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The Philippines is among the key growth areas in Southeast Asia for retail real estate, given its expanding middle class segment, rosy economic growth outlook and increasing tourism activities, according to property consultancy CBRE Asia Pacific.
In its report, "The New Age of the Asia Pacific Real Estate Market," CBRE cited the Philippines as a key growth market in Southeast Asian along with Hanoi and Ho Chi Minh in Vietnam and major cities in Indonesia and Malaysia.
In the region, the middle class is expected to triple to 1.74 billion in 2020 from 525 million in 2009 and is expected to drive demand of retail goods and eventually translates to economic growth.
“In the Philippine landscape, these factors look promising. The resilience of the economy has been tested and proven this year, bouncing back quarter per quarter. Likewise, the country’s tourist attractions and opportune business landscape has continuously been boosting investor interest,” CBRE Philippines chairman, president and CEO Rick Santos said.
The Philippine economic output is heavily supported by consumer spending, anchored on robust remittances from overseas Filipinos.
CBRE pointed out the boost in tourism will provide extra support to market growth, saying the projected 5.7 percent year-on-year average rise in international tourist arrivals from 2010 to 2020 in the region is strongest, according to the UNWTO Tourism Highlights-2014 Edition.
In 2014, over 250 new international establishments under coffee & restaurants, luxury & business, and mid-range fashion entered the Philippines.
In anticipation of the boom in the retail market, CBRE said local developers are beefing up their portfolios by developing more malls and mixed-use projects in Metro Manila, Rizal, Cavite, Cebu, and Iloilo.
These mixed-use developments will accommodate the demand for shopping and food convenience near their residences or offices.
“The presence of more restaurants, coffee shops, and even convenience stores, shows that more Filipinos have the capacity or purchasing power to shop and dine,” Santos said.
As the sector becomes more competitive, CBRE said that developers should take advantage of the concept of “Retail-tainment.”
The concept is a strategy in which developers manage tenant mix and developing strategies that will keep the tenants and consumers inside or within the shopping centers.
According to CBRE Research, the incorporation of ‘experiential’ elements – food courts, cinemas, ice-skating rinks, bowling alleys, children’s playgrounds, and pet parks – helps give the market a holistic take on shopping.
This "Retail-tainment" factor is expected to attract foot traffic as well as help landlords achieve higher returns in branding, image and media exposure, and revenue.
“The retail market in the Philippines has, and still continues to mature. Filipinos are now after the overall retail experience, choosing malls and outlets that give them the power of choice – whether in food & beverage or clothing and the like," Santos said.
"It also helps that developers allow the interests of the tenants and consumers to meet by giving them a convenient place to stay in, unwind and shop,” he added. – Danessa O. Rivera/VS, GMA News