Philippines seen to ride on logistics, industrial growth in AsPac

CEBU, Philippines — The Philippines is seen to ride on the growth of logistics and industrial investments in Asia Pacific, as both local and foreign investors are positioning to build huge facilities in the country.

“The pandemic has forced diversification,” said P. Ryan Isip, Head of Capital Markets, JLL Philippines.

“Developers in the Philippines are looking to diversify into industrial & logistics, with most of the inventory demand being in office and residential developments,” he added.

In JLL Philippines’ recent real estate market overview, Janlo de los Reyes, head of Research and Consultancy said that the logistics and industrial sector continues to be a bright spot in the real estate market.

Logistics and industrial transactions volume grew by 47 percent outshining other asset classes as demand continues to increase and rent remains stable.

“As e-commerce continues to be the consumer platform of choice for many Filipinos, urban logistics demand continues to grow. We are also seeing growth of third-party logistics firms seeking spaces within and outside metro areas,” de los Reyes explained.

Due to the consistent increase in core and core-plus funds into the sector over recent years, there is potential for more sale and leaseback transactions in the sector across Asia Pacific.

Many owner occupiers are exploring this option to free up capex to upgrade facilities and implement new technological solutions into warehousing and supply chain management.

“The increasing adoption of technology and automation solutions coupled with a better understanding of the rising importance of Environmental, Social and Governance (ESG) and human-centric design requirements all point to a new trajectory for the logistics sector. Ultimately, this new trajectory is changing the occupier mix significantly and supporting the investment thesis for prime, modern logistics real estate,” said Peter Guevarra, Director, Research, Asia Pacific, JLL.

 Based on the JLL’s outlook, Asia Pacific logistics and industrial investment poised to double within next three-to-five years as investors look to increase exposure to the asset class.

JLL  forecasts logistics and industrial investment volumes to rise to $50-60 billion between 2023-2025 from US$25-30 billion in 2019- 2020.

Logistics and industrial buildings, which comprise of warehousing, supply chain and manufacturing facilities, will see increased investment due to rising occupier confidence in the sector.

In recent years, due to the evolution of e-commerce and third-party logistics (3PL) services, both investor engagement and occupier composition within logistics and industrial real estate has changed significantly, according to JLL’s recently published report A New Trajectory for Logistics Real Estate in Asia Pacific.

“Across Asia Pacific, structural changes to asset allocations and supply chain networks have converged to accelerate logistics sector investor and occupier demand. Increased investment into logistics and industrial real estate mirrors changes in occupier strategies for higher quality assets and the shifting composition towards ‘new economy’ occupiers, based largely around e-commerce growth and technology-enabled supply chains,” noted Tom Woolhouse, Head of Logistics and Industrial, Asia Pacific, JLL.

Contributing to swelling investment volumes are a growing number of portfolio and mega deals and several macroeconomic factors. The urban population of Asia Pacific is set to rise 41 million per year between 2020 and 2025. In the same period, an additional 760 million people will join the middle class, and incomes will grow four percent per year, presenting significant growth potential for the sector.

According to JLL research, logistics funds doubled assets under management in 2020 and continued to accelerate further in 2021.