The rise of the industrial and logistics property sector in the Philippines was swift, although not completely unexpected. Santos Knight Frank predicted growth in 2019, but the unprecedented impact of COVID-19 accelerated demand for these properties. The consultancy believes this trend will continue.
“In 2021, we expect a strong and healthy growth in the industrial and logistics segment. This industry is vital in the nationwide rollout of the vaccine against COVID-19,” Kash Salvador, Director Investment & Capital Markets at Santos Knight Frank, explained in the Santos Knight Frank Real Estate Outlook 2021. “We can expect for the capital market for this industry segment to become more sophisticated. Venture capitalists and investment firms have placed this industry high on their list.”
When the Philippines went into lockdown last year due to the COVID-19 pandemic, Salvador pointed out that consumers were forced to adapt. They ended up becoming more comfortable with e-commerce platforms and these are now part of their daily lives. For the industrial and logistics property sector, e-commerce is driving skyrocketing demand for warehousing, cold storage and distribution centers.
One of the most interesting trends to emerge was the repurposing of real estate to cater to growing demand in the industrial and logistics property sector. For example, Ayala Land began converting some parts of its shopping malls to e-commerce facilities in 2020.
“Previous commercial spaces were converted to storage and warehousing facilities. Furthermore, landlords offered competitive rates to gain market share of the growing demand. We think some of the repurposing is temporary given that in the long term, the asset will always be a function of land value,” Salvador stated.
Health and wellness is another area of importance for the industrial and logistics property sector. Things like fresh food and even the COVID-19 vaccine require very specific storage and transportation. It is vital for the Philippines to have the correct industrial real estate infrastructure in place and this presents another opportunity for developers.
