A bullish take-up of retail space in the Metro Manila property market is anticipated in the coming quarters, driven by high consumer confidence, according to real estate services firm Colliers International.
“Colliers sees a bullish retail segment over the next 12 months given a vastly improved consumer outlook,” Colliers International said in a statement on Tuesday.
The report noted that a large chunk of retail space was added to Metro Manila’s inventory in the second and third quarters of the year.
An estimated 118,000 square meters of leasable space was added to Metro Manila’s retail space from April to September – bringing the capital’s stock to 6.3 million square meters.
This was driven by the retail projects in the Manila Bay Reclamation Area, which complemented the massive development of office, residential, and leisure projects in the emerging business district.
“The initial opening of the Solaire retail complex as well as the completion of S Maison, the high-end retail complex of six-star Conrad Hotel, added some 25,500 sq m to the Manila Bay Area’s retail stock,” Colliers said.
A total of 57,000 square meters of retail space entered Alabang’s retail stock, with the expansion of the Festival Supermall.
In contrast, a total of 33,000 square meters was added in Northern Metro Manila with the completion of the UP Town Center Phase Two in Quezon City.
Colliers noted that an estimated 570,000 square meters of retail space is expected to be delivered in full-year 2016.
“The figure, despite being a record-high, is lower than the 720,000 sq m of leasable space initially projected due to construction delays related to a lack of skilled laborers,” Colliers said.
Colliers explained that the bullish outlook of the retail sector is driven by the confidence of the Filipino consumers.
The real estate services firm cited data from the Central Bank’s latest poll, which showed that consumer confidence is at its highest since the survey started in 1Q2007.
“Among the factors that buoyed consumers’ optimism are availability of more jobs, stable prices of commodities, anticipated increase in salaries, effective government policies, assumption into office of the new administration and assistance from government such as the Conditional Cash Transfer (CCT) program,” Colliers said.
Moreover, the report highlighted that Food and Beverage (F&B) remains a major driver of retail spending in Metro Manila as it accounts for 30 percent to 40 percent of leasable space in shopping centers.
This is mainly due to Filipinos’ high expenditure on food and beverage, which covers about 40 percent of Philippine household spending, the report said.
“Colliers sees this trend being sustained over the long term as consumer spending, which accounts for about two-thirds of the country’s gross domestic product (GDP), continues to drive the overall growth of the economy,” Colliers said.
The report urges developers to implement a diverse tenant mix into their malls, Metro Manila shopping centers have become too generic and house almost the same tenants.
“Developers must recognize that they need to offer a unique tenant mix to consumers and position towards a specific market, such as the millennials that have high disposable incomes and adopt fast-paced lifestyles,” the report said.