Metro Manila posted the highest amount of current retail property stock in South East Asia countries in the first three months of the year, as developers build up supplies to meet demand growth in the Food and Beverage (F&B) industry, according to a report by real estate services group Jones Lang Lasalle.
The report noted that Metro Manila’s current retail stock is at 4.8 million square meters, much larger than other South East Asian cities.
Following Manila in terms of the largest amount of retail stock is Bangkok, Thailand with 3.0 million square meters; Jakarta, Indonesia with 1.5 million; Kuala Lumpur, Malaysia with 1.1 million square meters; and Singapore with 0.75 million square meters.
JLL noted that in the first three months of the year, Metro Manila saw the completion of three retail developments namely the Venice Grand Canal Mall, Uptown Place Mall, and Uptown Parade. The new developments added around 140,000 square meters of retail space into Metro Manila’s existing stock.
JLL national director for retail Singapore Gary Nonis said the growth of the region’s retail sector is largely influenced by the food and beverage industry (F&B).
“Southeast Asia’s food and beverage sector is more intense than ever,” Nonis said “Rapid population growth and urbanization across the region are the primary drivers for the sector’s growth. While opportunities are aplenty in SEA, the landscape is highly competitive, with increased consumer expectations.”
An example of the F&B trends cited by Nonis was that of mixed-use developments in Singapore, which incorporate F&B components such as juice bars and organic gardens to cater to the needs of health-conscious consumers.
“Singapore consumers are becoming more aware of their lifestyle choices- what they eat and where their food has been sourced as well as placing more emphasis on their fitness regimes,” Nonis said.
JLL also cited the Drive Thru trend that is attracting F&B brands to locate in Bangkok.
“While operators of neighborhood malls need leading F&B brands as tenants, more F&B brands prefer having their drive-thru as a part of a neighborhood mall than opening a traditional outlet inside the mall,” said Siwanart Srisomsup, Retail Manager, JLL Bangkok.
With a huge supply of retail stock in the pipeline, the Philippines is not lagging behind the F&B trend, as JLL noted that demand for the retail sector is being driven by the entry of foreign retailers, including those in the F&B sector.
“Retail demand remained robust on the back of the entry and expansion of foreign and local retailers, especially F&B, in key shopping malls in Metro Manila,” JLL said.
Some of the foreign F&B brands that recently entered the country are the Singaporean Pepperonia Pizzeria, Malaysian Morganfields and the Hong Kong-based Dessert Kitchen.
Furthermore, JLL foresees an optimistic outlook for Metro Manila’s retail sector with rental growth seen to be sustained on the back of the continual entry and expansion of local and foreign retailers.
At present, rental growth of the Metro Manila retail market is at 8.9 percent year-on-year.
“Positive overseas Filipino remittances and robust expansion in the offshoring and outsourcing sector are likely to support growth in local consumption,” JLL concluded.