Industrial, logistics seen to lead property recovery

By Angelica Y. Yang

THE industrial and logistics sector — among the most stable real estate assets last year — would lead the recovery of the country’s property market in 2021, as the demand for e-commerce and coronavirus disease 2019 (COVID-19) vaccines rises, a real estate service provider said.

“Industrial and logistics will lead the recovery and will lead the renaissance and changes of the market. I think that’s driven by e-commerce, the (COVID-19) vaccine, and cold storage (demand),” said Rick Santos, chairman and chief executive officer of real estate provider Santos Knight Frank, Inc., in a media briefing on Wednesday.

Mr. Santos said that even before the pandemic, institutions in the region were already looking for investment opportunities in Southeast Asia’s industrial and logistics segment.

“I think that the market is only constrained by supply so there’s a large appetite for industrial and logistics locally but also for regional institution investments,” he said.


Kash Aristotle Salvador, the firm’s director for investment and capital markets, said during the briefing that warehouse demand would remain strong, and there would be an increase in cold chain solutions to accommodate the rollout of the COVID-19 vaccine.

“We see more venture capitalists have logistics and industrial warehousing space at the top of their priority list when it comes to looking for opportunities in the Philippines,” Mr. Salvador said.

“We’ve seen that happen last December 2020, where a venture capitalist has invested into a big logistics and warehousing company, and we feel that more and more of these companies will open up… (and) that would help the overall market,” he added.

In a press release, Santos Knight Frank described the industrial and logistics sector as the most stable asset class last year. It said that the adoption of e-commerce during the government-imposed lockdown had “important implications” on the growth of industrial and logistics.

“Santos Knight Frank expects the capital market for the industrial and logistics segment to become more sophisticated as venture capitalists and investment firms place the sector high on their list,” the group said in a statement.

The firm said that the country’s property market would exhibit a “soft rebound this year,” with key sectors such as industrial and logistics, office and residential showing signs of recovery.

The group added that the country’s office market would fare better than last year, but it is unlikely to immediately return to pre-pandemic levels.

“While COVID-19 forced occupiers to adopt remote work setups and increased Metro Manila’s vacancy to 9.8% in 2020, the office sector may see a gradual return by tenants to the physical workplace this year,” Santos Knight Frank said.

It added that business process outsourcing firms are expected to continue looking for new locations for expansion and office rightsizing in 2021.

Meanwhile, the residential market is targeted to rebound slowly but steadily, with the sector leaning in favor of buyers.

“Santos Knight Frank anticipates more opportunities for residential buyers with better deals in terms of price and payment terms. For instance, developers have extended flexible payment schemes to drive demand and, in terms of financing, more competitive interest rates from the banks will also be key in encouraging homebuying,” the group said.


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