Retail estate declines due to martial law

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(Source: Sunstar.com.ph | July 24, 2018)
The declaration and extension of Martial Law in Mindanao hints an slow progress as one of various effects in the retail estate business in the city according to the study “Bracing form Impact: an Analysis One Year under Martial Law” conducted by Prime Philippines.

“Since the implementation of Martial Law on May 23 last year and its extension until the end of this year, this study we are sharing to you now showed interesting results as to how it may seem that Martial Law may have affected different sectors in the real estate industry,” Managing director Jet Yu said during the media forum Kapehan sa Dabaw on Monday, July 23, 2018.

According to the study, there was a slowdown in the expansion of the retail sector in the city for real estate.

“So the retail market anchor tenants like Jollibee, McDonalds, and Starbucks, and other national branded tenants, there is a slowdown, in terms of their expansion in Davao city for the whole year.”

Yu added though this decline is already expected, few opening of new branches of coffee shops still remain to happen compared to their proposed plan of expansion before the declaration of extension of martial law.

The same trend was seen for the office sectors which include BPO company in the city.

“Several of them put their expansions on hold, up to the end of this year,” Yu said.

Based on the study, for office sector supply, there is an increase for first half of 2018. However, demand failed to catch up. Even though the volume of leased space is increased by 10 percent from last year, there is still a lower occupancy rate. 2017’s occupancy rate was at 89 percent. While for this year is at 81 percent.

The study showed Bajada-Lanang area still tops the most number of office spaces at more than 100 thousand square meters and has an occupancy rate of 79 percent.

While Matina and Poblacion has around almost 40,000 square meters of spaces. Occupancy rate is higher in poblacion at 95% than Matina which rates at 73 percent.

Meanwhile, Yu said before the martial law declaration last year, from January to May 2017, there was a 20-50 percent increase compared to 2016 in the real estate business. Shortly, after two months of the declaration, The investment sentiment started to decline.

“There were some negotiations that were closed, while others were placed on hold on a ‘wait and see’ perspective,” Yu said.

According to Yu most business investors who were in a “wait and see” perspective were optimistic in the upliftment of the martial law until a declaration for a need to extension was announced on the second week of December 2017.

Meanwhile Yu said even with extension, tourism grew an increase of 13% during the first half of 2018. The agribusiness and Public-Private Partnerships were also catching up in terms of performance.

“But we are hopeful that once the martial law is lifted in Mindanao, the onhold expansions will definitely be pushed through here in Davao. Also Prime Philippines is adamant in aiding Davao city to be a first-class district business someday,” Yu added.

 

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