Cushman & Wakefield Global Cities Retail Guide - Cushman & Wakefield Retail
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Cushman & Wakefield Global Cities Retail Guide
The Philippines strong economic
expansion affirmed its position as
one of Asia Pacific’s frontrunners,
with annual GDP growth rate
registered at 6.2% in 2018.
The country’s economic growth is heavily led by the
manufacturing and trade sectors, with 20% and 14%
share of the GDP, respectively. The service sector, which
is the fastest growing sector, is trailed closely by the
industrial sector, particularly by the buoyant construction
segment.
The on-going massive infrastructure programs are seen to
further augment the country’s attractiveness as an
investment destination and deliver sizeable economic
gains as they address the desperate need for better
infrastructures. Factoring in the healthy domestic demand
and investments, which are seen to counterpoise the
global economic pressures, the country is expected to
sustain its robust GDP growth trajectory.
PHILIPPINES
OVERVIEW
Cushman & Wakefield | Philippines | 2019 1
PHILIPPINES
ECONOMIC OVERVIEW
ECONOMIC SUMMARY
ECONOMIC INDICATORS* 2018 2019F 2020F 2021F 2022F
GDP growth 6.2 6.1 5.8 5.5 5.3
Consumer spending 5.6 5.8 5.5 5.3 5.3
Industrial production 4.9 7.9 5.5 5.3 5.2
Investment 14.0 8.9 8.2 5.0 4.9
Unemployment rate (%) 5.3 4.9 4.5 4.3 4.2
Inflation 5.2 3.4 3.5 3.9 3.9
Peso₱/€ (average) 62.2 60.1 61.5 62.3 61.6
Peso₱/US$ (average) 52.7 52.6 51.8 50.4 49.3
Interest rates Short Term (%) 3.6 4.5 4.3 4.4 4.7
Interest rates 10-year (%) 6.7 6.1 6.1 6.8 7.5
ECONOMIC BREAKDOWN RETAIL SALES GROWTH:
% CHANGE ON PREVIOUS YEAR
Population 108.3 Million (2019F)
GDP (nominal) US$ 365.6 Billion (2019F) PHILIPPINES 2018F 2019F 2020F 2021F 2022F
Public Sector Balance -3.0% of GDP (2019F) Retail Volume* 6.0 5.9 5.6 5.6 5.5
Public Sector Debt 40.1% of GDP (2019F)
Current Account Balance -2.3% of GDP (2019F)
Government Democratic
President Rodrigo Duterte
Vice President Leni Robredo
Election Date May 2016
NOTE: *annual % growth rate unless otherwise indicated. Figures
are based on local currency and real terms. E estimate F forecast.
Cushman & Wakefield | Philippines | 2019 SOURCE: Oxford Economics Ltd. 2
POPULATION
CITY
(2015 Census)
Quezon City, MM 2,919,657
City of Manila, MM 1,763,348
Davao City 1,622,427
Caloocan City, MM 1,581,025
Cebu City 910,678
Zamboanga City 855,418
Taguig City, MM 801,143
Antipolo City 774,734
Pasig City, MM 753,030
Parañaque City, MM 663,733
PHILIPPINES
LARGEST CITIES
Cushman & Wakefield | Philippines | 2019 3
PHILIPPINES
RETAIL OVERVIEW
MAJOR FOOD & BEVERAGE (F&B) RETAILERS
Jollibee, McDonald’s, Max’s Restaurant, KFC, Shakey’s, Goldilocks, Chowking, Mang Inasal, Greenwich, Starbucks
MAJOR DOMESTIC NON-F&B RETAILERS
Bench, Penshoppe, Kamiseta, Plains & Prints, Memo, Oxygen, Regatta, Bayo
INTERNATIONAL NON F&B RETAILERS IN THE PHILIPPINES
H&M, Uniqlo, Zara, Nike, Forever 21, Cotton On
TYPICAL HOURS
MONDAY-FRIDAY SATURDAY SUNDAY
10.00 - 22.00 10.00 - 22.00 10.00 - 22.00
NEW ENTRANTS TO MARKET
John Lobb
Innisfree Luk Fook Off-white Popeyes Little Caesars
Bootmaker
Tiffany & Co. Mr. Diy Stefano Ricci Puma Select Shake Shack The Alley
Cushman & Wakefield | Philippines | 2019 4
PHILIPPINES
RETAIL SCENE
The Philippines continue to diverge from The robust demand for retail spaces in the country is
the global trend of dwindling traditional manifested by the healthy occupancy rate currently being
enjoyed by shopping malls and by the continuous
retail activities as “brick and mortar”
expansions and new developments of retail
stores continue to thrive and expand, establishments. With the Philippines being on track to
driven by the sustained increase in per upper middle income status, the retail scene is expected
capita income and purchasing power of to head towards sustained growth.
the growing middle-class population. While e-commerce does not necessarily translate to a
In 2018 up to mid-2019, the Philippines welcomed at least significant disturbance in the traditional retail situation, its
43 new foreign retail brands, of which 42% are in the Food 1% to 2% current share of the total retail value is
and Beverage (F&B) segment, and 14% are in the projected to upsurge with Filipino consumers spending
Clothing and Apparel segment. Notable retailers with F&B more time online and as retailers bet on the recent
concepts include Popeyes, Shake Shack, Little Caesars evolution labelled as “bricks and clicks”, wherein physical
and M Bakery. Joining the Clothing and Apparel segment presence is integrated with online presence in an attempt
are Off-White, Puma Select, and Stefano Ricci. Moreover, to offer an improved shopping experience to customers.
the surging consumer demand for the latest healthcare
and beauty trends brought Innisfree and Freyja into the
country’s retail scene. The entry of these foreign brands
cemented Bonifacio Global City in Taguig City as a
premier financial and lifestyle business district, and an
attractive business destination, competing with Makati City
in these aspects, with 40% of these retailers starting their
operations in the area.
Cushman & Wakefield | Philippines | 2019 5PHILIPPINES
SHOPPING CENTERS
TOP SHOPPING CENTERS BY SIZE
SIZE* YEAR
NAME CITY
(GFA SQM) OPENED
SM City North EDSA Quezon City 498,000 1985
SM Megamall Mandaluyong City 474,000 1991
SM Seaside City Cebu Cebu City 470,000 2015
SM Mall of Asia Pasay City 432,819 2006
SM City Fairview Quezon City 282,681 1997
SM City Cebu Cebu City 273,804 1993
SM Aura Premier Taguig City 249,862 2013
Robinsons Place Manila City of Manila 241,000 1997
Robinsons Galleria Quezon City 220,000 1990
TriNoma Quezon City 224,502 2007
*Does not include the GFA of ongoing and proposed expansion plans
Cushman & Wakefield | Philippines | 2019 6PHILIPPINES
KEY FEATURES OF LEASE STRUCTURE
SUB-HEADING
KEY FEATURES OF LEASE
ITEM COMMENT
Lease Terms Typical lease terms for retail outlets in the Philippines run for 1-2 years. Anchor tenants may get a lease term of up to 5 years.
Rents are usually payable with a month’s deposit and a quarter advance payable on the start of the lease, followed by monthly payments for the
Rental Payment remaining months. However, these terms are usually negotiable with the landlord and usually depend on the length of the lease contract and
the size of the property.
It is rather difficult to track and index rent growth in the market as developers usually keep rents confidential. However, developers in recent
Rent Review
years have been increasing rents by 5-10% annually.
Service charges, or most commonly known as Common Use Service Area or CUSA fees in the Philippines, are usually payable in tenanted
buildings which covers management fees, security, cleaning, repair and landscaping of common parts and areas of the development. This is
Service Charges, Repairs and
usually excluded from rent and is calculated on a per square meter basis. The landlord is responsible for the repair of external or structural
Insurance
matters in shopping centers and developments, while the tenants are responsible for internal repairs. Insurance for common parts of the
shopping center is also paid by the landlord but it is usually charged back to the tenant. The tenant is usually responsible for internal insurance.
VAT of 12% is payable on lease rentals in the Philippines and landlords shoulder the annual property taxes. In addition to the monthly rental, it
Property Taxes and other costs
is common for mall operators to take a percentage of the retail tenant’s gross monthly revenues. This normally runs at about 3-10%.
Retail landlords, particularly those in the malls are hesitant to allow subleasing and normally keep strict control of retail tenants in their facilities.
Disposal of a Lease In situations where suitable replacement tenants can be found then landlords will allow the lease to be assigned to the incoming tenants. In
cases of pre-termination, penalties will apply.
Shops are usually valued on a zoning basis. Shops located on the ground floor are usually charged higher rents compared to those shops on
Valuation Methods the upper floors. There will occasionally be local variations to these rates, which will also depend on the quality and functionality of the
accommodation, relative to the market norm.
A mandatory standard form of lease does not exist and each mall operator will have their own template. In addition, Documentary Stamps are
Legislation
payable on notarized lease contracts in order to register lease contracts.
Cushman & Wakefield | Philippines | 2019 7TETET CASTRO Director, Tenant Advisory Group Cushman & Wakefield Philippines, Inc. 9th Floor Ecotower 32nd Street corner 9th Avenue Bonifacio Global City, Taguig City Metro Manila, Philippines Tel: +63 2 554-2927 Email: tetet.castro@ap.cushwake.com No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and the same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2019 Cushman & Wakefield LLP. All rights reserved.
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