Philippines' 1st Japanese department store aims to win over young middle class
Mitsukoshi department store will be located just north of Bonifacio Global City, a new business district in Metro Manila. (Image courtesy of Isetan Mitsukoshi Holdings)
MANILA -- When Mitsukoshi department store opens in Manila later this year, it will be the first such Japanese retailer to make a debut in the Philippines where companies are hoping to take advantage of a growing middle class.
Isetan Mitsukoshi Holdings will open its flagship store in a large complex that it is jointly building with Nomura Real Estate Development and local property developer Federal Land in the north part of Bonifacio Global City, a new business district in Metro Manila.
Luxury hotel Grand Hyatt Manila and Manila Japanese School are nearby the store. In the future, the area will also be served by subway, under construction now.
Mitsukoshi is banking on its brand as a premium shopping center to draw the Philippine consumer. It also hopes that its depachika -- basement food hall found in most Japanese department stores -- will be as popular in Manila as they are elsewhere.
Consumer spending makes almost 70% of the Philippines' gross domestic product. The country's retail industry has been dominated by local conglomerates, and multinational companies such as Japanese casual clothes chain Uniqlo and Swedish furniture giant Ikea.
The Philippine government's revised Retail Trade Liberalization Act took effect in January, which lowers the paid-up capital requirement for foreign retail enterprises to enter the market. As such, it is expected that other Japanese retailers will follow in Mitsukoshi's footsteps.
For now, the four residential towers -- called The Seasons Residences -- above the department store are also selling well. The towers are named after the seasons -- Haru (Spring), Natsu (Summer), Aki (Autumn), and Fuyu (Winter) -- and each has around 50 floors for a total of around 1,400 units.
Most of the units in Haru tower have been sold. (Photo by Yuichi Shiga)
The unit price ranges from nearly 20 million peso ($340,000) to around 80 million peso depending on size. About 95% of the units in Haru tower, the first to go on sale, has been sold. The sale of the fourth tower is expected to start next year.
"About 70% of buyers are wealthy locals and most of them are buying these condos so that their family members can live in them rather than for investment purposes," said Yasuhiro Ohira, section chief of Nomura's overseas business department.
Japanese know-how in areas such as anti-earthquake technology, smart toilets and kitchen appliances and heat-resistant glass, have impressed buyers, according to the company.
Given the success of The Seasons Residences, Nomura and Federal Land have formed a joint venture called Federal Land NRE Global. Under the partnership, Federal Land holds a 66% stake and Nomura the remaining. The two companies are planning to spend 750 billion yen ($5.1 billion) to launch four projects in Manila, Cebu and other regions in 2024.
Under those projects, there will be around 50,000 units for sale and offices with a total floor area of about 6.8 million sq. meters. With a population of about 110 million and an average age of 24, the Philippines has seen steady growth in its residential property sector and prices rising.
"We are pinning hopes on the explosive purchasing power of the country's booming middle class," said Nomura Executive Officer Yusuke Hirano, who is also a vice chairman of Federal Land NRE Global.
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