There is not enough spending power to support the number of Philippine provincial malls being developed, warns a real estate expert.

This follows a “fantastic” year for the property sector during which most major developers opened malls.

“Retail has had an incredible expansion in route,” says CEO David Leechiu of Leechiu Property Consultants (LPC) has told The Manila Times.

Ayala, DoubleDragon, Filinvest, Puregold, Robinsons, SM and Villar all opened malls in new sites, which Leechiu says is unprecedented.

According to Colliers International Philippines, about 118,000 sqm of retail space was added to Metro Manila’s retail stock in the third quarter of last year, taking the total stock to 6.32 million sqm.

For Metro Manila alone, total retail stock is forecast to rise by 7 per cent to 6.76 million sqm by the third quarter of this year, says Colliers. Meanwhile, retail vacancy levels have remained low at just 0.57 per cent.

But Leechiu says it is a different story for the provincial retail market.

“I think rents are softening because some areas might be ‘over-malled’ now,” he says. “The purchasing power is not there yet.”

In particular, these Philippine provincial malls cater to the middle-income market. However, he believes the situation will be “very temporary’, with changes and improvements in two to three years’ time as purchasing power continues to grow.