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Industrial property presents opportunities for developers

Media Coverage

By: Catherine Talavera, December 16, 2016, The Manila Times

Industrial property market is an enticing proposition for developers in the coming years, a move that is in line with the need to diversify portfolios and the ongoing infrastructure projects, a real estate services firm said.

“With many real estate players diversifying their portfolios, it is very enticing for major developers to start venturing into industrial investments that are lucrative but less risky compared to other real estate sectors,” CBRE said.

The industrial sector continues to remain robust, mainly driven by the various infrastructure projects, specifically road networks and transportation access currently in the pipeline.

“The advances in logistics can provide opportunities for developers and investors to explore more skilled labor and tap locations that are more conducive to business activities,” the report said.

With the government’s focus on infrastructure development and accessibility, CBRE noted it could translate to further property developments in areas outside of Metro Manila as a result of better accessibility.

“Location and accessibility are two of the most important factors influencing real estate investment decisions and tourism activities,” CBRE said. “This fact establishes the critical part that transport infrastructure plays in the determination of the next best location for property investment and development.”

In an earlier interview, Pronove Tai International Property Consultants Chief Executive Officer Monique Cornelio-Pronove said the industrial property market presents a huge potential for growth.

“I think the industry that will do very well is the industrial market. We don’t have that much supply. There are very few developers that are into the industrial estates development,” Pronove said.

The potential is also there for industrial demand neighboring countries to invest in the Philippines.
“We see, manufacturing corporations moving out of Japan and China, particularly China, because of the higher labor cost and taxation,” Pronove said.

CBRE noted that the manufacturing sector, accounted for a chunk of the country’s total foreign direct investments (FDI) in the first half of the year, which grew by 11.5 percent year-on-year to P40.4 billion.

“Together with construction and administrative and support services, future projects under the manufacturing sector accounted for 35.3 percent or P14.2 billion of the total FDI,” the report said. “The noticeable FDI growth is expected to continue with increasing confidence in the potential of the industry.”

Despite the huge growth potential of the industrial sector, CBRE said there were few recorded proposals for new industrial subdivision developments due to remaining existing supply of warehouses and manufacturing spaces in known industrial locations such as the CALABARZON, Clark and other areas in North Luzon.

“On the other hand, considering the present vigorous activities in the manufacturing sector, continuous inflow of investments coming from both international and local investors and aggressive infrastructure developments outside of Metro Manila, alternative locations for industrial development might be needed in the coming years,” the real estate services firm concluded.