Presentation of KMC Managing Director Michael McCullough during the 1st Property Summit Cebu, July 17, 2015 at the Radisson Blu Hotel in Cebu.

1. kmcmaggroup.com
Upcoming Opportunities /
Challenges for BPO Market
Property Summit Cebu
Copyright Ⓒ 2015

2. opportunities, challenges, and strategies to employ in the cebu office sector
content
cebu office real estate outlook
cebu real estate market overview

3. our team

5. the BPO industry in the Philippines
#2
in non-voice
complex
Began
emerging in
2000
Growth at an annual
rate of
26 percent
over a decade
1,000,000
direct employees
by 2014
US$16
billion in
revenues
3 million
indirect
employees
Serving
 North America
 Asia
 EU
20+
sectors
Over 700IT-
BPO companies
and Global In-
house Centers
Source: Business Process Association Philippines (BPAP)

6. cebu real estate market overview

7. history
 1990’s
 The early 90’s saw the development of local business
parks, making Cebu one of the biggest business parks
outside of Manila
 Aside from office buildings, initial developments
included retail and hotel components
 1997 Asian Financial Crisis halted developments
 2000’s
 Development resumed due to expansion and rise of
BPOs in Cebu
 Due to the Dot Com boom
 Since then, Cebu has been on the rise, becoming
one of the top BPO destinations in the world

8. township evolution
Source: KMC MAG Group Research & Consultancy

9.  Vacancy dropped to 1.99% owing to fairly constant supply and strong leasing activity. Vacancy rates are
expected to go up in the next few quarters in all submarkets in 3Q2015, specially in Cebu Business Park,
with the turnover of new supply.
cebu office market overview
Source: KMC MAG Group Research & Consultancy
Cebu Grade A Office Supply & Take-Up

10. cebu office market overview
Source: KMC MAG Group Research & Consultancy
Cebu Grade A Office Rental

11.  Robust activity in Cebu’s office sector as more
players enter the market
 Ayala Land is rolling out P8B for Central Bloc,
located within Cebu IT Park
 Megaworld’s Mactan Newtown expected to add
150,000 sq m by 2021
 Filinvest has already rolled out first tower of P5B
Cyberzone complex
 Norkis expected to complete first office tower in
Norkis Cyberpark in 3Q 2015
 Much-anticipiated SM Seaside development in
full-swing with mall construction finishing soon
Source: KMC MAG Group Research & Consultancy
cebu office market overview
Cebu Grade A Office Stock

12. opportunities, challenges, strategies

13.  Infrastructure still in development
 Lack of connectivity between microdistricts
 Lack of central planning body for Metro Cebu
(MMDA)
 Infrastructure, disaster preparedness,
security
 Need to decongest Cebu City
 Other emerging BPO destinations nearby
(Bacolod, Iloilo, Davao)
 Lack of quality office supply
 Cebu still seen as a secondary site option
challenges

14. opportunities: infrastructure improvements
Source: KMC MAG Group Research & Consultancy

15. TransCebu – Bus Rapid Transit
 16 km line
 $115M USD
 $7M / km
 will save Cebuanos 570
million hours / year
 Same costs as Jeepney
fares
"Cebu BRT Potential Network" by Integrated Transport Planning Ltd

16. Mactan – Passenger Terminal
 ~$400M USD
 MegaWide / GMR
 Establish Sustainable
Transport System
 Improved international
and domestic air transport
services
 Passenger traffic to handle
up to 12.5M / year
CNN Philippines

17. Third Cebu Mactan Bridge
 2018
 5.5Km
 Will it happen?
Cebu Daily News

18.  Growing number of graduates to support BPO industry growth requirements
challenges: manpower
Historical Graduate Figures
Source: Commission on Higher Education

19.  More BPO companies expanding outside of Metro Manila, specifically Cebu
opportunities: market entrants

20.  Developers should move towards building 24/7
live-work-play environments
 Infrastructure development should be priority
 Government should further improve ease of
doing business in order to remain competitive
vs alternative destinations
 Government should prioritize the creation and
centralization of a governing body that
oversees development in Metro Cebu
 Strengthen branding as a primary BPO
destination through improving supporting social
and physical infrastructure
strategies

21. office market outlook

22. Source: KMC MAG Group Research & Consultancy
cebu office: upcoming supply
8 Newtown
Boulevard
 3Q 2015
 Mactan
Newtown
FLB Corporate
Center
 3Q 2015
 Cebu Business
Park
Skyrise
Beta
 3Q 2015
 Cebu Business
Park
Park
Centrale
 3Q 2015
 Cebu IT Park
Norkis
One
 3Q 2015
 Norkis
Cyberpark

23.  Ongoing and planned infrastructure to bring in
more investment
 Townships and microdistricts to come online
within the next 3-4 years
 Rental rates to continue to rise due to consistent
demand, with many spaces already pre-
committed
office market outlook

24. for more information
KMC MAG Group
8th Floor, Sun Life Centre,
5th Avenue corner Rizal Drive,
Bonifacio Global City 1634, Philippines
T: 403 55 19
E: info@kmcmaggroup.com
W: kmcmaggroup.com