Prospects for investment in the Philippine industrial real estate market are looking bright due to a current shortage of developed property in the sector, a real estate analyst said.
In an interview last week, Monique Cornelio-Pronove, chief executive officer of Pronove Tai International Property Consultants, told The Manila Times that the industrial property sector will become the top performing real estate sector as it has the least amount of supply in the market.
“Both the office and residential markets have a lot of supply. It has already slowed down, but that’s not to say that there are no sales happening. It just slowed down, it’s not as robust as before,” Pronove said.
Pronove noted that very few developers are catering to the industrial market.
“I think the segment that will do very well is the industrial market. We don’t have that much supply. There are very few developers that are into the industrial estates development,” Pronove said.
She noted opportunities for industrial demand from China and Japan, as manufacturing corporations are moving out of their home countries.
“We see manufacturing corporations moving out of Japan and China– China particularly, because of the higher labor costs and taxation,” the analyst said.
Despite the potential opportunities for investment, Pronove said the country needs to provide more tax incentives for foreign companies in both income and employment taxes to be able to attract them into the country.
“The tax holidays of course are going to hurt, but as I’ve said, it’s a push and a pull. It creates jobs, but once you have investments there’s a ripple effect,” the analyst expressed.
Pronove said there is already demand for the country’s industrial property market particularly for typical warehouses and manufacturing. However, the sector continues to be underserved.
“We get a number of Japanese investors coming in. A lot of the big firms are looking at putting in 8 to 10 hectares of properties and building products within the Philippines,” Pronove said.
Asked what areas in the country could serve as potential industrial hubs, Pronove mentioned areas such as Clark, Batangas and Bulacan.
We have a lot of supply in Clark and the concentration is in Clark. You have an airport there, good supply of labor so Clark is an area,” Pronove said
At present, the Cavite-Laguna-Batangas area is considered as the country’s major industrial hub as its manufacturing output accounts for half of the Cavite-LagunaBatangas-Rizal-Quezon (CALABARZON) region’s gross domestic product (GDP), according to Colliers International.
“Total industrial stock in the Cavite-Laguna-Batangas area reached 6,898 ha as of 2H 2016, a mere 1 percent increase,” Colliers said.
Pronove projects that future industrial development will be seen in the northern part of the country.
“Now I think it’s the north that is being developed and getting a lot of attention, because most of your supply is there,” Pronove said.
The real estate analyst suggested there are opportunities for industrial development for both the northern and southern parts of the country.
“So both ends, as long as you have supply and the supply is good, you can control security, you can have a good quality development, and you can have infrastructure, roads and bridges,” Pronove concluded.