Expect a Surge in Industrial Space Demand - Real Estate Trends

With the Philippines' recent achievements -- getting a new investment grade credit rating, maintaining steady economic growth, and having positive macroeconomic fundamentals -- demand for industrial properties, together with residential and office spaces, is likely to surge within the next few years. In fact, the country is already attracting many investors and companies are starting to expand and establish operations in various industrial facilities. 

In the first six months of 2013, approved foreign investments have already expanded to 93.4 billion, increasing by 126.9% from last year, according to the National Statistical Coordination Board foreign investments report. The report also showed that majority of the investments came from the electricity, gas, steam, and air conditioning supply sector at 73.7% while the manufacturing sector is at 11.8%. Most of the investments came from USA at Php 43.2-billion, followed by Japan and Netherlands at Php 4.2-billion and Php 3.8-billion respectively.

Investments in the industrial real estate sector are spread out in different areas in Luzon, especially the CALABARZON area (Cavite, Laguna, Batangas, Rizal, Quezon). Danish electronics company Sonion Philippines, Inc. has already built a 11,500-sqm plant earmarked at $30-billion while an air separation plant owned by Ingasco, Inc. is already being developed in the Clark Freeport Zone. Other companies have also expanded their operations in the country. Japanese-printer manufacturer Brother Industries, Ltd. has allocated $432-million to expand its facilities, including its factory in Batangas.

A number of industrial parks are also currently in the pipeline. A 4-billion industrial estate, Science Park of the Philippines, is expected to rise in Malvar, Batangas. Sumitomo Corp., another Japanese firm, is also expanding the First Philippine Industrial Park by 100 hectares. Major local players are also eyeing certain locations for new developments. The Lopez group is looking at Clark, Subic as the site of its next industrial park, while AboitizLand is planning to buy the majority stake in Lima Land industrial park Batangas to increase its industrial estate portfolio next year.

The Philippines is currently at the forefront of an industrial real estate boom -- more investors are scouting for properties in the country as Asian economies China and Taiwan start to slow down and stabilize. Increasing territorial tensions between China, Taiwan, and Japan and the recent calamity or flooding in Thailand that led to the closing of industrial parks also discourage foreign investors in moving to these locations, giving the Philippines an advantage in industrial park investments.