Relocations of multinationals drive growth of local industrial sector

MANILA, Philippines - The country’s manufacturing industry is now experiencing a resurgence since its slowdown in 2009.

Demand for industrial facilities during the last quarter of 2012 was driven mostly by the relocation of multinational companies to the country.

However, lease rates and land values in industrial sites are likely to keep steady throughout the current year as landlords are inclined to keep their competitive edge through lower rents despite the anticipated increase in industrial locators.

This is among the insights contained in the 2012 yearend Market View report by leading commercial real estate services firm CBRE Philippines, particularly on the industrial property sector, which observed a shift in operations last year of Japanese, Korean, and Taiwanese manufacturing and industrial companies from China to the country.

The tension caused by territorial disputes between China and Japan pushed the companies to look for alternative sites for its operations. In addition, escalating labor costs in the Chinese industrial regions have forced Taiwanese and South Korean companies to move to the Philippines.

With the expected influx of global companies engaged in manufacturing and agro-industrial activities, the country’s four PEZA parks — the First Philippine Industrial Park, LiMA Technology Center, Laguna Technopark and Light Industry and Science Park — are expanding their properties to accommodate the incoming firms. Subic and Clark are also undertaking the expansion and development of its industrial properties to support the growth in industrial activities.

Continuous infrastructure developments such as airport, seaport and highways between the Clark Freeport Zone and Subic Bay Freeport Zone has opened up new areas of investment for the manufacturing industry as these foreign firms realize the country’s high investment potential.

 In addition, Ayala Land is currently developing a mixed-use development in Porac, Pampanga that will feature sites for industrial facilities.

The last quarter of the year, which is the holiday season, is a traditional harbinger of increased demand for consumer goods, leading to expansion in imports. Exports, meanwhile, expanded with semiconductors, control instrumentations, metal components, office equipment and telecommunication goods. Total exports in the last quarter of 2012 rebounded by 9.1 percent year on year, while total imports increased by 4.6 percent.

Despite such growth in imports and exports, supply of land for industrial facilities remains abundant therefore keeping lease rates constant.

Rick Santos, chairman and founder of CBRE Philippines, shares that “the resurgence of the manufacturing sector is an indication of renewed investor confidence. This is the best real estate market the Philippines has experienced in the past 20 years.”