Ayala Malls unfazed by slowed consumption, economic risks

By Beatriz Marie D. Cruz, Reporter

AYALA MALLS said it is continuing its expansion plans amid softer consumer sentiment, citing the Philippines’ consumption-led economy and the resilience of the retail sector as factors that will help support demand in its malls.

“I think we are an economy that is built on consumption,” Ayala Malls Chief Operating Officer Paul Birkett told BusinessWorld on the sidelines of an event last week.

“As long as we can keep what we’re building in malls alive, relevant, and invigorating, if people are going to spend thousands on certain things, why do they have to go to Japan to spend it?”

Household final consumption expenditure grew by a slower 4.1% in the third quarter, easing from 5.3% in the second quarter. This brought the nine-month average to 4.9%, data from the Philippine Statistics Authority showed.

Mr. Birkett noted that the company is “always concerned about the harshening or softening of consumer sentiment. But it comes and it goes.”

The Philippine economy expanded by 4% in the third quarter — its weakest pace in more than four years — as household spending and public infrastructure outlays weakened. The slowdown came amid a widening flood control scandal that has weighed on both investor and consumer confidence.

“We need to bring that money back into the country, and I can only do that by building malls that are relevant and beautiful and put the right products in there,” Mr. Birkett added.

Ayala Malls, the retail development arm of one of the country’s oldest conglomerates, has set a P17.5-billion budget for its renovation program. It aims to add 700,000 square meters (sq.m.) of new gross leasable area over the next five years.

Major malls included in its redevelopment pipeline are Glorietta and Greenbelt in Makati City, TriNoma in Quezon City, and Ayala Center Cebu.

The company is also preparing to launch new malls within Evo City Estate in Kawit, Cavite and the Parklinks estate spanning Pasig and Quezon City, alongside an expansion of Ayala Malls Nuvali (formerly Solenad).

Its parent firm, Ayala Land, Inc. (ALI), posted a 0.9% year-on-year increase in nine-month attributable net income to P21.4 billion, while mall revenues climbed 4% to P17.4 billion.

On Monday, ALI rose by 40 centavos or 1.97% to close at P20.75.