Philippine retail ‘to shift to neighborhood malls’-A A +A
Monday, February 24, 2014
A REAL estate analyst sees a big shift in retail in the Philippines from large malls to community or neighborhood malls.
Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, said the transition will result in more robust retail activities in the country as well as pave the way for the proliferation of more community malls.
Soriano said there would be less construction of “mega” malls in the coming years due to the scarcity of prime land. Retail companies, instead, will shift to growing their branch network of community malls to cover areas previously served only by sari-sari stores.
This community malls, he said, would have a cut of around 3,000 square meters (sq.m) to 5,000 sq.m or smaller than Waltermart outlets and will be located in first class municipalities.
According to Soriano, the retail format of the Philippines is heading toward this direction as modern and young shoppers prefer community malls that have express supermarkets and retail shops and are easily accessible from their homes via jeepneys, tricycles and even by foot.
“Thailand is already transformed with less sari-sari stores, in the Philippines there is a gradual shift to that. I believe we are heading into this direction,” said Soriano.
Recently, SM Investments Corp. (SMIC) acquired 34 percent of CityMall, a community mall developed by DoubleDragon Properties Corp., which is jointly owned by Mang Inasal founder Edgar “Injap” Sia II and Jollibee Foods Corp. chairman Tony Tan Caktiong.
According to Soriano, the owners plan to build 100 CityMall branches worth P24 billion nationwide in the medium term. The company said it wants CityMall to become “one of the largest independent branded community mall chain in the country” with floor areas of 5,000 sq.m to 10,000 sq.m which will be put up in prime locations nationwide, mostly in Visayas and Mindanao.
Meanwhile, “the real estate industry will continue to do well in the next two to three years as the overall market is okay,” said Soriano, referring to the sustainable growth of the information technology-business process management (IT-BPM) and retail industries.
“Now that markets are competitive, residential developers will have to brace themselves for more street fighting in prices and installment schemes,” he said. He said developers will continue to create new brands to cater to specific market segments.
Housing requirement for the mid-income segment stood at 40,000 units per year, while the economic segment is close to 400,000 units per year.
“The housing backlog is still huge. This then would result in continued building in the residential segment,” said Soriano.
Condominium developments, on the other hand, will continue to rise as more overseas Filipino workers (OFWs) diversify their investments to include condominiums aside from the usual house and lot.
According to Soriano, there is now a change of mindset among OFWs in terms of condo-investment. In fact, 30 percent of the sales of condominiums generated last year were from the OFW market.
Soriano was in Cebu last week to attend an event by Sundance Residences. The Cebu-based real estate player said they are strengthening their position as a family condominium here. Fifty-percent of the buyers at Sundance Residences are families.
Last week, they brought Maribel Dionisio, a relationship and parenting consultant to talk about Disciplining Kids with Love.
Sharon Ong, vice president for marketing and sales of Worldwide Central Properties Inc. (WCPI), said they will be putting in place amenities that are child-friendly such as the day care center, language, art and music school and catering and cleaning stations.
Sundance Residences is a P450 million two-tower mid-rise building project along Duterte St. in Banawa.
Published in the Sun.Star Cebu newspaper on February 25, 2014.