Bullish outlook for retail sector as BPO workers drive spending

Real estate services company Colliers International Philippines has maintained a bullish short-term outlook on Cebu’s retail market given the strong consumer spending propelled by rising incomes and purchasing power of Cebuanos, especially those in the business process outsourcing (BPO) sector.

Julius Guevara, director and head of research, noted that there are about 100,000 BPO employees in Metro Cebu, about 7 percent of the total BPO workforce in the country.

Other factors that have fueled robust consumer spending include the increase in job opportunities because of the implementation of public infrastructure projects, continuous inflow of remittances from overseas Filipino workers, and the rise in township developments.

As of end-2015, Guevara said in a recent briefing that Metro Cebu had a total retail space inventory of 983,000 square meters, an increase of about 45 percent from the 675,567 sq.m. in 2014.

New supply came from, among others, the opening of new malls such as SM Seaside City Cebu at the South Road Properties (SRP), Robinsons Galleria at the Cebu City North Reclamation Area, and CityMall in Consolacion town in northern Cebu.

The expansion of these retail giants here reflected their “confidence in Cebu as a dynamic retail market,” Guevara said.

Because of the additional retail space, he said the vacancy rate in Metro Cebu increased to 14.7 percent last year from an average of 1.32 percent in 2014.

“But vacancy is expected to decline due to aggressive expansion plans of current retailers coupled by Cebuanos’ rising purchasing power and influx of international retailers,” Guevara said.

He said a “substantial amount” of the available retail space is expected to be taken up before the end of the year.

For this year, Guevara said more than 70,000 sq.m. of new retail space are expected to be opened.

He cited the ongoing development of City di Mare by Filinvest Land, Inc. at the SRP and the township projects of property giants Ayala Land, Inc. and Megaworld Corp. in Mandaue and Lapu-Lapu cities.

The outlook is not as bullish in the residential segments, where oversupply in both horizontal and vertical projects are causing a slowdown.

To cope with the slowdown, Guevara had said developers should look at condotels, serviced apartments and other condominium units for the leisure market.

It is a good time, on the other hand, for end-users to acquire new housing units because the slowdown has caused low take-up rates and low prices, he added.