Rental rates in shopping mall stores seen climbing

Wednesday, May 31, 2006

By Darwin G. Amojelar, Reporter

RENTAL rates for retail stores in Metro Manila malls are expected to rise in the next 12 months with Filipinos’ fondness for bargain items, Colliers International Research said.

“Moving forward, we believe that the saturation of retail space in Metro Manila coupled with the general preference for bargain items are expected to exert pressure on rents,” the research firm said in its second-quarter Philippine property market overview released Monday.

Colliers said its forecast rent by end-2006 is an expansion of 5 percent or an average of P1,207 per square meter in Ayala and P965 in Ortigas.

Retail rents in Ayala Center posted a slight quarter-on-quarter increase of nearly 3 percent to an average of P1,183 a month. In Ortigas, rentals were nearly unchanged at P930—up by less than 2-percent quarter-on-quarter.

During the first three months of the year, retail sales rose by 3 percent as compared with 8-percent year-on-year growth posted in the same period in 2005.

The research firm also said that land values at the Makati and Ortigas central business districts (CBD) are expected to rise by 15 percent in the next 12 months.

Colliers attributed the increase to the continued strengthening of the office segment and healthy take-up rates in residential condominiums.

Land values in Makati CBD are estimated to have posted a 3-percent quarter-on-quarter rise to an average of P223,130. This translates to an estimated accommodation value of P13,946 per developable square meter.

“While we doubt that a transaction will transpire at these levels soon, our estimates are supported by the significant escalation in the office segment and the current preselling levels of residential condominiums,” the research firm said.

In Ortigas, land value is estimated at P100,979 or an accommodation value of P5,094 per developable square meter.

Vacancy stood at 7 percent, lower than the 7.4 percent in the previous quarter. In absolute terms, 184,172 square meters of space are currently vacant.

“Throughout 2007, expectations are for vacancies to further decline to 5 percent by end this year,” Colliers said.

For the first three months, the estimated absorption of office space in the Makati CBD was recorded at 11,431 square meters.

“For the whole 2006, our forecast absorption is 63,931 square meters, down by 22 percent year on year from 81,829 in 2005 due to the availability of space in the market,” the research firm said.

  

http://www.manilatimes.net/national/2006/may/31/yehey/business/20060531bus1.html