Sustaining Cebu’s retail boom
What is keeping Cebu’s retail sector strong these days? A lot, apparently.
It could well be a mere confluence of events, but the fact remains that the Queen City of the South continues to be a major retail hub outside Metro Manila for a number of reasons.
According to Colliers International Philippines, this could be attributed mainly to the proliferation of outsourcing and offshoring companies in Cebu; the continued deployment of Filipino workers abroad whose monthly remittances fuel household spending; influx of local and foreign tourists; and the sustained generation of employment opportunities in major economic sectors such as construction, manufacturing, and export processing.
Higher disposable incomes
“Overall, Colliers International Philippines has observed that despite the substantial increase in retail stock since 2008, overall vacancy remains low as the additional supply is offset by a continuously expanding local economy which effectively boosts Cebuanos’ disposable incomes,” it explained.
Colliers claimed that the establishment of more knowledge process outsourcing (KPO) firms in Cebu City complemented the retail sector’s growth.
It noted that the influx of these companies boosted the share of KPO employees to Cebu’s outsourcing workforce to nearly 30 percent in 2015 from only 10 percent in 2008. And the projected 10 percent annual growth of Cebu’s outsourcing workforce is seen to support the expansion of the city’s consumer base.
Colliers further noted that the sustained remittances from overseas Filipino workers and increasing tourist arrivals will fuel retail spending in Cebu City and its environs.
Citing data from the Philippine Overseas Employment Administration (POEA), Colliers said that total deployment was estimated to rise by at least 5 percent yearly over the next five years, driven by continued global demand for highly-skilled Filipino workers.
“More households in Cebu will continue to benefit from higher remittances as an increasing number of Cebuanos are being deployed overseas,” Colliers explained.
Meanwhile, Cebu also continues to be the most visited destination in the Philippines last year, having attracted 3.46 million tourists from January to November 2016.
Manufacturing and export firms located inside Mactan Export Processing Zone have also been instrumental in propelling Cebu’s retail base. The influx of investors has sustained the growth of employment opportunities in Cebu, which meanwhile drove spending among nearly 3 million households.
“Metro Cebu’s dynamism as a major retail hub will be sustained by continued economic growth which fuels Cebuanos’ disposable incomes. According to the National Economic and Development Authority, Central Visayas recorded an annual economic expansion of 7.2 percent from 2014 to 2016,” Colliers noted.
“Gross domestic product per capita grew by an average of 5.5 percent a year during the same period. This robust macroeconomic environment effectively boosts Cebu households’ propensity to consume,” it added.