Industrial logistics, data centers, renewable energy and real estate investment trusts (REITs) are going to be the bright spots in the country’s property sector this year, according to leading executives in consumer banking and real estate asset management.
In a recent webinar organized by the Urban Land Institute and Price Waterhouse Coopers (PwC), PwC Philippines Executive Director Raoul Villegas said the logistics industry will continue to attract both local and foreign investors due to higher demand for goods.
In its “2022: Emerging Trends in Real Estate report,” ULI and PwC said 344 interviewees noted that the rising popularity of logistics as a rising class could be attributed to the convergence of several factors, such as structural undersupply of high-quality assets, evolution of more sophisticated supply chains, and the rapid growth of e-commerce retailing.
“In fact, the market is also hoping logistics companies go into the REIT market as there is a huge potential for growth in the coming years,” Villegas said during the webinar.
Sheryll Verano, senior vice president at Arthaland Corp., added that logistics-related assets are also going to be popular for potential investors as the economy expects to further upon up this year.
“I think we haven’t seen the full offering of REITs for traditional assets,” she said.
Leonides Intalan, head of consumer loans group at Asia United Bank, said renewable energy such as solar power and date centers are the industries to watch as more companies will implement sustainable programs and respond to the explosive growth of data as more companies are expected to boost their digital capabilities.
Intalan also said data centers will experience growth as internet in Asia Pacific is expected to rise due to pandemic-related issues, such as the work-from-home scheme and e-commerce shopping.
The three panelists agreed that healthcare emerged as an important component of development planning projects as people will premium on their health and wellbeing.
Rick Santos, Chairman and CEO of Santos Knight Frank (SKF) and the 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 several real estate sectors, including industrial & logistics, REITs, and office. Niche markets such as data centers, healthcare, and renewable energy also show a lot of promise in 2022 and post-pandemic,” Santos said.
“The office sector will continue to have staying power in the real estate sector as companies in markets, such as the United States and Australia, continue to cut back on costs by outsourcing in the Philippines. Demand from the IT-BPO sector will benefit not just 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 deals flowing into the country this year, driven by pent-up demand for acquisition by both foreign and local investors. Santos said REITs will continue to be on the radar to raise fresh capital.
“We expect to see future REIT portfolios to become more diversified to include both traditional and non-traditional assets,” he said.
Nevertheless, the ULI and PWC report noted that developing markets like the Philippines will still face challenges in capital flows into real estate brought about by the Covid-19 pandemic.
“The expectation is we’re going to get out of this down cycle pretty soon, but from the perspective of foreign investors were not yet on the radar. If you look at the neighboring countries, a lot of them are moving into the recovery phase, and their fundamentals are now back in terms of occupier demand. But from where we are at the moment, I don’t see a lot of them in the horizon,” said one Manila-based expert.