Malls go online as shoppers stay home
Given the impact of the pandemic on the retail sector, mall operators are now working with retailers to further accelerate digital transformation. Certain malls are now offering alternative shopping options such as personal shopper services, expedited deliveries, and curbside pick-ups. In November 2020, SM Supermalls launched its mobile application for SM Megamall, North EDSA, and Mall of Asia (MOA). The application enables customers to purchase and pay for products online with options to pick-up in-store or opt for delivery. SM Supermalls President Steven Tan said that the group is focusing on offering innovative shopping options to attract more customers. Tan also added that foot traffic of SM malls are currently at 50% to 60% of pre-COVID levels, up from 18% when the establishments re-opened in May 2020.
Colliers saw Metro Manila retail vacancy rising to 12.5% in Q3 2020 from 10% in Q1 2020. We attribute the rise in vacancy to Filipinos’ subdued spending and low foot traffic in brick-and-mortar malls which resulted in the closure of some retail establishments across malls in Metro Manila. Colliers sees vacancy rising to about 13% in 2021 as consumers are still likely to focus spending on essential retail such as medicines, groceries and food and beverage (F&B). Data from the Google Mobility Report showed that visits to retail and recreational facilities such as restaurants, malls, museums and cafes were down by 39% as of February 9 from 36% in January 29. Given the bleak retail landscape, Colliers recommends that malls which are likely to open within the next 12 to 24 months monitor the spending patterns of households and how they allocate their incomes. Data from the Philippine Statistics Authority (PSA) show that personal consumption expenditure contracted by 7.9% in 2020 from a 5.9% growth in 2019. Spending on restaurants and hotels also plunged by 42.9% from a growth of 6.7% in 2019. In our view, upcoming malls should factor in the evolving consumer preferences into their retail mixes.
Idesia project launched in Lipa
P.A. Properties and Hankyu Hanshin Properties are developing a new residential project in Lipa, Batangas. Idesia Lipa is the third joint-venture project of P.A Properties and Hankyu and will likely cover 11.37 hectares (28.1 acres). The project will offer 747 residential units of single detached, attached bungalows and townhouses. Amenities of the project include a basketball court, tennis court, jogging path, swimming pool, gym and a clubhouse. Idesia Lipa is scheduled to be completed by Q4 2023 with construction works set to begin by Q1 2021.
Despite the impact of the pandemic on the residential market, we have observed sustained take-up for horizontal projects in the CALABA (Cavite-Laguna-Batangas) region and Pampanga. In Q3 2020, average take-up rate of house and lot (H&L) and lot only projects in Batangas reached 65% and 78%, respectively. As of the end of Q3 2020, the remaining inventory of horizontal projects in Batangas declined to 9,600 units, down 24% from 12,500 units in Q1 2020. We recommend developers to continue highlighting projects outside of Metro Manila to cash in on the stable demand. Developers that plan on expanding their projects should implement strategic landbanking near upcoming infrastructure projects of the government. These include the SLEX Toll Road 4 and the Cavite-Laguna Expressway (CALAX) which will likely be completed in 2022. Once completed, these projects should improve accessibility to several residential projects in Southern Luzon.
Air travelers drop 66% in ’20 – IATA
The International Air Transport Association (IATA) said that global air passenger traffic declined by 66% in 2020 due to pandemic-induced travel restrictions. During the same year, domestic and foreign passenger traffic dropped by 49% and 76%, respectively. The IATA, which represents 290 airlines globally, projects air traffic to increase by 50% in 2021. Despite the recovery, The projected recovery is still only half of the global traffic recorded in 2019. The group added that the potential emergence of new COVID-19 variants may likely affect the projected rebound.
Data from the Department of Tourism (DOT) show that foreign arrivals to the Philippines reached 1.48 million in 2020, down 82% from the record-high 8.3 million in 2019. Tourist expenditures also dropped by 83% to PHP82.24 billion (USD1.7 billion) from PHP482.2 billion (USD10.0 billion) in 2019. The disappointing arrivals and expenditures have resulted in occupancies further declining to 20% at the end of 2020 from 72% in 2019. We project that occupancies are likely to remain below 30% in 2021 as we do not see arrivals from the country’s top source markets such as South Korea and China picking up in the next 12 months. While the hotel sector continues to reel the impact of the pandemic, Colliers recommends that hotel operators continue targeting returning Overseas Filipino Workers (OFWs) looking for quarantine facilities and professionals searching for flexible workspaces. Operators should also highlight technology-driven innovative services such as self-cleaning robots and contactless payments to minimize physical contact and raise sanitation standards.