30 shopping malls yet, and counting: Retail dev't in Cebu soaring, report says

CEBU, Philippines - The strong spending power of Cebuanos brought about by the dynamic growth of business process outsourcing (BPO) sector and the economic shaping up of the Philippines contributed to the heightened awareness among retail traders and even mall developers to expand and set up more shopping facilities in the metropolis.

A report from Colliers International revealed that retail development in Cebu heightened further, with more mall establishments underway.

At present there are over 30 shopping malls on the island province, including the newest addition to SM City shopping malls, the SM Consolacion with a total of 57,000 square-meter gross leasable area, and the 29,000-square meter J Centre Mall in Mandaue City.

According to the report, in other areas, new constructions and expansion plans by major developers are being laid out such as the Ayala Center Cebu extension (36,000 sq m), Robinsons Galleria (56,000 sq m), and SM Seaside City at the South Road Properties (240,000 sq m).

Meanwhile, the Gaisano Group, a well-known retail developer in the Visayas region, remains to position its projects in focused markets outside the Cebu City proper with four new mall developments in the pipeline.

The drive for developers to further boost their investments has been primarily attributed to the locals’ increase in spending power. This is further backed with the availability of large-scale developable land, a high population, a healthy tourism market and a generally strong business environment in Cebu.

The surge of outsourcing firms has also paved the way for retail hubs to emerge in commercial complexes or through mixed-used developments.

The strong spending from the BPO employees, who have relatively higher disposable income, has contributed in the increase of store sales, thereby pushing developers to proceed with widening their footprints.

Beyond the impact of the BPO, the growth in the retail sector is likewise attributed to the continuous inflow of overseas Filipino remittances.

Based on the latest data from the National Statistics Office, there were about 148,900 deployed Filipino workers from Central Visayas in 2011, which grew by some 10 percent year-on-year.

Cebu City, where commercial and business activities are primarily centralized, hosts more than half the total number of malls on the island.

At present, there are about 16 malls in the city, translating to over 600,000 sq m of gross leasable space. Most of the large-scale mall developments are owned by major players, such as Ayala Land, SM Prime and Robinsons Land.

Meanwhile, local player Gaisano has about five district-level malls.

Last year, mall developers in Cebu City benefited from the vibrant spending activities and high foot traffic across districts, leading to an average mall occupancy rate of 98.7 percent.            Premium floor rents are likewise reasonable, ranging from between P500 to P1,200 per square meter per month, with an average rent of P780 per sq m – a discount of about 30 percent compared to Metro Manila.

Outlook on the growth of the retail industry in Cebu indicates a further long-term increase, as various market sources expand driven by robust economic fundamentals. /JMD (FREEMAN)