High hopes for CALABA region

Robust industrial activities in the Cavite-Laguna-Batangas (CALABA) corridor are expected to continue over the next one to two years. With improving infrastructure connectivity and growth of commercial activities, the region is also becoming a hotbed for township developments featuring residential projects.

According to a report just released by property consulting firm Colliers International, the industrial and infrastructure investments that support township development should further raise the CALABA region’s stature as a commercial business district outside of Metro Manila.

Colliers noted that based on data from the Philippine Statistics Authority, manufacturing investments in the Philippines reached P41 billion as of the first half of 2019, with the bulk of investments going to the CALABA region. The investments primarily are in industrial land and warehouses and presently, the corridor serves as the country’s major industrial hub.

The Colliers report said the area is set to continue to flourish due to the development of major infrastructure projects around Cavite, Laguna, and Batangas; trade deals between the Philippines and Asian and European countries; further improvement of the country’s viability as an investment hub in the region; and sustained growth of manufacturing sub-sectors on the back of strong domestic consumption and the construction sector.

It observed that the CALABA corridor continues to attract new and expanding manufacturing tenants, and that the region’s competitiveness as an industrial hub should further be enhanced by the infrastructure projects lined up by the government.

These factors, Colliers said, have also been enticing developers to build integrated communities and stand alone residential projects to cater to rising demand in the region.

With continued interest in the area for industrial and residential investments, Colliers called on developers to carve out space for industrial parks within townships, align industrial expansion plans with the government’s infrastructure program, modernize warehouses, implement strategic landbanking, expand township projects, further differentiate features of integrated communities, and complement industrial parks with socialized and economic residential projects.

Colliers pointed out that aside from the typical office, residential, and retail projects, property developers should also consider developing industrial space and warehouses within the new integrated communities being developed in Cavite, Laguna and Batangas. But with continuously increasing demand and lack of new industrial space, developers should explore partnerships with local governments for the acquisition and eventual development of industrial space and should also be on the lookout for firms selling land in the area.

Colliers called on industrial developers to focus on the demand of industrial tenants in different locations. It cited data from the Philippine Economic Zone Authority and the Philippine Statistics Authority which showed that most electronics and semiconductor investments still gravitate towards the CALABA region while light manufacturing facilities such as food and beverage and packaging materials factories tend to be in industrial facilities north of Metro Manila. High-value manufacturers, it said, are likely to continue gravitating towards Southern Luzon.

Building modern warehouses is also one way by which developers can expand their footprint in the industrial segment. Colliers projects demand for industrial warehouses to rise over the next 12 to 36 months due to the country’s thriving e-commerce market and to the investments pledged by the manufacturing sector in the past six to 12 months which should translate into space requirements.

With the Bangko Sentral ng Pilipinas reporting that around one percent of retail transactions in the Philippines using electronic platforms, Colliers said this shift may rise over the next two to three years due to robust domestic spending and increases in internet and infrastructure spending throughout the country.

The report said the increased spending would propel demand for more modern warehouses and more efficient transportation system which would translate into increased investments in the transportation and storage segment from 2019 to 2021.

Meanwhile, Colliers recommended that industrial developers and tenants such as manufacturers align their expansion plans with government’s infrastructure push, adding that a number of key projects due to be completed over the next two to three years are likely to be in the CALABA area and should further stoke industrial demand.

It noted that infrastructure projects lined up by government should ease some of the congestion pressure in the urban core and into these suburban areas. Major developers, it said, already have significant landbank in key areas outside of the country’s capital and smallers players should intensify efforts to acquire more land to take advantage of the greater accessibility made possible by infrastructure projects.

Colliers also observed in its report that socialized and economic house and lot projects near the industrial parks are recording strong take-up, and after being launched a year ago, some of the purchases have recorded take-up exceeding 90 percent. It called on developers with residential projects near industrial areas to launch economic and socialized residential projects with prices ranging from P580,000 to P1.7 million per unit.

Aside from thriving industrial activities and the lure of improved infrastructure connectivity in Southern Luzon, Colliers said that sustained regional economic growth, an influx of offshore gaming firms, and continued overseas worker remittance inflows should further propel residential demand in the Southern Luzon region.

It noted that offshore gaming firms from China have been dominating office space absorption in Metro Manila, but with tight vacancy conditions in the metropolis firms have started to occupy office space in Cavite and Laguna and this demand could spill over to the residential sector. Colliers expects POGOs to continue leading office space take-up over the next two to three years especially with continued efforts from lawmakers to legitimize their operations.

Let us hope that recent developments brought about by Taal Volcano’s eruption would not discourage investors from looking at the long-term potential of the CALABA corridor.

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