(This is the second of a two-part property market outlook by Colliers Philippines)
MALL OPERATORS should brace for more foreign and local retailers as consumer confidence plus foot traffic pick up this year.
Major mall developers have been reporting that customer traffic has now reached between 85%-95% of pre-COVID levels in the third quarter of 2022 from only 40% a year ago.
In 2023, we see more merchants (foreign and local) taking up physical mall space to take advantage associated with rising consumer traf fi c plus anticipated increase in purchasing power.
Colliers sees the approval of the particular amendments to the Retail Trade Liberalization Act (RTLA) as paving the way for the entry more foreign retailers in the country. Based on our mall scans, the food and beverage (F& B) segment will account for 50% of the upcoming suppliers followed by fashion accessories plus beauty and health at 27%.
Colliers recommends that mall operators reactivate their event spaces or activity centers simply by organizing events such as trade fairs, exhibits plus concerts in order to attract more mallgoers. F& B and clothing & footwear retailers should also consider opening pop-up stores, especially those testing the feasibility of the Philippine retail market.
We also encourage shopping mall operators plus retailers to continue implementing regular sanitation and other health and safety protocols, especially in high-density retail areas.
In 2023, we see vacancy marginally rising to 17% from a projected 16% openings in 2022 due to the substantial delivery of 448, 900 square meters (sq. m. ) (4. 8 million square feet) of new supply. Despite record-high new supply, we expect greater retail space absorption from brick-and-mortar shops following the improved consumer visitors as reported by mall operators and the consumer confidence index from the Philippine central bank.
Colliers encourages developers to reassess the ideal sizes associated with upcoming store developments as they welcome more consumers back in order to their properties.
From 2024 to 2026, Colliers views the completion of 62, 000 sq . m. (667, 100 sq ft . ) of new retail space annually, just a fi fth of the particular annual delivery of 327, 200 sq . m. (3. 5 mil sq. feet. ) of recent supply that we recorded from 2017 to 2019.
Colliers believes that will online shopping will remain popular as Filipinos continue to put a premium on convenience. In our view, this will likely complement brick-and-mortar buying which all of us see receiving a boost from the dropping of mask mandates.
Colliers encourages mall providers and merchants to further strengthen their own omni channel strategies to support brick-and-click purchasing.
LEISURE: DOMESTIC TOURISTS TO JUMPSTART RECOVERY
Data through the Department of Tourism (DoT) showed that international arrivals as of Nov. 14, reached 2 million, already exceeding the full year target of 1. 7 million arrivals. The United States, South Korea and Australia were the top source markets during the period.
Meanwhile, hotel occupancies in the particular capital region since H1 2022 arrived at 47% from 44% in H2 2021 as we saw the return of business travel and resumption associated with MICE activities.
The DoT also documented that visitor arrivals through February in order to September 2022 generated P100. 7 billion ($1. 7 billion) within visitor spending, higher than the P4. 94 billion ($8. 4 million) last year.
Meanwhile, data from the Filipino Statistics Authority (PSA) demonstrated that the particular tourism sector’s share to the country’s economy attained 5. 2% in 2021 from 5. 1% in 2020. Domestic tourism expenditures also reached P783 billion ($13. 2 billion), up 39% year on 12 months a ft er reporting 37. 3 million trips in 2021 (from 27 million inside 2020).
The particular DoT is optimistic that the removal of mask requires will likely attract more travelers to visit the country. In our view, this is likely in order to stoke demand for hotels across the country plus help raise occupancy levels.
However , the particular Philippine Hotel Owners Association (PHOA) is “cautiously optimistic” for 2023 as increasing in fl ation and higher airfares as well as global geopolitical tensions are likely to a ff ect customers’ travel decisions.
For 2023, Colliers projects the completion of the record-high 3, 900 rooms as designers anticipate the particular projected recovery in worldwide travel. From 2023 to 2025, Colliers expects the annual shipping of two, 120 areas, greater than the particular 720 rooms completed yearly from 2020 to 2022. We anticipate more foreign-branded hotels opening in the next 12 to 36 months. Through 2023 in order to 2025, about 42% of the new supply are foreign brands and are likely to open within the Bay Area, Makati and Ortigas central company districts.
Colliers sees average daily rates (ADRs) rising by about 15% in 2022 after recording a cumulative drop of 20% in 2020 and 2021. ADRs are likely in order to always improve in 2023 following the projected rise in local and international tourists.
The ADRs associated with selected high-end resorts have either held fi rm or increased versus the previous half. Colliers attributes this to continued revenge journey across the country. Within our view, the particular increase within rates is likely to be sustained as the country attracts more international travelers, especially the long-haul and high-spending ones.
INDUSTRIAL: Industrial parks to support manufacturing’s revival
The industrial sector is likely to bene fi t from your Marcos administration’s push for industrialization. Prioritizing job-generating manufacturing activities was among then-candidate Ferdinand Marcos, Jr. ’s priorities. Colliers believes that improving manufacturing competitiveness should result in greater in fl ow of investments and these should bene fi t industrial parks, especially those located in northern and central Luzon.
In June 2022, the Department of Trade and Industry (DTI) highlighted that it is expecting more than P500 billion ($8. 4 billion) worth of investments in the Philippines in the particular next 18 months. According in order to DTI, the manufacturing sector will likely be the major recipient of these pledges. Colliers believes that this particular will play a vital role in industrial space assimilation once these investments materialize.
We furthermore see the cold chain field sustaining need for commercial and warehouse assets, specifically with the growing preference for online groceries and same-day deliveries. Recently, the German-Philippine Chamber of Commerce and Industry (GPCCI) disclosed that there are usually seven German companies which are seeking local partners in the particular cold chain industry. The particular Board associated with Investments (BoI) aims to increase chilly storage capacity in the country in order to 650, 000 pallets by 2023 through 500, 500 pallets inside 2020.
In our own view, data centers are potential industrial locators beyond 2022. Industrial parks are usually ideal locations for information centers because of their particular power capability that can assistance data centers’ electricity requirements. Developers ought to be proactive in cornering the requirement from data centers simply by highlighting features of industrial parks such while the potential for customization plus subsidized utility costs. Upcoming data centers located inside industrial parks include YCO Cloud Centers in Light Industry and Science Park 4 in Batangas plus Dito Telecommunity in Clark Global City in Pampanga.
Commercial parks inside Central Luzon will probably remain as well-known alternative options to CALABA (Cavite-Laguna-Batangas). From 2023 to 2024, we all view the delivery of 210 hectares (520 acres) of new commercial space particularly in Tarlac and Subic. The DTI is currently pitching Central Luzon like a manufacturing and logistics hub, highlighting growth opportunities in Pampanga’s New Clark simon City, Bataan’s Freeport Area, and Tarlac’s Luisita Industrial Park. Singaporean fi rms are also keen upon investing in the particular Filinvest Innovation Park in New Clark City.
Joey Roi Bondoc will be associate director and head of research at Colliers Philippines.