The Philippine economy registered a modest Gross Domestic Product (GDP) growth of 4.9% in the first quarter of 2011. This is expected to be the trend in the succeeding quarters as the contraction in public spending and rising commodity and oil prices continue to affect the general sentiment of the market.
The national annual headline inflation went up to 4.5% in May from 4.3% in April.
A Bangko Sentral ng Pilipinas (BSP) review of inflation rates indicated that inflation is expected to remain above 5% in the second semester and breach the target of 3%-5% this year due to continued pressures from rising oil prices.
The employment rate in the April 2011 Labor Force Survey (LFS) was estimated at 92.8%, slightly higher than the figure reported in April last year at 92.0%. The country’s Gross International Reserves (GIR) increased by US$0.3 billion to reach $68.8 billion as of end May 2011 from the previous month’s level of $68.5 billion.
Foreign direct investments (FDI) continued to post net inflows in March, amounting to $167 million, more than twice the $69 million level recorded in March 2010.Transactions in registered foreign portfolio investments for the month of May yielded a net inflow of $364 million. The continued inflow of investment funds resulted from positive
investor interest in the Philippine Stock Exchange (PSE)-listed securities and fixed income investments. Overall, the second quarter performance showed the Philippines’ resiliency amidst challenging global economic conditions.
Commercial Office Real Estate in the Philippines>
The Philippine Real Estate Market remained positive in the second quarter of 2011. The healthy outlook and demand from the Business Process Outsourcing (BPO)/Call Center industry drove the growth of office leasing operations in the same period.
Developers are bullish in providing this industry, as well as other industries, with fresh space, despite completions progressing at a slow pace. There are a lot of projects in the pipeline that will provide additional office space but only a fraction is expected to be completed this year.
Development of property is no longer concentrated in Metro Manila and Metro Cebu. The so-called Next Wave
Cities are hosts to a big chunk of planned projects.
Most landlords are slowly increasing their lease rates. Current conditions still support the view that 2011 will see the market gaining at a gradual pace as demand peaks and supply gradually diminishes. The office market is anticipated to be stable later this year. The improvement of investor sentiments are more explicit.
While low lease rates may still be enjoyed in a few areas, vacancy rates are now starting to decline, even in Makati. CBD prime rates in Makati averages at Php 850 per square meter a month, while vacancy rate has dropped to 8.5%