Developers building more malls in time for economic recovery Thursday, February 26, 2009
By: KRISTINE JANE R. LIU
RETAIL SPACES are expected to remain in demand and drive the growth of this property segment as shopping-crazy Filipinos continue to flock to malls despite the slowing global economy.
"Growth in the retail property market is expected, with mall developers expressing optimism about the country’s quick recovery from the economic crisis," property consultant CB Richard Ellis said, noting that mall developers had announced expansion plans for the year.
CB Richard Ellis noted that mall developers were keen on building more branches despit the crisis, believing that by the time the projects are finished a year or two from now, the country will have been out of the crisis.
"They would rather have the space available by the time the crisis passes rather than catch up when the demand suddenly turns up," the property consultant said.
Notable among the country’s developers that continue to reap profits is the holding company of mall magnate Henry Sy, Sr.
Profits of listed mall developer SM Prime Holdings, Inc. went up by about 7% to P6.4 billion last year as revenues climbed by over a tenth to P17.8 billion, with consumers continuing to flock to malls despite a difficult economic situation.
CB Richard Ellis said last year saw major turnovers of retail spaces within the metropolis.
Two of the countries’ largest malls, SM North EDSA and SM Megamall, finished their expansion in time for holiday shopping last year.
The expansion of SM North EDSA Annex in Quezon City gave it 90,000 square meters more of gross floor area, making it the largest mall in the country and the third largest in the world.
The expansion of SM Megamall in Ortigas — the seventh largest in the world — provided 8,120 square meters more of leasable shopping space.
Meanwhile, the 9,500-square meter Glorietta 5 in the Makati central business district was completed. The mall is a mixed office and retail development, and will be occupied by tenants from Glorietta 1 and Glorietta 2.
Another mall that opened last year was the four-storey Eastwood Mall in Libis, Quezon City, which will provide 45,000 square meters of retail space and complement various office and residential expansions made over the past few years.
"The expansions in the retail market last year showed the confidence of retail developers [about] the recovery of the retail [property] industry," CB Richard Ellis said.
These developers, it added, expect the economy to rebound soon, and that Filipino consumers will continue spending during the crisis.
The Philippines houses four of the world’s largest malls. Aside from SM North EDSA and SM Megamall, SM Prime Holdings also owns the world’s fourth, and 11th biggest malls — SM Mall of Asia in Pasay City and SM City Cebu.
This year, SM Prime plans to open three new malls in Naga City in Bicol, Pamplona in Las Piñas City and Rosario in Cavite, and will start building three more along Commonwealth Ave. in Quezon City, Novaliches and San Pablo, Laguna.
Once the malls are completed, SM Prime will have 39 malls with a total gross floor area of about 4.7 million square meters.
Meanwhile, Lucio Tan-led Eton Properties Philippines, Inc. is opening three commercial centers this year in line with a strategy to tap retail shops.
The three commercial centers, which will give the company an additional P300 million in yearly revenues, include the 14,000-square meter Centris Walk and 15,000-square meter Centris Station which are scheduled to open by the last quarter, and the 9,000-square meter digital hub E-life in Ortigas by the third quarter this year.
Centris Station is a two-level commercial center anchored by SM Hypermarket. Located at the corner of EDSA and Quezon Ave. and linked to the MRT station, it will house specialty food outlets and other stores, while Centris Walk will be an open-spaced dining and entertainment strip in Quezon City targeting food enthusiasts and bar hoppers.
Both will be part of the company’s 12-hectare township development project Eton Centris, which will be built in Quezon City.
CB Ricard Ellis said retail developers continue to expand because experience has taught them that sales pick up after the economy comes out of a crisis.
"Consumers are most likely to take this opportunity to reward themselves after a prolonged scrimping on expenses during the time of the crisis, and retailers do not want to let go of this opportunity," the property consultant said.