(The Philippine Star) | Updated July 5, 2014 -
12:00am
MANILA, Philippines - Based on CBRE
Global Research, the Philippines is among the countries with an active retail
market and current appeal to investors—one of the most viable destinations that
retailers from Europe, the Americas, and Asia Pacific are looking into given
their large-scale, cross-border expansions.
In a survey conducted with more than
130 global retailers, the Philippines ranked 28th out of 58 in the global list
of top target markets for 2014. Asian retailers likewise showed significant
potential in their own region, with the Philippines ranking 8th in the top 10
target markets.
Similarly, a recent study conducted by
the Urban Land Institute and PricewaterhouseCoopers titled “Emerging Trends in
Real Estate Asia Pacific” showed Manila ranking fourth out of 23 Asian cities
for city investment prospects, putting it high on the list of investors. Cebu
is likewise gaining interest with the expansion and openings of upcoming malls.
“Right now, robust retail activity can be seen
in Manila and Cebu—two of the most progressive cities in the Philippines. The
maturity of the market in these areas is what retailers are going for,”
explains Rick Santos, CBRE Philippines CEO, chairman and founder.
The consumption-driven economy and
increase in purchasing power of the population have encouraged the expansion of
international retailers. Cebu, in particular, is awaiting the opening of SM
Seaside City—a high profile, 496,000-sqm lifestyle destination envisioned to be
the fourth largest shopping mall in the world.
Ayala Center Cebu, SM City Cebu, and
other Grade A malls in the area are also expanding and welcoming a variety of
global brands, from luxury houses such as Gucci to high street fashion like
Gap, Superdry, Onitsuka Tiger, Yves Rocher, and even specialty lifestyle brands
like Muji.
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Metro Manila, meanwhile, is gearing up
for the opening of several community shopping centers, including Ayala Fairview
Terraces, Century City Mall, and Blue Bay Walk.
Retail strategies
With the increase in OFW remittances
and BPO (business process outsourcing) revenues, retail developers are
increasingly focusing on the potential of these market segments. In Metro
Manila, stores like Family Mart are aggressively taking up space within and
near central business districts. Podium retail spaces in office building
developments are likewise experiencing an increase in demand.
Some investors have tied up with, or
acquired, brands to further their market reach. In Manila, Puregold Price Club
has been absorbing local players. Other supermarket chains have been observed
undertaking the same strategy in Cebu.
“Based on the trends, the Philippines has the
potential of being a top retail destination in the future. As purchasing power
and the economy continue to get stronger, global investors will see the great
expansion opportunities that the country can offer,” added Santos.
These investors are expected to take
advantage of prevailing competent lease rates in the Philippines. In Manila,
current average rent is at P1,200/sqm and prime rent at P1,400/sqm. In Cebu,
meanwhile, current average rent is at P950/sqm and prime rent at P1,400/sqm.
Lease rate in the country is at $36/sq ft., the most affordable across Asia.
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