Tuesday, 14 September 2010 00:00 [ manilatimes.net ]
BY DARWIN G. AMOJELAR SENIOR REPORTER
OCCUPANCY and rental rates in Metro Manila shopping malls are expected to rise in the next 12 months on strong consumer spending and the expansion of clinics, activities and lifestyle services in these commercial hubs, according to a property research firm. In its latest Philippine market overview, Colliers International said Metro Manila malls are expected to enjoy single-digit vacancies given limited mall expansion in the future.
As of the second quarter, vacancy fell from 10.7 percent last year to 8.3 percent this year.
“With consumer spending poised to rebound this year, sales volumes and foot traffic are expected to improve,” Colliers said.
The National Statistical Coordination Board (NSCB) earlier reported that consumer spending in the first quarter quickened to 5.9 percent from 3 percent last year.
Personal consumption expenditures contribute about 70 percent to 80 percent of the country’s gross domestic product (GDP). An indicator of economic performance, GDP is the amount of final goods and services produced in the country.
Colliers said mall occupancy is also enjoying a lift from the expansion of clinics, activities and lifestyle services.
“International retail brands have also resumed expansion plans to developing countries like the Philippines.
Specialty stores have been constantly increasing their reach to other parts of Metro Manila,” the research firm said.
All of these developments will contribute to retail vacancy declining to 7 percent over the next 12 months, it said.
The retail sector contributes an average of 12 percent to 15 percent of GDP and is one of the country’s biggest employers.
As of the second quarter, Metro Manila’s retail stock was unchanged at 5 million square meters spread over more than 70 malls.
“With limited opportunity for regional scale mall development in Metro Manila, mall developers are looking into the provinces for expansion. Nevertheless, community-type malls are expected to be developed in various locations in Metro Manila,” Colliers said.
Except for SM Novaliches, most mall expansions are happening outside the metropolis.
Robinsons Land Corp. has three projects slated for completion this year located in Dumaguete, Ilocos Norte, and Cebu, while SM Prime Holdings Inc. is building new malls in Calamba, Tarlac, and San Pablo.
Because of the anticipated strong sales of retail tenants, Colliers said effective rents are expected to increase by 3 percent to 5 percent over the next 12 months.
As of the second quarter, rents for retail space in Ayala Center’s Makati Central Business District (CBD) are at an average of P1,150 per square meter, up by 2.7 percent from P1,120 in the last quarter.
In Ortigas Center, however, rents for retail space are virtually unchanged at P1,035 per square meter a month.
Colliers also said that both commercial and residential segments performed well over the past six months.
“Office leasing got a boost from renewed expansion demand from the BPO [business process outsourcing] sector while residential condominium sales continue to improve behind affordable payment terms.
Confidence in the property market should continue over the next twelve months behind a stronger economic backdrop,” Colliers said.
For second quarter of the year, Makati CBD implied land values marginally declined to an average of P265,000 per square meter.
As a result, the accommodation values are at an average of P16,600 per developable square meter. Commercial values have bottomed out, with implied land values expected to remain stable towards the end of the year.
“Interest for prime properties in the CBD has started to pick up as demand for property development, both office and residential, also intensifies,” Colliers said.
Outside the Makati CBD land values are flat at P120,000 per square meter in the Ortigas Center and at P140,000 to P160,000 in Bonifacio Global City.
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