Global brands should grow in Philippines

With retail rents still affordable compared to other Asia Pacific countries, the Philippines should be attracting more international brands, says a property analyst.

This would further fuel the growth of the retail property market this year, says Jones Lang LaSalle Philippines (JLL) regional director Sheila Lobien, who is also the company’s head of project leasing markets.

She says that while rental rates for ground-floor retail in the Philippines are rising because of high market demand, regionally the country is still the cheapest.

“If you look at the rental rates in Asia Pacific, Manila is the cheapest. Hong Kong is the most expensive, Singapore may be in the middle and even Kuala Lumpur is twice as high as us,” says Lobien. “So the Philippines is still the cheapest, though the rental is already increasing for ground-floor space.”

Based on JLL figures for 2015, Manila continues to offer the most affordable shopping centers in the region at US$555 a square meter per annum. In contrast, Hong Kong commands the most expensive retail rents at US$15,661 a square meter per annum.

Rising incomes

As well as the lower retail rates attracting more international brands, the rising income of Filipinos is also a magnet.

“Almost all the big brands that are in Singapore, Hong Kong and even the US are now here,” says Lobien. “We see Forever21, H&M and all the other big brands. Even brands as prestigious as Apple are looking at the Philippines now.”

According to Jones Lang Lasalle’s Global Cross Border Retailer Attractiveness Index 2016, Manila is classified as a growth retail city, ranking 29th on the list of 50 top cities attractive for retail.

“Strong retail sales growth is driven by an expanding population, rapidly rising middle classes and fast-track urbanisation,” says JLL.

Lobien says the Filipino consumer market is becoming more sophisticated and is being more exposed to what is happening abroad, as travelling has become less expensive. “We didn’t know those brands before. Nowadays, we are familiar with all the international brands and we’re looking for them in the Philippines.”

International brands that have entered the Philippines lately include Fatburger, Morganfield’s, Sugar Factory, Tokyo Milk Cheese Factory and Vera Wang, says JLL.

To enter the Philippine market, foreign brands need a local retail partner, says Lobien, citing SM, which has partnered with Forever21 and H&M. “There are a lot of others like the Bench Group, which has international brands also.”