THE Philippine retail property sector is experiencing ripples of excitement from the current upbeat business environment on the back of sustained overseas money inflow and bigger household spending, thanks mainly to business process outsourcing (BPO) income.
In a report, global property advisor CBRE said the upbeat business environment in the country has been enticing retail investors and inducing the entry of foreign brands.
In turn, retail developers continue to find ways to accommodate more
tenants and patrons, more than stimulating the local retail industry.
“With the entry of foreign brands into the Philippine market, more local retailers are also aggressive in setting up shop in major malls and in retail space integrated in mixed-use developments,” CBRE said. “This fuels the competition in the market, resulting to a healthier sector.”
CBRE noted that in the third quarter of 2015 alone, a number of foreign brands came into the market and several others launched expansions.
Among those that came in were Applebee’s, Pie Face, Laduree, and Honeycreme.
Those that expanded their operations, although they had just entered the market in the previous quarters, included Mr.Pizza, St. Marc’s Café, Triple O’s, and H&M.
CBRE also noted that convenience stores are also rapidly mushrooming in central business districts and fringe areas to fill consumer demand from the 24/7 sector, mainly BPO offices.
Fellow global property advisor Cushman and Wakefield echoed CBRE’s opinion, noting in a separate report that demand for the retail sector in Metro Manila is fuelled by foreign brands entering or expanding in shopping malls and high streets.
“Robust activity due to healthy domestic consumption on the back of higher income from remittances and the BPO industry,” Cushman and Wakefield said.
CBRE noted that the expansion of both foreign and local retail brands is mainly supported by strong household consumption and OFW remittances.
“Taking advantage of the robust demand from consumers and seeing this continuing, developers have been announcing their retail expansion plans which are expected to traverse in the coming quarters,” said CBRE.
The local retail sector, it added, is likewise awaiting the rehabilitation and expansion of existing malls in the central business districts in the near future.
“The additional supply expected to come online also reflects the bullish demand for retail space,” CBRE said.
It noted that several shops have opened in Ayala Land’s UP Town Center in Quezon City, as well as in housing mogul Manny Villar’s Vista Land’s Evia Lifestyle Center in Daang Hari in Las Piñas City, down south of Metro Manila.
Evia is a 40,000-square-meter retail development that is part of a bigger Vista Land project, which is expected to be one of the biggest contributors of retail space in the south of Metro Manila.
CBRE noted that similar open-type retail centers have also been common in other areas, such as Vertis North, Arca South, Bay City, and Nuvali.
“The rise of mixed-use and pocket retail developments across the metro and its outskirts is expected to spur in more retail activity,” CBRE said.
CBRE said rental rates went up in the third quarter of 2015, ranging from P800 to P1,700, due to strong demand for retail supply.
It noted, though, that the increase in rental rates was at a slow pace, as most of the retail space stock was still at the construction phase.
“Developers are keeping their rental rates steady to maintain a competitive playing field,” CBRE observed.