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Manila Market Intelligence June 8, 2021

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Retailers see bill easing foreign entry as ‘win-win

NEWS

Philippine Retailers Association (PRA) president Rosemarie Ong said that the Senate Bill 1840, which seeks to amend the Retail Trade Liberalization Act of 2000, is a win-win solution for providing protection to local micro, small and medium enterprises (MSMEs). The bill aims to reduce the minimum paid-up capital for foreign retail investors to about USD1 million (PHP48 million) from USD2.5 million (PHP120 million). Meanwhile, the proposed version from the House of Representatives wants to further reduce the minimum capital to about USD200,000 (PHP9.6 million) to attract more foreign investments and boost the country’s economy.


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RESEARCH VIEW

In our view, liberalizing retail trade in the country should promote competition among retailers. In Q1 2021, vacancy across malls in Metro Manila reached 14% from 12.5% in Q3 2020 due to subdued consumer traffic and closure of brick-and-mortar shops. By the end of 2021, we see vacancy increasing to 16% due to the new supply coming online, which we estimate at about 249,000 sq metres (2.7 million sq feet). Colliers believes that retailers providing essential goods and services are likely to absorb new physical retail space over the next 12 to 18 months. Among the segments likely to take up space are miscellaneous/personal items, groceries, supermarkets and food and beverage retailers. In our opinion, liberalizing retail trade should encourage mall operators to diversify and re-think retail tenancy strategies post COVID-19.

Rockwell Land ventures into Angeles City
  

NEWS

Rockwell Land Corp. has partnered with Juan D. Nepomuceno Realty Group to develop a 3.6-hectare (8.9-acre) property in Nepo Center Angeles City, Pampanga. This will be a mixed-use estate with four mid-rise residential buildings and retail spaces. The company said that the new Rockwell Center is expected to launch by the 2nd half of 2021, with its first residential building being targeted for turnover by the 4th quarter of 2025.

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RESEARCH VIEW

Colliers has observed that developers have been actively land banking outside the capital region due to the government’s infrastructure implementation and decentralization program. In our view, infrastructure projects such as the Clark International Airport Modernization and Manila-Clark Railway will likely boost the province’s attractiveness for more property development and potential for capital appreciation. Colliers believes that the completion of Skyway 3 should also raise Pampanga’s viability for more residential projects. Pampanga is among the urban areas outside Metro Manila that remains an attractive location for vertical and horizontal developments.

FDI inflows to recover this year – S&P

NEWS

S&P Global Ratings reported that Foreign Direct Investment (FDI) inflows into the Philippines is expected to recover this year after a three year decline. The debt watcher sees net FDI inflows rising steadily from 1.3% of the country’s GDP in 2021 to 1.5% by 2024. The Banko Sentral ng Pilipinas (BSP), or the central bank, projects net FDI inflow to reach USD7.8 billion (PHP374 billion) in 2021, up from the USD6.5 billion (PHP313 billion) recorded in 2020. S&P also notes that the recent passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act which could help boost domestic business prospects would also be a vital component in stabilizing FDI inflows over the coming years.

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RESEARCH VIEW

Despite the pandemic, the property sector continues to attract FDIs received by the Philippines. In 2M 2021, the manufacturing, transport and storage and real estate activities accounted for 33% of total FDIs or USD123 million (PHP5.9 billion). Colliers believes that these investments should contribute to greater absorption of warehouses, industrial and office spaces. The recently enacted CREATE law should attract more investments into the country through reduced corporate income taxes. Foreign companies also continue to look for local partners for residential developments within and outside Metro Manila. This should also contribute to more foreign funds being funneled into the property development sector.

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Related Experts

Joey Bondoc

Associate Director

Research

Manila

Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

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Martin Aguila

Senior Analyst

Research

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Martin Aguila graduated in February 2019 from the De La Salle University with a degree in AB Economics. He joined Colliers Philippines in the same month and works as an analyst under the Research department. He has presented in several property market briefings with developers and investors and has assisted in the preparation of reports related to property such as Market Intelligence, GDP Flash, Quarterly Market Updates and Radar Reports. He also helps the team maintain and develop databases.

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