Well, the world is changing fast, that’s a fact—then again in this day and age whether or not the statement is a fact is a matter of supreme irrelevance. Facts just derail what large majorities of the population really feel!
One thing, however, seems fairly clear and that is that many wealthy Filipinos continue to pursue with some vigour their proclivity for building shopping malls. Not only does the Philippines already host 36 of the 100 [including four of the top 10]biggest shopping malls in the world, the shopping mall-centric oligarchs seem to be racing each other to see who can build even more and faster.
At one count the Philippines has between 15 and 20,000,000 square metres of shopping malls, enough for more than 2 square feet of mall space for every man, woman and child in the country. The malls employ about 15 percent of the working population, and apart from offering several hundred arrays of exactly the same shops selling exactly the same items, they also, by their poorly planned presence, manage to create havoc with the world’s worst traffic. Planning for locating malls seems to pay scant regard to the effect of the millions of visitors to each mall every year—800,000 people a day in SM Megamall.
Personally I don’t really like shopping malls. In Asia they seem to be developed in ‘the biggest is best’ way. The world’s biggest mall has a covered area of 892,000 sqm, or about 10 times the area of the 1-kilometre long Bonifacio High Street and is [needless to say]in China. The second biggest mall is also in China at Tianjin, owned by SM of the Philippines and covering around 700,000 sqm. So far to walk around them all. Fortunately, though, in the case of the world’s biggest mall there is no need to, as since it opened in 2005 up to 2014, of the planned more than 2,300 retail outlets it had still only attracted about 10 percent occupancy.
Easy to understand the attraction of the shopping mall in a place like the Philippines where it is always hot. To be able to wander around in an air conditioned atmosphere, check out the gizmos, clothes and other products being sold and at the same time get a meal or a snack or even catch a movie or a live show of some sort, is naturally attractive to lots of people. Money is spent on consumption, which keeps the mall sales associates in jobs, albeit they are fairly mundane jobs, and the whole shopping mall lifecycle, from conceiving the idea to the end of its operational life, contributes to the economy and seems to be generally a fairly useful thing to develop and operate. As a developers’ investment, it is fairly risk-free so long as you get enough tenants signed up on long leases to cover the development and operations costs, before you commit to construct.
But isn’t this shopping mall fever a strategy of diminishing returns? There are finite limits to the amount of money that the economy allows to be spent on consumption and there are also limits on the creativity of retail manufacturers. Consumption accounts for almost 70 percent of Philippine GDP and is forecast to grow, and this is largely fuelled by remittances at a rate of $24 billion a year. If we assume that more and more malls are developed to house retailers who have an ever optimistic view of future Philippines remittance-fuelled consumption, then somewhere along the line and in the not too distant future it looks as if there could be lots of disappointed retailers saddled with long-term lease contracts and not enough paying customers. Perhaps this is why SM is moving big time into China mall development.
Nevertheless, the Philippines is a world leader, if not THE world leader in mega shopping malls. Malls in the west tend to be smaller—the biggest mall in the USA is 260,000 sqm in area and the biggest in the UK is 190,000 sqm, which attracts 22 million visitors a year. Both are a far cry from SM North with its 600,000 sqm and 350,000,000 visitors a year—no wonder the traffic flows are so awful.
A pity that the wealthy developers don’t put some of their money into developing industrial production facilities to make things for export or to reduce the need for imports … and through that, raise the Philippines’ game on technological development and support yet more shopping mall development where the higher paid, more technologically advanced, locally employed customers can spend their earnings.
Mike can be contacted at email@example.com