Manila Entertainment City Designer Outlets

Market Feasibility Analysis

Prepared for: Andrew Roud

Effective Date: April 22, 2015

TABLE OF CONTENTS1. INTRODUCTION......................................................................................................................A. Overview of Subject...................................................................................................................................................B. Purpose......................................................................................................................................................................C. Format of Report........................................................................................................................................................D. Client, Intended User, and Intended Use...................................................................................................................E. Scope of Work............................................................................................................................................................F. Report Limitations......................................................................................................................................................2. PROJECT DESCRIPTION...........................................................................................................A. Manila Entertainment City Designer Outlets Overview..............................................................................................B. Target Market............................................................................................................................................................C. Building Types and Placement...................................................................................................................................3. SITE AND NEIGHBORHOOD ANALYSIS.....................................................................................A. Site Analysis...............................................................................................................................................................

1. Site Location......................................................................................................................................................2. Existing Uses......................................................................................................................................................3. Size, Shape, and Topography.............................................................................................................................

B. Neighborhood Analysis..............................................................................................................................................1. General Description of Neighborhood...............................................................................................................

C. Site Visibility and Accessibility....................................................................................................................................1. Visibility.............................................................................................................................................................2. Availability of Public Transit...............................................................................................................................3. Commercial Goods and Services........................................................................................................................4. Crime.................................................................................................................................................................

4. ECONOMIC CONTEXT...........................................................................................................A. Introduction.............................................................................................................................................................B. Labor Force, Resident Employment, and Unemployment........................................................................................

1. Trends in Unemployment................................................................................................................................2. Economic Development Trends.......................................................................................................................

5. DEMOGRAPHIC ANALYSIS....................................................................................................A. Introduction and Methodology................................................................................................................................B. Trends in Population................................................................................................................................................

1. Recent Past Trends..........................................................................................................................................2. Projected Trends..............................................................................................................................................

C. Demographic Characteristics....................................................................................................................................1. Income Characteristics.....................................................................................................................................

6. FINDINGS AND CONCLUSIONS..............................................................................................A. Key Findings.............................................................................................................................................................

1. Site and Neighborhood Analysis......................................................................................................................2. Economic Context............................................................................................................................................3. Demographic Analysis......................................................................................................................................

B. Product Evaluation...................................................................................................................................................C. Impact on Existing Market.......................................................................................................................................D. Concluding Remarks.................................................................................................................................................

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1. INTRODUCTION

A. Overview of Subject

The subject of this report, the Manila Entertainment City Designer Outlets, is a proposed outlet mall

in the Entertainment City district of Parañaque, Metro Manila. I have proposed a one-story structure

containing 50 designer outlet stores with a parking lot. The site is within a short walking distance

from Entertainment City’s four casinos. It is a kilometer west of Roxas Boulevard, a major arterial

linking Downtown Manila with its southern suburbs.

B. Purpose

The purpose of this market study is to perform a market feasibility analysis through a comprehensive

examination of the economic context, demographic trends, and a site analysis relevant to the

proposed project.

C. Format of Report

The report format is comprehensive. The market study conforms to HUD’s Market Study Guide

projects applying for mortgage insurance under the 211(d)(4) or 220 program in the United States.

The market study also considered the National Council of Housing Market Analysts’ (NCHMA)

recommended model content and market study index.

D. Client, Intended User, and Intended Use

The Client and Intended User is Andrew Roud. The Intended Use is for the University of Maryland’s

International Development course.

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E. Scope of Work

To determine the appropriate scope of work of the assignment, I considered the intended use of the

market study, the needs of the user, the complexity of the property, and other pertinent factors. My

concluded scope of work is described below:

No site visits were conducted

Primary information gathered through Internet research was used throughout the various

sections of this report.

All pertinent information obtained was incorporated in the appropriate section(s) of this

report.

F. Report Limitations

The conclusions reached in a market assessment are inherently subjective and should not be relied

upon as a predictor of results that will actually occur in the marketplace. There can be no assurance

that the estimates made or assumptions employed in preparing this report will be realized or that

other methods or assumptions might not be appropriate. The conclusions expressed in this report

are as of the date of this report. The actual results achieved will depend on a variety of factors,

including the performance of management, the impact of changes in general and local economic

conditions, and the absence of material changes in the regulatory or competitive environment.

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2. PROJECT DESCRIPTION

A. Manila Entertainment City Designer Outlets Overview

The subject is to be a large outlet mall located in the Entertainment City district of Parañaque, Metro

Manila. The outlet mall will allow shoppers to purchase designer brands that are out of fashion

and/or out of season, and are sold at 30 to 50 percent off retail value. Only designer brands such as

Nike and Under Armour are allowed to operate shops at the outlet malls. Counterfeit products are

strictly prohibited. The outlet mall is to feature 14,000 square meters of designer outlet stores, as

well as a food court featuring fast food brands.

The property is to feature a parking lot featuring 500 parking spaces. Parking in the parking lot will be

complimentary. The parking lot will be monitored 24/7. The subject will also feature a bus/jeepney

stop. Jeepneys are converted busses that are American military jeeps left over from World War II.

B. Target Market

The Manila Entertainment City Designer Outlets will offer upscale designer brands at discount prices.

These shops will target middle class families in Parañaque, Pasay, and southern parts of Manila, as

well as tourists.

C. Building Types and Placement

The Manila Entertainment City Designer Outlets will feature two new construction one-story

structures. The buildings will be located in the northern end of Entertainment City, across the street

from Solaire Resort & Casino.

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3. SITE AND NEIGHBORHOOD ANALYSIS

A. Site Analysis

1. Site Location

The subject is located on land reclaimed from Manila Bay in Parañaque, Metro Manila at the

northwestern quadrant of Aseana Avenue and J.W. Diokno Boulevard.

Map 1. Map of the Project

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2. Existing Uses

The subject, along with most of the surrounding land, is currently vacant land. The only two

completed neighboring properties are Solaire Resort & Casino, across Aseana Avenue from the

subject, and City of Dreams Manila, further down Aseana Avenue.

3. Size, Shape, and Topography

The subject site is roughly rectangular in shape, and occupies a hectare. The subject site is on

reclaimed land, and the land is thus flat and near sea level.

Figure 1 Views of Subject Site

Google Maps Aerial Photography (2015) Future Rendering of Site (2018-2020)

B. Neighborhood Analysis

1. General Description of Neighborhood

Entertainment City is an 8 square kilometer shopping, gaming, and leisure district located on

Manila Bay 11 kilometers south of Downtown Manila.1 Once completed, Entertainment City will

1 Google Maps

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feature four casinos. The four casinos are expected to bring in ₱445 billion, or US$10 billion, in

tax revenues in 2016, more than the Las Vegas Strip brought in in 2010.2

C. Site Visibility and Accessibility

1. Visibility

The subject is within walking distance of Entertainment City’s four casinos, and has easy vehicular

access to Roxas Boulevard. Roughly two kilometers northeast of the subject is Roxas Boulevard’s

intersection with EDSA, the major ring road surrounding Metro Manila.

2. Availability of Public Transit

The Airport Road bus stop is located 1.3 km east of the subject along Roxas Blvd. in Parañaque.

Buses provide easy access to Ninoy Aquino International Airport, as well as surrounding towns. 3

An extension of the Manila LRT light rail system will also feature a station in the vicinity, Asia

World LRT Station. This extension is currently in design phase, and no timetable is set for its

completion.4

3. Commercial Goods and Services

The largest stock on the Philippines Stock Exchange is SM Prime Holdings, a Philippine operator

of shopping malls.5 SM Prime Holdings owns and operates a large shopping mall one kilometer

north of the site, SM Mall of Asia. SM Mall of Asia features roller skating, an IMAX theater, a 76-

2 http://www.interaksyon.com/business/27792/pagcors-entertainment-city-seen-to-outstrip-the-strip-by-2016

3 Google Maps

4 http://www.lrta.gov.ph/index.php/2014-05-22-02-18-20/2014-05-28-03-03-56

5 http://www.pinoymoneytalk.com/biggest-philippine-companies-market-cap/

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lane bowling alley, and a large music hall. Shops inside of SM Mall of Asia include Ace Hardware,

5th Avenue, Adidas, Calvin Klein, Levi’s, Nike Park, an SM Hypermarket, and Steve Madden.6 An

outlet mall already exists in the Philippines: in nearby Santa Rosa, Laguna.7

4. Crime

Crime is a major issue in Metro Manila. A large number of Filipinos carry either guns or machetes,

and regulation of weapons is very minimal. This leads to high rates of violent robberies and

assault. Criminal gang activity is widespread. Furthermore, grenade attacks and kidnappings of

foreigners are not uncommon.8 Parañaque’s police station is located 5 kilometers south of the

subject. I would recommend that Parañaque build a new police station in Entertainment City to

better protect tourists and shoppers, similar to what the Las Vegas Metropolitan Police

Department has done to protect tourists on The Strip.9

6 http://smmallofasia.com/moa/?p=1097

7 http://www.manilashopper.com/2011/03/outlet-stores-at-paseo-de-sta-rosa.html

8 https://www.worldnomads.com/travel-safety/Philippines/Crime-in-the-Philippines

9 http://www.lvmpd.com/FindNearestCommand/ConventionCenter/tabid/329/Default.aspx

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4. ECONOMIC CONTEXT

A. Introduction

This section of the report focuses on economic trends and conditions in the Philippines and,

when applicable, the subject site’s province of Metro Manila.

B. Labor Force, Resident Employment, and Unemployment

1. Trends in Unemployment

Until 2006, the Philippines has been plagued by high unemployment during winter months and

moderately high unemployment during summer months. The unemployment rate peaked in

2000 at 13.9 percent. Between 2001 and 2005, the unemployment rate hovered between a low

of 11.2 percent in 2002 and a high of 13.7 percent in 2004. In 2006, the unemployment rate

dropped dramatically to 8.2 percent. It has remained around that level – even during the global

recession. The unemployment rate as of 2015 is 6.6 percent.

Annual unemployment rates in Metro Manila were not available; however, sources have

suggested that Metro Manila has the highest unemployment rates in the Philippines: the

unemployment rate in 2013 was 9.5 percent.10

10 http://gulfnews.com/news/asia/philippines/manila-area-has-highest-unemployment-rate-in-philippines-1.1159372

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Table 1 Unemployment Rate, 2000 to 2015

2. Economic Development Trends

The Philippines are a rapidly industrializing nation. Since 2000, the economy has diversified from a

primarily agricultural economy to an economy with emphases on banking and tourism. In 2002,

PACGOR reclaimed eight square kilometers of land in Manila Bay, and announced in 2007 that they

were allowing the development of a ₱889 billion, or US$20 billion, “entertainment city”.

Entertainment City’s four planned casinos are being projected to immediately compete with Las

Vegas and Macao for gamblers. Only City of Dreams Manila and Solaire Resort & Casino are currently

open to the public.

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0%

2%

4%

6%

8%

10%

12%

14%

16%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Une

mpl

oym

ent R

ate

Year

Unemployment Rates in the Philippines, 2000-2015

Philippines

Source: ieconomics.com

5. DEMOGRAPHIC ANALYSIS

A. Introduction and Methodology

Recent trends in population were analyzed in the Philippines and Metro Manila using the

Philippines Census. I looked at data from the 2000 and 2010 Censuses, incorporated the data

from these censuses.

B. Trends in Population

1. Recent Past Trends

Based on the information provided by the Philippines Census, the population of Metro Manila

increased by 15.9 percent between 2000 and 2010, an increase of 1,583,500 people. On an

annual basis, the province’s population gain was 1.6 percent. As of 2010, the province’s

population stood at 11,552,100. The overall population of the Philippines grew from 76,946,500

in 2000 to 93,135,100 in 2010, an increase of 16,188,600 people. The national population gain

was 21 percent, or 2.1 percent annually.

2. Projected Trends

Metro Manila’s population was estimated to have grown by 668,400 people between 2010 and

2015, making an annual rate of 1.2 percent. It is projected that the province’s population will

increase by 996,200 people between 2015 and 2025, or 0.8 percent annually. The Philippines was

estimated to have grown by 8,427,200 between 2010 and 2015, making an annual rate of 1.8

percent. By 2025, the population is projected to have grown from 101,562,300 in 2015 to

117,959,400, an annual rate of 1.6 percent.

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Table 2 Population Projections, 2000 to 2025

C.Demographic

Characteristics

1. Income Characteristics

Mean annual household income estimates reveal that Metro Manila is the most affluent province

in the Philippines; however, annual household incomes are lower than those in more developed

countries. According to income statistics provided by the Philippines Census, households in

Metro Manila have a mean annual household income of ₱379,000, equivalent to US$8,496. The

mean annual household income nationally is about ₱235,000, equivalent to US$5,268.

Table 3 2012 Mean Annual Household Income

₱235,000

₱379,000

₱0

₱50,000

₱100,000

₱150,000

₱200,000

₱250,000

₱300,000

₱350,000

₱400,000

Philippines Metro Manila

Annu

al H

ouse

hold

Inco

me

Mean Annual Household Income in Metro Manila, 2012

Source: http://web0.psa.gov.ph/content/2012-fies-statistical-tables

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76,946,500 85,261,000

93,135,100 101,562,300

109,947,900 117,959,400

9,968,600 10,787,300 11,552,100 12,220,500 12,775,900 13,216,700

-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

2000 2005 2010 2015 2020 2025

Proj

ecte

d Po

pula

tion

Year

Projected Population in Metro Manila, 2000-2025

Philippines

Metro Manila

Source: http://web0.psa.gov.ph/statistics/census/projected-population

6. FINDINGS AND CONCLUSIONS

A. Key FindingsBased on the preceding review of the subject project, as well as the demographic trends in Metro

Manila, I believe there is a strong opportunity to introduce an upscale outlet mall; however, I

have reservations about safety in Metro Manila. I offer the following key findings:

1. Site and Neighborhood Analysis

The site is uniquely located within a pedestrian-oriented entertainment district on reclaimed land

fronting Manila Bay that offers easy access for vehicles and future access for light rail. Crime is a

major concern, particularly in Metro Manila.

2. Economic Context

While unemployment is still higher than in developed countries, unemployment has stabilized

since the recession.

3. Demographic Analysis

Both Metro Manila and the Philippines as a whole have experienced rapid population growth.

However, mean annual household incomes are relatively low and are typical of a developing

nation.

B. Product Evaluation Considered in the context of the competitive environment is as follows:

Structure Type: The subject is proposed as two one-story buildings, and should appeal to people who drive to the site.

Parking: The subject will feature 500 parking spaces in a single-level parking lot.

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C. Impact on Existing Market

There is a need for outlet shopping in Metro Manila. While existing retail would oppose

construction of the subject, I judge that the construction of the subject will not have an impact

on existing retail properties.

D. Concluding Remarks

Overall, I believe the subject community will be well received within the context of the local

market. Metro Manila area has experienced rapid population growth over the past ten years, a

trend that is expected to moderate in the forthcoming years. My analysis indicates that

household incomes are expected to increase. The site is strategically located in Entertainment

City, providing easy access to all parts of Metro Manila.

In conclusion, the site’s strategic location and the economic emergence of the Philippines create

a powerful argument for constructing an outlet mall here. However, I would maintain a heavy

security presence on the property due to high crime rates.

I hope you find this analysis helpful in your decision making process.

_______________________ .Analyst

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