Malaya Business Insight pooled the comments and projections on the industrial real estate market of the Philippines’ property consultancy firms.
Lobien Realty Group:
The industrial real estate market in the Philippines is fueled by the demand for warehousing and data centers.
According to Sheila Lobien, chief executive officer of Lobien Realty Group (LRG) warehousing industry will continue to thrive as momentum from e-commerce continues to drive market growth.
Government initiatives and programs together with changing lifestyle has propelled growth in the cold chain market.
In a presentation to the media recently, Lobien noted the Philippines’ high digital consumption is fueling its rise an emerging data center market.
Steph Ng, associate director at LRG, said warehousing market revenues are projected to grow from $750 million in 2022 to $1.2 billion by 2030, a CAGR of 6.5%.
Ng said a third of the supply is in Metro Manila, another one-third is in CALABARZON.
The remaining one-third is outside of these two locations.
Ng said a total of 76 manufacturing and 22 agro-industrial sites are located across the country and are operating under the Philippine Economic Zone Authority.
She added the continuing growth in e-commerce revenues, expected to reach P54 billion in 2024 from P34 billion in 2019, the demand for cold storage warehouses, and the growth of data centers are driving the growth of industrial real estate.
LRG predicts cold storage warehouses for grocery and meal delivery will grow to a $7.46 billion market by 2029 from a forecast of $4.56 billion this year. Actual revenues in 2023 stood at $3.83 billion.
LRG data showed the number of cold storage warehouses jumped to 233 from 151 in 2019. These are cold storage warehouses accredited by the Department of Agriculture.
Luzon accounts for 82.5 percent of these warehouses or about 158 with Metro Manila having the most. For data centers, LRG identified 13 players which have invested in the Philippines strategically located Metro Manila, Subic, Cavite, Pampanga, Rizal, Laguna, Batangas and Cebu.
“Metro Manila, as the economic and business center of the country, combined with the strong presence of major telco players, ensures that NCR will remain the top spot for data center hubs,” LRG said.
Colliers:
Colliers Philippines believes that it is the industrial sector that will hugely benefit from the trickle-down effect of the government’s push to promote the country as a manufacturing hub in Asean region.
The Purchasing Managers’ Index (PMI), a barometer of the manufacturing segment’s expansion, has been steadily increasing and more manufacturing investments should boost industrial space absorption particularly in the CALABA (Cavite, Laguna, Batangas) region and Central Luzon once they materialize.
Electric vehicles, semiconductors, and food and beverage (F&B) manufacturers as well as distribution centers will further propel industrial space takeup in the country’s primary industrial hubs. Land leasehold and warehouse lease rates will likely continue to grow at flattish rates over the next 12 months.
Colliers encourages industrial players to incorporate technological innovation into their warehouses; corner the constantly growing demand for cold storage assets; work with the government and other stakeholders in upskilling manufacturing workforce; and explore launching new industrial space and building modern warehouses in emerging industrial hubs.
KMC Savills:
Manufacturing companies are driving the demand for industrial warehouse space, according to KMC Savills in its Industrial Market Overview for the second half of 2023.
The report, released middle of the year,said while Calabarzon hosts the most number of warehouses, New Clark City is driving the northern expansion. The report cited the upcoming Filinvest Innovation Park in Tarlac as a significant milestone in regional development in the northern part of Luzon.
Cavite remains the hub for Philippine Economic Zone Authority-registered warehouses.
Calamba leads in the South, hosting 54 percent of Laguna’s storage facilities, with 64 percent of its space currently leased.
But KMC said elevated vacancies are pushing industrial rental rates down, notably in Bulacan (down 42 percent) and Pampanga (down 21 percent). Meanwhile, in the Southern Tagalog Region (Cavite, Laguna, Batangas), upcoming warehouse rents range from P250 to P300 per square meter, the report said.
“Key factors that affect the spread on rents are determined by inherent differences among industrial warehouses, such as the age of the building, quality of construction, and location,” KMC said
At present, manufacturing companies account for 41 percent of warehouse occupacy; followed by third-party logistics and fast-moving consumer goods sectors.
“In response to this growing need, significant infrastructure initiatives are underway to enhance connectivity and accessibility to key provincial industrial centers. These efforts aim to support the seamless flow of goods and services, ensuring that industrial hubs are well-integrated into the broader transportation network, thereby fostering economic growth and efficiency,” KMC said.
Property Report:
As the global economy navigates the post-pandemic landscape, the Philippine real estate market shows signs of a robust recovery in 2024. Despite facing volatility in recent years, several factors indicate a promising future for the sector.
Economic and market dynamics The Philippine economy is set to grow by 5.8 percent in 2024, according to the World Bank, marking it as the fastest-growing economy in Southeast Asia.
The impact of townships and mixed-use developments One of the bright spots in the real estate industry is the continued development of townships or mixed-use communities.
These developments, which combine residential, commercial, office, and leisure spaces, are increasingly popular.
Currently, 40 percent of these projects are in Metro Manila, with the remaining 60 percent spread across the provinces.
Townships are particularly beneficial in addressing the shift towards mixed and work-from-home arrangements by offering convenient office locations close to residential areas, reducing commute times and costs for employees.
