Policy changes in Myanmar and the Philippines could boost retail market: Colliers

THE retail market is making a comeback in Myanmar and the Philippines, according to real estate consultancy Colliers, which also noted that now is a boom time for foreign direct investment (FDI) in Vietnam.

According to the firm's Q3 Asia market report, various moves by the authorities to open up Myanmar and the Philippines to more foreign investment should give the retail sector a lift.

Government initiatives have reinforced growth in Myanmar's retail and business hotel markets, while the liberalisation has piqued the interest of major retailers in Asia in Yangon, where retail occupancies have held steady at 90 per cent, said deputy managing director Karlo Pobre.

He added: "In H1 2018, the government took further action to liberalise the sector by allowing full foreign ownership of wholesale and retail operators subject to certain restrictions such as minimum capital investment requirements as well as minimum trade areas.

"This much-welcomed liberalisation is expected to facilitate foreign investment in retail and wholesale activities in Yangon going forward.

"In the meantime, Colliers sees robust and untapped demand for large-scale shopping malls. Creating destination retail establishments geared towards recreation and entertainment will bode well for the market as these appear to be an attractive offering to many locals."

Over in the Philippines, the relaxation of foreign ownership rules in key sectors such as construction and retail, as well as ongoing construction of major infrastructure projects in the Metro Manila, are potential drivers of economic growth.

"The government has indicated it will reduce the minimum capital required for foreign retailers to open shop in the country from US$2.5 million to US$200,000," said deputy managing director Ieyo de Guzman.

"This move by the government should enable entry of more foreign retailers, particularly those in the food and beverage and home furnishing sectors as these are still dominated by local players."

Meanwhile, Vietnam has netted more foreign capital in the first half of 2018 - some US$5.5 billion altogether - than in 2016 and 2017 combined.

"With the State Bank of Vietnam tightening lending to the real estate sector in a bid to control bad debt, Vietnamese real estate developers are seeking foreign capital and we expect the already record levels of FDI into the real estate sector to increase further," said Colliers director Jonathon Clarke.

Developers are turning their gaze towards the hospitality sector, while industrial land and ready-build space are also attractive targets, he added.

Terence Tang, Colliers' Asia managing director for capital markets and investment services, noted that market sentiment has dimmed in some key markets in the region.

"Nonetheless, we expect developers and investors to remain cautious overall rather than retreat from the market completely," he said.

"From regulatory changes that promise to pave the way for further investment in the retail sector in Myanmar and the Philippines, to planned mega mixed-use developments in Thailand and the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link in the Pearl River Delta, there is a steady pipeline of opportunities emerging that will continue to draw interest even in a more challenging regional climate."