The Philippine logistics property market while still in the nascent stage has huge potential for growth amid growing adoption of electronic commerce.
JLL Philippines in a report said Philippine logistics demand to grow by 56 percent by end-2020 and a stellar triple-digit increase of 118 percent by end-2030.
“The outlook requires that a sustained improvement in e-commerce platform should take place along with the growing trade balance with other countries and favorable manufacturing sector, which is still an important stimulant for logistics market demand,” the report said.
The report said while CALABARZON is observed to be the dominant area for logistics activities, JLL Philippines anticipates an increasing logistics activity going towards Central Luzon and Davao Region.
Demand is projected to grow by 160,000 square meters (sq.m.) per year over the next 10 years and is projected to outpace supply pipeline, the report said.
JLL Philippines sees lower takeup by the end of the year due to the new coronavirus disease 2019 but the arjet rebound in 2021as stalled projects catch up.
The report also noted the Philippines shows signs of resiliency, despite the presence of headwinds posed by the pandemic such as the holding of end-user demand, the slowing down of delivery, and the disrupting global supply chain.
The report said opportunities come primarily from the rising cold storage demand and growing e-commerce landscape.
“The bigger subscriber base in e-commerce platforms is expected to continue online transactions, warranting e-commerce players to locate in larger distribution centers to better manage and monitor operations,” JLL said.
The Philippines is still a very nascent market, according to Tom Over, director at JLL Philippines.
“The Philippines is still maturing… majority of developers are not looking at it from a technical standpoint, so it’s really a sort of more investment, long term income. The market hasn’t really been brought to the international standard. There are opportunities within some of the larger developers’ existing land bank around those upcoming expressways,” Over said.
He noted developers could look into partnering with international companies to build out high quality logistics centers and to bring in tenants and investments in the Philippines.
The JLL report noted the overall growth in logistics takeup is anticipated to outpace the current pipeline of identified stock, suggesting a possible supply gap in the market in the coming years.
As of the first quarter of the year, logistics property stock stood at 1.6 million sq.m with operators preferring to locate their facilities equipped with high-quality specifications despite the relatively higher associated costs.
Majority or around 1.5 million sqm of the existing stock can be found in Luzon, led by Region IV-A or CALABARZON due to strong presence of industrial hubs in the region. “This is attributable to the area being identified as an industrial corridor,” the report added.
High-grade logistics facilities are also found in Visayas and Mindanao, which accounts for roughly 33,600 sqm of existing logistics space. In Visayas, there is a growing presence of logistics stock in Mandaue City and Lapu Lapu City, which are the industrial areas of Metro Cebu and in close proximity to the Cebu International Port and Mactan International Airport. In Mindanao, other regions contributed to the logistics stock, including Region XI (Davao Region), and Region XII (SOCCSKSARGEN). Upcoming supply of about 424,000 sqm is largely sourced from Central Luzon and CALABARZON, which are the key gateways to the South and North of Metro Manila
“These regions remain as attractive industrial and logistics corridors. This is further supported by the ongoing and upcoming infrastructure projects that are expected to improve connectivity between metro and other parts of the country,” the report said. – Irma Isip