AFTER putting the Philippines on the world map, giving impetus to the mushrooming of office buildings even outside the capital city, and enlivening a consumption-driven retail industry, this time, Business Process Outsourcing (BPO), with an active e-commerce, may soon prop up the country’s logistics industry.
“Logistics should be one of the most exciting spaces for investment, Colliers anticipates, as capital—once almost exclusively local—starts to cross borders in greater volume,” property consultant Colliers International said in its global outlook for 2016. “Business process outsourcing has put the Philippines on the map, resulting in large demand for purpose-built facilities there.”
“The technology sector, especially e-commerce operators, will be one of the most active groups in Asia due to sustained growth in their business in the region,” said David Hand, Colliers’ chief executive officer for Asia Pacific. “A lack of supply of land has been holding back the availability of brand-new warehouses for both occupiers and investors in the logistics sector.”
As such, Hand said, people would likely see in 2016 more occupiers partnering with private-sector developers to create built-to-suit facilities.
“The logistics sector in Asia looks very exciting in terms of expansion into new locations for development, and the adoption of innovative business models by various players in the market,” reported Colliers.
It said the completion of transportation infrastructure projects, such as road and railway links and port facilities expansions in the region, would result in more inland spots for logistics activity.
“All these are expected to trigger the faster development of logistics real estate, in tandem with Asia’s ongoing infrastructure development,” said Colliers Industrial Services in China. “The massive ‘One Belt, One Road’ project implemented by China to link up various nations from Asia to Europe is expected to forge ahead in 2016, moving from the stage of desktop blueprints to concrete action.”
Colliers added that the growing e-commerce in the region also plays a role in luring in demand for the logistics sectors.
It cited China’s Alibaba as an example, when its “Single’s Day” internet shopping festival posted a record $14.3 billion in sales on Nov. 11, 2015, which is more than four times the volume of sales on Black Friday and Cyber Monday in the United States combined.
In a separate report by CBRE, another global property advisory firm, e-commerce firms and third-party logistics (3PLs) were cited as the major drivers of leasing demand for logistics in Asia in the third quarter of 2015.
“While distribution networks continue to be modernized and online retail continues to expand, generally stable domestic consumption is supporting retailer demand for logistics space in the region,” CBRE said.
CBRE said demand for logistics space in Asia Pacific remained solid in the third quarter despite the more subdued economic outlook in most markets.
But looking forward, Colliers said the “development of logistics facilities in Asia has largely lagged demand, leading to sustained demand for high-quality logistics space in 2016.”
Colliers said the lack of land supply for logistics development in the region has prevented developers from bringing more brand-new logistics warehousing facilities for occupiers and investors into the market.
Colliers said it sees more global funds entering the market in 2016, as the region shows potential for growth, contrary to the past, where investment sales was largely driven by local capital.
“From a regional perspective, we expect to see more cross-country mergers and acquisitions, allowing investors to expand at a much faster pace,” Colliers said.
It noted that a solution to the lack of land for logistics development is for funds, occupiers and operators to create partnerships.
“To get around land-supply constraints, we envision the formation of creative partnering arrangements or joint ventures between funds, occupiers and operators,” Colliers said.
The company cited China, as an example, where occupiers and investors are looking to partner with state-owned-enterprises to secure more resources.
“Lured by attractive yields, more long-term investment funds will invest back in Asia in 2016,” concluded Hand.