Chapter 5 - Locating to the Philippines

Back on Track | The Business Districts
Negotiating a Commercial Lease | Residential Properties

The Philippines remains on track to becoming the investment destination hub in Asia anew after releasing its first semester economic performance for 2002. Recent data suggested that the Philippine Gross Domestic Product (GDP) grew 4.5% in 2Q02, the highest growth rate achieved since 4Q00. Economic expansion was driven by the surprisingly better than expected performance of the industry (+4.3%) and services sector (+5.5%), subsequently contributing to beat government and analysts' expectations of a 3.8% to 4.0% 2nd quarter GDP growth.

While the Philippine economy continued to gather strength, actual gains have yet to trickle down and translate to a major recovery in the real estate sector. For the second quarter of 2002, the real estate sector managed to post a +1.0% growth, better than last year's -0.6%. For the first semester, the sector thus suggested a +1.6% growth, reversing the -1.6% contraction last year. Economic managers have attributed the recovery to the low interest rate regime, which is helping the local real estate market's resiliency.

The government's efforts to stimulate business activity have resulted in keeping inflation and lending rates at historic lows: latest inflation rate is at 2.6% while lending rates are steady at 9% to 10%. The creation of the Special Purpose Asset Vehicles Act (SPAV) provides a regulatory framework that will enable the creation of an asset management company (AMC) that will absorb the banking system's non-performing assets/loans.

In essence, this will free the banks from their existing deadweight that will generate more liquidity for renewed lending activities for recovering industries, including fresh funds for new mortgages. In addition, the sale of property assets should provide market-clearing benchmarks for prices, which has been the deterrent for some deals to be concluded.

Company Profile Jones Lang LaSalle Jones Lang LaSalle Incorporated (NYSE: JLL) is the world's leading real estate services and investment management firm, operating across more than 100 markets on five continents. With approximately 7,200 employees, the company provides comprehensive integrated expertise, including management services, implementation services and investment management services on a local, regional and global level to owners, occupiers and investors. To effectively address the local real estate needs of real estate owners and occupiers, the Americas, Europe and Asia Pacific regions of Jones Lang LaSalle provide a full spectrum of integrated services. With a portfolio of approximately 725 million square feet (67 million square meters) of property under management worldwide, Jones Lang LaSalle is the industry leader in property and corporate facility management services. Supported by innovative products and services, a strong technology platform and sophisticated research, Jones Lang LaSalle is a unique single source for clients' comprehensive real estate requirements. Operating under a single organizational and ownership structure, Jones Lang LaSalle takes a unified approach with its business activities by using and advancing the best practices of the world's most innovative companies to increase value for its clients. Capabilities We operate in three geographic regions-the Americas, Europe and Asia Pacific-to offer a range of services to multinationals, corporations, institutions, occupiers and investors. Through our Corporate Solutions capability, we assemble cross-disciplinary teams of specialists to meet our clients' complex occupancy needs. They depend on us to manage facilities, projects, transactions and lease administration for their portfolios. Our Investor Services professionals have expertise in agency leasing, property management, investment management and sales, acquisitions, financings and portfolio advisory. Our expertise spans office, retail, industrial, residential, hotel, entertainment, data and call centers, public institutions, healthcare and land assets. Our Capital Markets team services the real estate capital investment and asset management activities of our clients through the core activities of investments, corporate finance, advisory, research and strategic consulting.

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