2007
Reason for Negative Sentiments 3.3%

▪ High unemployment and less working family members Households that plan on buying properties in the
▪ Low and reduced income next 12 months. A record low
▪ Faster increase in price of goods
Source: Bangko Sentral ng Pilipinas. (2020). Third Quarter Consumer Expectations Survey
RECOVERY ENABLERS
Metro Manila condominium market
Lower mortgage rates (7.4%1 in Q3 Developers offering attractive Growing interest in residential projects
2020), from 21% during the AFC packages such as 20% down outside of Metro Manila such as
payment, previously 30% Southern and Central Luzon
Cash remittances contracted by 2.6% Mass production of effective Businesses starting to re-open
from January to August 20202, slower vaccine against COVID-19
than the -10% to -20% forecast3,4
Source: Colliers International. Google Images. 1 Various Banks. 2 Bangko Sentral ng Pilipinas. 3 BusinessWorld, Remittances
seen to fall up to 10%. 4 The Philippine Star, Remittances buck pessimistic expectations to peak in July
PRE-COVID 19 VS. CURRENT & POST COVID-19
How the residential investors are adjusting
PRE-COVID 19 CURRENT AND POST-COVID 19

Rental Rates
About 7.5% growth annually from 2020 to 2022 7.7% drop in 2020; gradual recovery starting
due to strong leasing especially from POGOs 2021 to 2022 or about 2.5% annually
Supply
Delivery of 6,000 units in 2020; further delays in
14,720 units in 2020; end-2022 supply at 158,290 units
completion due to labor constraints and
restrictions
Demand
Absorption of 11,700 units in 2020. Take-up in the pre- 9M 2020 pre-selling market take-up reached
selling market reached 47,000 units in 2019 24,900 units, down 28% YOY; unlikely to breach
40K units
Price
Increase peaked at 12% in 2018 despite high 13% potential correction on secondary prices,
inflation rate due to POGO demand; Bay Area slower than initial forecast due to further project
pre-selling prices peaked at PHP164,000 per sq m delays; annual growth of 2.1% from 2021 to 2022

How should developers regain lost ground post-pandemic
Continue offering attractive and Consider attractive price segments

flexible payment terms and locations for pre-selling
Small to mid-sized developers

Use of property technology with substantial RFO units to
(proptech) platforms consider residential management
services

RECOMMENDATIONS FOR TENANTS/INVESTORS
How should buyers seize opportunities in the market
Monitor RFO units with above Consider H&L projects outside of

market discounts Metro Manila offering discounts
Units are adaptable to work-from-

Investors to consider tapping asset home
management services

RETAIL SECTOR
IN A NUTSHELL | RETAIL
Subdued retail space Developers deferring project Lease rates to drop in 2020 and
absorption due to bleak completion as some retailers 2021 before slow recovery in 2022
consumer confidence close shop and migrate online

METRO MANILA RETAIL SUPPLY
Retail supply up 2% YOY
Supply
1.8M sq m
North Pop.
2.8M
Supply Supply Supply

1.4M sq m 1.5M sqm 1.4M sq m
West Pop. Central Pop. East Pop.
1.8M 1.6M 4.7M
Total leasable retail space in Metro Manila as of Q3 2020
7.3M sqm Supply

1.2M sq m
South Pop.
3.6M
Source: Colliers International; Philippine Statistics Authority
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW *Population as of 2015
COMPLETIONS IN 2020
Some 53,100 sq metres completed in 2020
FORT BONIFACIO ALABANG MANILA

The Shops at Grand Central Park Bloc 10 (6,420 sq m), Deca Mall Tondo (24,800 sq m),
(21,800 sq m), Federal Land Filinvest Land 8990 Holdings

SELECTED UPCOMING PROJECTS (2020-2022)
Pre-COVID
2020
• Araneta Gateway Mall 2 • Bridgetowne Mall
•
•
One Ayala Retail
Ayala Triangle Gardens Retail
2021 • Parqal Mall
• Mitsukoshi Mall
• SM City Grand Central
2022
• Ayala Malls Arca South
• SM Mall of Asia Expansion

SELECTED UPCOMING PROJECTS (2020-2022)
During COVID
2021 • One Ayala Retail

• Ayala Triangle Retail
• Mitsukoshi Mall
• SM City Grand Central
• Araneta Gateway Mall 2
Completed retail space in 2020,

51% down from our initial forecast
53,100 sqm
2022
• Bridgetowne Mall
• SM Mall of Asia Expansion
• Parqal Mall

RETAIL VACANCY FORECAST
Metro Manila vacancy to peak in 2020
Retail vacancy as of Q3 2020 Decline in mall foot traffic vs. Pre-COVID levels
12.5% 30-50%
New Supply Vacancy at Year-End (RHS)
500K 20%
450K 18%
400K 16%
14%
350K 14%
300K 12%
250K 10%
200K 8%
150K 6%
100K 4%
53K
50K 2%
0 0%
2020*
2021F
2022F
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
CONSUMER CONFIDENCE VS RETAIL RENT GROWTH
Retail rents plunged during GFC but recovered after a year
15.0% 20.0%
10.0% 10.0%
0.0%
5.0%
-10.0%
0.0%
-20.0%
-5.0%
-30.0%
-10.0%
-7.3%
-40.0%
-10.0%
-15.0% -50.0%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Rental Growth Consumer Confidence (RHS)
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International; Bangko Sentral ng Pilipinas
RETAIL RENTS TO DROP IN 2020
Rents to drop due to softer demand and rising vacancy all over Metro Manila
Projected decline in retail rents Projected recovery in retail rents

for 2020 for 2022
-10% 1%
LOCATION Q1 2020 Q3 2020 % CHANGE (HoH) Q1 2021F* % CHANGE (YoY)
PHP1,684 PHP1,568 PHP1,510

Ayala Center -6.9% -10.3%
(USD33.0) (USD32.7) (USD31.5)
PHP1,572 PH1,495 PHP1,445

Ortigas Center -4.9% -8.1%
(USD30.8) (USD31.1) (USD30.1)
*USD1 = PHP51 as of the end of Q1 2020

*USD1 = PHP48 as of the end of Q3 2020

RETAIL CONCESSIONS
Extended by various mall operators
30 days 50%
Percentage of sales instead of
Grace period on rents Basic rent discount for some
fixed rent
tenants and on Common Usage
Service Area (CUSA)

7 COMMANDMENTS IN MALLS
Protocols to be strictly implemented as per DTI
3. No talking and eating (public

1. Wearing of proper face masks 2. Wearing of face shields
transport, confined, and crowded areas)
6. Isolate COVID-19 positive individuals

4. Adequate ventilation 5. Frequent and proper disinfection
7. Appropriate physical distancing
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: ABS-CBN News. (2020). DTI reminds mall operators, consumers to follow strict health protocols as restrictions ease
ADVERSE EFFECTS FELT IN VARIOUS RETAIL SEGMENTS
Retail industries impacted by the pandemic
Most affected Moderately affected Least affected
• Cinemas • Hardware stores • Pharmacies and

• Fitness Centers • Cosmetics Supermarkets
• Food courts • Coffee Shops • E-commerce merchants and
• Luxury footwear and clothing • Pet supplies fast food
• Family entertainment centers • Banks and currency exchange
• Remittance Centers
• In-mall clinics
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International; Moody’s
ESTABLISHMENTS THAT CLOSED OR ARE STRUGGLING
Footwear and clothing or retail spaces where people convene
Cinemas and foodcourts

Source: Businessworld, COVID-19 forces Periwinkle to close its boutiques ; Timezone is now selling their game
machines ; ABS-CBN Studio Experience stops operations after 2 years ; Sad news for the kids: Kidzania Manila is closing down
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW for good
NEW TRENDS IN RETAIL
Mall operators and retailers migrating online
Virtual Mall Tours Rolling stores
FB Live for fashion Door to door

Source: Businessworld, Virtual tour of Gateway Mall launched ; FamilyMart launches rolling stores, to offer delivery service
CREATIVE RESPONSES TO THE PANDEMIC
Innovate or evaporate amid the pandemic
MerryMart’s “dark grocery”

concept with FoodPanda1
Conversion of vacant mall spaces into co-

working facilities or micro-warehouses
Accelerated personal shopper

services2
Uniqlo standalone roadside stores 3

Source: 1 BusinessMirror, MerryMart forays into ‘dark stores’ . 2 ABS-CBN News, This delivery app offers curated options for
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW groceries and more. 3 Malaya Business Insight, Uniqlo to open new Lifewear store
CURBSIDE PICKUPS PROLIFERATING
Mall operators implementing new schemes
Source: Click The City, Rockwell Introduces Pick-Up Service ‘Rockwell In & Out’ ; Manila Times, SM Southmall introduces
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW personal shopper and curbside pickup for Las Piñas
SHOPS GOING ONLINE
Brands expanding e-commerce sites
Source: Manila Bulletin, IKEA to open online store first in PH. The Philippine Star. H&M explains Philippine impact of global
store closures. Rappler, Uniqlo Philippines launches online store
PROFILE OF UPCOMING TENANTS
Essentials continue to dominate
Cloud Kitchens Medical-related Specialty shops
Groceries Cosmetics Home furnishing

LESS HOLIDAY SPENDING IN 2020
Outlook on spending based on the Q3 2020 Consumer Expectation Survey (CES)
Spending outlook on clothing,

footwear, restaurants, cafes, and big-
ticket items (H&L, vehicles, durables)
26.4%
Household spending outlook index in Q4 2020, 3.3%
a record low
Households that plan to acquire property in
(based on the Q3 2020 CES)
the next 12 months (from 5.9% in Q1 2020)
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Philstar. (2020). Filipinos to spend less this Christmas — BSP
HOUSEHOLD SPENDING PER SUBSEGMENT SHARE
Q2 2019 vs. Q2 2020
Share of food and non-

4%
42% alcoholic beverages in Q2
5% 2020 vs. 35% in Q2 2019
5% 4%
5%
Food and beverages Share of housing and
Housing and utilities 12%
35%
16% utilities in Q2 2020 vs. 12%
Miscellaneous goods
14% 42% in Q2 2019
Transport
Education
12%
Health Share of miscellaneous
12% 14% goods in Q2 2020 vs. 12%
16%
in Q2 2019
Decline in household
15.5%
Note: Inner circle = Q2 2019; Outer circle = Q2 2020
spending in Q2 2020 vs.
5.6% growth in Q2 2019
Source: Philippine Statistics Authority

CONSUMER SPENDING SUB-SEGMENTS
Q1 2020 vs. Q2 2020
10.0
4.7 6.6 9.1 7.4 8.2
5.2
2.4 2.4
0.1 0.6
0.0
-0.6
-5.7
-10.0
-9.4 -7.4
-12.2 -12.7
-14.3
-20.0
-17.5
-22.4
-30.0
-29.2
-40.0
-40.2
-50.0
-60.0
-60.5 -57.2
-70.0 -66.4
Q1 2020 Q2 2020
Food and non- Alcoholic Housing, water, Household

alcoholic beverages Clothing electricity equipment Health Transport Communication Recreation and Education Restaurants and Miscellaneous
culture hotels goods
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Philippine Statistics Authority
MOBILITY OF CONSUMERS IN METRO MANILA
Google COVID-19 Community Mobility Report, October 6, 2020
National Capital Region
Retail and Recreation Grocery and Pharmacy Parks
-53% -20% -50%
Transit Stations Workplaces Residential
-67% -49% 24%

Note: Compared to baseline sample taken January 3 to February 6, 2020
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Google Images Source: Google. (2020). COVID-19 Community Mobility Report - Philippines
POST-COVID SHOPPING BEHAVIOR IN ASIA
Digital Consumer in Asia 2020 report
79%
Asian shoppers open to using scan-and-
go technology where smartphones are
used to scan products and pay
71%
Open to using automated checkouts
(unmanned retail shops)
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Philippine Retailing Magazine Q3 2020
SOUTH EAST ASIA INTERNET ECONOMY
Gross Merchandise Volume (2019)
45
40
40
35
30
USD25 Bn 27%
Projected GMV for the Philippines by 2025 Compounded Annual Growth Rate (CAGR)
In USD billion
25 from 2015-2025
20
16
15
12 12 11
10
7
5 10-30%
0 Growth in GMV
Indonesia Thailand Singapore Vietnam Malaysia Philippines from 2019-2022
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Google Temasek

E-PAYMENTS SEEN RISING
E-wallets to play a role in financial inclusion; opportunities for retailers
USD1.5 Tn 53%
Projected value of online Smartphone users in the Philippines
payments by 2030 that do not own a credit card
29% 50%
Filipinos with formal accounts in Digital retail payments target by the
financial institutions as of 2019 central bank by 2023
Source: BusinessWorld. E-payments seen rising in cash-heavy ASEAN

INSTAPAY TRANSACTIONS
Surge in online transactions
31%
✓
Monthly average growth from
April-August ✓
✓
✓ ✓
✓
PHP141.2 Bn
PHP100.3 Bn
PHP117 Bn
PHP49.5 Bn
PHP80 Bn
29.5 Mn
Instapay transactions recorded
as of the end of August 2020
April May June July August
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Bangko Sentral ng Pilipinas and va rious news a rticles
BAY AREA & ALABANG AS FLEXI SPACE HUBS
Office and Retail vacancies at a glance
BAY AREA
3.8% Office
Vacancy ALABANG
20% Retail
Vacancy 9% Office
Vacancy
As of Q3 2020
22%
Retail
Vacancy
As of Q3 2020

WORK WHERE YOU SHOP
Landlords embracing a more holistic approach to fill vacancies and increase foot traffic
Benefits of co-working space in malls
67.3% 72.9% 74.6%
YES NO YES NO YES NO
Visit shops in the mall more Visit restaurants in the mall more Spend more money in the mall
COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International USA 2019 Retail Spotlight Report
RECOVERY ENABLERS
Factors to anchor retail sector rebound
Mallwide sales to generate Easing of restrictions on public Passage of the amendments to

more economic activities transportation the Retail Trade Liberalization Act
OFW Remittances Recovery in employment Internet Transactions Act

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International USA 2019 Retail Spotlight Report
RECOMMENDATIONS FOR CONSUMERS AND RETAILERS
How should retailers respond to the pandemic
Differentiate using technological Be mindful on online scams and

advantages sites that may compromise credit
card security
Explore popular segments such Expanded tie-up with logistics

F&B segment and maximize firms and delivery apps
delivery options
Be innovative with client

engagement particularly higher- Implement loyalty programs for
end brands (e.g. home deliveries, customer retention
personal shoppers)
Landlords need to rethink their strategies
Provide rent concessions and

highlight sanitation
Monitor changes in households’
spending patterns
Aggressive implementation of
online shopping platforms,
personal shopping services
Conversion and repurposing of

vacant spaces
Reconfigure retail spaces
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experience in their local markets. Our professionals know their communities and the industry inside and out. Whether you are a local
firm or a global organization, we provide creative solutions for all your real estate needs.
Investors Owners Occupiers Tenants
Capital Markets & Investment Services Asset & Lease Management Corporate Solutions
Consultancy Services Brokerage / Agency Services Tenant Representation
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Landlord Representation Project Management Facilities Management
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delivering a memorable experience each and every time they choose to do business with us.
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Q3 2020 Property Briefing 12102020

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Q3 2020 PROPERTY

OCTOBER 29, 2020

World Bank -1.9% -6.9%

Oxford Economics -6.9% -8.2% -20% -16.5%

ADB -3.8% -7.3% GDP contraction in 1998,

8.0% 7.5% 7.5%

Construction Growth Unemployment Household Consumption

• Decline from Saudi Arabia, 40 8M 2020 Remittances,

USD (in Billions)

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

400K 352K 352K

Ortigas Center 348,300 -1.7% 34,800 100K

Makati CBD Fort Bonifacio Ortigas Center Manila Bay Area

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW

QUEZON CITY 1,518,200 12%

ORTIGAS CBD 1,952,600 16%

ORTIGAS FRINGE 565,000 5%

Total office stock in Metro Manila MAKATI CBD 3,355,400 28%

BAY AREA 837,400 7%

Source: Colliers International Location End Q3 2020 stock % share to total

ORTIGAS CBD | 54K

Bay Area Prestige Bay Mall 7,400

Makati Fringe One Oculus Center 6,000

Ortigas CBD Jollibee Tower 54,200 9M 2020 Completion vs.

Makati CBD 3,355,400 - 70,700 75,400 3,501,500 4%

Makati Fringe 417,700 32,800 33,900 27,700 512,100 53%

Fort Bonifacio 2,231,400 26,600 188,000 112,000 2,558,800 15%

Ortigas Center 1,840,900 154,700 71,500 132,600 2,199,700 19%

Ortigas Fringe 535,800 29,300 22,600 18,600 606,300 13%

Bay Area 798,600 100,400 224,900 35,200 1,159,100 45%

Alabang 731,900 11,800 8,500 77,600 829,800 13%

Quezon City 1,489,500 28,600 12,500 - 1,530,600 3%

Others 472,300 - - - 472,300 0%

Total 11,873,500 384,200 632,600 479,100 13,369,400 13%

Source: Colliers International Supply Net Take Up Vacancy Rate (RHS)

-30K sq m Net take-up in Q2 2009, during

Source: Colliers International

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International

MANDALUYONG | 13% MAKATI FRINGE | 7%

MAKATI CBD (P) | 4% BGC/NORTH BONIFACIO | 7%

BAY AREA | 4% ALABANG | 9%

ORTIGAS FRINGE ORTIGAS CBD

MAKATI CBD FORT BONIFACIO

Q3 2020 = 1,500 Q3 2020 = 1,200

Note: Headline Rates Source: Colliers International

Hong Kong -16.6%

Singapore CBD -3.1%

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International

Source: Colliers International

3,400 sqm 5,700 sqm

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW

9M 2020 vs. 9M 2019

50 9M 2020 vs. 9M 2019

9M 2020 vs. 9M 2019

9M 2020 vs. 9M 2019

5K sqm 4K sqm 9K sqm

COLLIERS INTERNATIONAL | Q3 2020 PROPERTY MARKET OVERVIEW Source: Colliers International

Tholons Global Innovation Index 2020

IBPAP to upskill up to 1,000