‘Logistics is real estate’s bright spot’
Industrial logistics, data centers, renewable energy and real estate investment trusts (REITs) will be the bright spots in the country’s real estate sector this year, say top executives in consumer banking and real estate asset management.
In a recent webinar organized by the Urban Land Institute and Price Waterhouse Coopers (PwC), Raoul Villegas, Executive Director of PwC Philippines said that the logistics industry will continue to attract both local and foreign investors due to higher demand for goods.
In their 2022: Emerging Trends in Real Estate report, ULI and PwC said 344 respondents found that the increasing popularity of logistics as an emerging class was due to a confluence of several factors, such as: B. Structural undersupply of high value assets, development of increasingly sophisticated supply chains and the rapid growth of e-commerce retail.
“In fact, the market is also hoping for logistics companies to enter the REIT market as there is tremendous growth potential there in the coming years,” Villegas said during the webinar.
Sheryll Verano, senior vice president at Arthaland Corp., added that logistics-related assets will also be popular with potential investors as the economy is expected to continue rising this year.
“I think we haven’t seen the full offering of REITs for traditional assets yet,” she said.
Leonides Intalan, head of consumer credit group at Asia United Bank, said renewable energy such as solar and data centers are the industries to watch as more companies implement sustainable programs and respond to the explosion of data, as more companies are expected to boost their digital capabilities.
Intalan also said data centers will grow as internet is expected to increase in Asia-Pacific due to pandemic-related issues such as the work-from-home program and e-commerce shopping.
The three panellists agreed that health care has become an important part of development planning projects as people value their health and well-being.
Rick Santos, Chairman and CEO of Santos Knight Frank (SKF) and moderator of the webinar, is also optimistic about the prospects for the local real estate sector this year.
“We see a year of opportunities for multiple real estate sectors, including industrial and logistics, REITs and office. Niche markets such as data centers, healthcare and renewable energy also show promise in 2022 and post-pandemic,” said Santos.
“The office sector will continue to have staying power in the real estate sector as companies in markets like the United States and Australia continue to cut costs by outsourcing in the Philippines. Demand from the IT BPO sector will benefit not only Metro Manila but also the secondary cities as companies diversify their locations.”
From a capital markets perspective, SKF sees a significant volume of real estate transactions flowing into the country this year, driven by pent-up demand for acquisitions from both foreign and local investors. Santos said REITs will continue to be on the radar for fresh capital.
“We expect future REIT portfolios to become more diversified to include both traditional and non-traditional assets,” he said.
Nonetheless, the ULI and PWC report noted that developing markets like the Philippines will continue to face real estate capital flow challenges caused by the Covid-19 pandemic.
“The expectation is that we’ll get out of this down cycle fairly soon, but from a foreign investor perspective, we haven’t been on the radar yet. If you look at the neighboring countries, many of them are moving into the recovery phase and their user demand fundamentals are back now. But as of today, I don’t see many of those on the horizon,” said a Manila-based expert.
