Despite the Philippines’ booming economy, retail and office rents in the Philippine capital remain Asia’s cheapest, according to reports recently released by global estate agent CBRE.
Compared to Hong Kong’s and Tokyo’s $2,238 and $1,291 per square meter (sqm) per year, Manila’s Grade A offices command an annual rent of just $290.5 per sqm, according to CBRE’s Asia Pacific Office MarketView report for the first quarter of 2013.
Similarly, the Philippine capital’s prime retail spaces inside shopping centers command annual rents of just $398 per sqm, according to CBRE’s Asia Pacific Retail MarketView for the second quarter of 2013. In comparison, the retail spaces in Singapore’s shopping centers command annual rents of $5,003 per sqm, while those in Kuala Lumpur are even higher at $6,251.5 per sqm.
But despite this, rents for Manila’s prime retail spaces grew 3.7 percent quarter-on-quarter in Q2 2013, thanks to continued steady expansion by international brands in major shopping malls across the capital. Some high-profile brands to enter the capital’s shopping malls include Uniqlo, Forever 21, Cotton On, and Bershka. Further, vacancy remained at just below 5.0%.
According to CBRE, strong growth in the purchasing power of the emerging middle class will continue to support the retail market going forward and draw interest from international retailers, particularly those in the fast fashion and F&B sectors.
Meanwhile, Manila’s Grade A office rents rose by 1.0 percent amid steady demand from local and foreign firms. Most leasing deals were for head offices in the central business district (CBD), while there was strong demand for space from high-value, non-voice business process outsourcing companies. New CBD supply in 2013 is just 39,000 sqm and Grade A rents are likely to record further gains, according to CBRE.
