Shopping centres set to be expanded
Philippine builders like SM Prime Holdings and Ayala Land can't add retail space fast enough to satisfy demand from Southeast Asia's most-confident consumers that pack Manila's malls.
A record 724,620 sq m (7.8 million sq ft) of new retail space will be added in the Philippine capital next year, according to Colliers International. That is a 10th of the existing stock as of the third quarter, according to the real estate broker.
"All of us are looking into adding retail space," said Teresita Sy-Coson, vice chairman at SM Investments, whose unit SM Prime is the country's largest mall operator. The retail market is still growing and "we're all OK with it," she said.
Rising remittances from Filipinos working and living abroad and a business-process outsourcing boom are fuelling household spending in one of Asia's fastest-growing economies. Private consumption accounts for at least 60pc of the Philippine economy, which is seen expanding by 6pc this year and 6.3pc in 2016, according to the Asian Development Bank.
Consumer spending remains resilient in an economy that expanded less than analysts estimated in the last quarter from a year earlier. A buying spree during the Christmas holidays can sustain growth at 6pc this year, Economic Planning Secretary Arsenio Balisacan said on Thursday.
Filipinos were the third-most confident consumers in the world in the third quarter, behind Indians and Americans, according to Nielsen Holdings' Global Consumer Confidence Index report, which uses an online survey of people's job prospects, personal finances and spending intentions. Consumer sentiment remains positive and buying intentions will be broadly steady next year, according to the latest survey by the Philippine central bank.
SM Prime and Ayala Land are adding retail space to meet the spending habits of shoppers like Jeanne Jampac, a 26-year-old marketing consultant who spends at least $100 on each shopping trip to Ayala Land's Greenbelt Mall in the Makati business district.
"I know I have a steady income to spend for products that I know I'll use daily; I think it makes perfect sense," said Jampac, who on a recent weekly shopping trip spent $150 on makeup from brands Benefit Cosmetics and The FaceShop.
SM Prime will account for about 28pc of Manila's new mall space next year and Ayala Land about 25pc, according to Colliers. Filinvest Land and Federal Land will also contribute to the retail-space supply in 2016.
Retail sales may increase to $155bn next year, up 10pc year-on-year and the fastest pace since 2010, according to Hamburg-based statistics company Statista
Consumer demand has prompted Philippine retailer SSI Group to bring Canadian retailer Loblaw's Joe Fresh fashion brand to Manila next year. That will add to the 190 mid-range and luxury names, such as Hennes & Mauritz' H&M and high-end shoemaker Jimmy Choo, which have entered the Southeast Asian nation since 2008, according to a Cushman & Wakefield report.
"International retailers are coming in or expanding their presence" and additional mall space is allotted for them, said Jan Custodio, Manila-based head of global research and consultancy at CBRE Group.