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Manila Market Intelligence May 12, 2021

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Prolonged pandemic dims outlook for PHL retailers’ recovery this year

NEWS

The Philippine Retailers Association (PRA) said that it now projects a flat growth this year from the earlier forecast of a 10% growth compared to 2020 due to renewed lockdown restrictions. The extended lockdowns and surge in COVID cases have resulted in muted retail sales. Under the modified enhanced community quarantine (MECQ), nonessential retail such as books, toys, jewelry and clothing stores are allowed to operate at 50% capacity. PRA Vice-Chairman Roberto Claudio said that the subdued household consumption will likely delay the sector’s recovery to 2H 2021.

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RESEARCH VIEW

Colliers saw retail vacancy across malls in Metro Manila reaching 14% in Q1 2021 from 12.5% in Q3 2020 due to subdued retail spending and brick-and-mortar stores shutting operations in several regional and super-regional malls. By the end of 2021, we see vacancy likely to peak at 16%, the highest since 2002 due to the substantial new retail space and anemic retail demand. Despite this, Colliers believes that retailers providing essential goods and services such as food and beverage and healthcare are likely to absorb new retail space over the next 12 to 24 months. In our view, landlords should be more flexible in offering concession to retailers. Both operators and retailers, meanwhile, should review their online and offline strategies to ensure the continues absorption of mall space despite the popularity of online shopping.

Shop, dine with confidence: DTI launches ‘safety seals’ for establishments

NEWS

The Department of Trade and Industry launched the Safety Seal Certificate Program which will help identify whether it is safe to shop or dine in business establishments around the country. A partnership between multiple government agencies, the safety seal aims to boost consumer confidence while assuring that minimum health protocols are still strictly observed to ensure that the risk of catching COVID-19 remains low in these business establishments.

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RESEARCH VIEW

Data from the Philippine Statistics Authority (PSA) show that household spending declined by 7.9% in 2020, slower than the 5.9% growth in 2019. Moreover, vacancy across malls in Metro Manila rose to 14% in Q1 2021 from 12.5% in Q3 2020. Mall operators also reported that consumer traffic has declined by 50-60% compared to pre-COVID levels due to the imposition of a stricter lockdown. The government has been proactive in adapting measures such as the implementation of safety seals to help regain consumer confidence while ensuring that safety protocols are still properly enforced. Colliers recommends that landlords highlight the availability of al fresco dining, establish hygiene and sanitation regulations in their respective establishments, rethink allowable densities of cinemas and food courts, and further promote e-commerce platforms.

Ortigas Land begins work on The Empress

NEWS

Ortigas Land has started the construction of the 56-floor The Empress condominium in Pasig City. The project will likely have 51 residential floors, retail spaces and amenities such as lounge areas and pools. The Empress will also be offering 771 studio to two-bedroom units, ranging from 30 to 106 sq metres (323 to 1,140 sq feet). New features of the project include smart home technology where residents are able to control air conditioning temperature and light fixtures through a mobile app. According to Ortigas Land, the project is scheduled to be completed by Q4 2026.

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RESEARCH VIEW

In Q1 2021, Colliers saw pre-selling launches and take-up reaching 4,400 units and 5,300 units respectively, down 43% and 53% compared to Q1 2020. Colliers believes that the pandemic-induced disruptions as well as subdued office leasing are likely to have an impact on residential demand. In Q1 2021, we saw vacancy in the secondary market reaching 16.3%, up from 15.6% in Q4 2020. We project vacancy to further rise to 17.2% by the end of 2021, a new all-time high. Colliers recommends that developers further explore the viability of the luxury market and become more innovative with their promotions and payment schemes. In our view, the government’s vaccination program should also boost investor and end-user residential demand. Developers should be proactive in lining up new projects to tap pent up demand once market conditions improve.

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Joey Bondoc

Associate Director

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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

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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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