Industrial, logistics to drive real estate market recovery

Catherine Talavera (The Philippine Star) - January 28, 2021 - 12:00am

MANILA, Philippines — The industrial and logistics sector would lead the recovery of the Philippine real estate market this year, property services firm Santos Knight Frank (SKF) said.

SKF said the industrial and logistics sector was the most stable asset class last year.

“2021 will likely see a repeat of that, driven by deeper e-commerce penetration, demand for COVID-19 vaccines, and new infrastructure,” SKF said.

“Cold storage facilities, warehouses and distribution centers will be in demand this year, while data centers present a long-term opportunity for both the sector and the country,” it added.

SKF emphasized that the physical shop’s loss and the downward pressure on the retail market has been favorable to the industrial and logistics sector.

It added that e-commerce continues to contribute to the expansion of the sector.

The real estate services firm said for this year, online retail in the Philippines is expected to grow by 26 percent

“Many consumers were forced to adapt to e-commerce platforms for their household necessities such as food, groceries and essential supplies during the lockdown period,” SKF said.

“This has not only accelerated the adoption of e-commerce across multiple product lines, but also ensured the long-lasting impact on consumer behavior, with important implications on the growth of the industrial and logistics sector,” it said.

Meanwhile, SKF said it expects the capital market for the industrial and logistics segment to become more sophisticated as venture capitalists and investment firms place the sector high on their list.

“Even pre-pandemic, there’s a lot of big institutions regionally looking to invest in logistics. I think that the market is only constrained by supply. So there’s a large appetite for industrial logistics not only locally, but also for regional institutional investments,” SKF chairman Rick Santos said.

Apart from the industrial and logistics sector, SKF also sees a better outlook for the office market this year. However, it is unlikely to see an immediate return to the pre-pandemic level.

While COVID-19 forced occupiers to adopt remote work setups and increased Metro Manila’s vacancy to 9.8 percent in 2020, SKF said the office sector may see a gradual return by tenants to the physical workplace this year.

“2020 was a challenging year for Philippine real estate and the global property market, but we see the new year as a promising time for real estate sectors such as industrial and logistics, office, residential, REITs and data centers, among others. In general, we expect to see a soft rebound in the real estate market as the economy gradually recovers,”Santos said.

For this year, he identified macrotrends such as the boom of e-commerce, flexible office setups, and continued decentralization outside Metro Manila to likely to continue and contribute to the property market’s recovery.

He added that the demographics of the Philippines remain key in driving the real estate market’s long-term performance.

“The country’s growing population will drive consumption, online retail, and the industrial and logistics sector, while its young pool of talent will help retain the Philippines’ place in the global BPO industry as outsourcing increases overall,”Santos said.

In terms of capital markets, he said companies with real estate assets are likely to prioritize liquidity.

“We anticipate more buying opportunities and a greater volume of deals happening especially in industries negatively impacted by the pandemic, in addition to a move towards non-bank financing and overseas debt and equity funding,”Santos said.

  • Latest
  • Trending
Are you sure you want to log out?

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

or sign in with