Posted on
June 29, 2015 10:32:00 PM [ BusinessWorld Online ]
PHILIPPINE
developers are expanding into industrial estates as the government moves to
make the nation a car-manufacturing hub have sparked interest from Japanese
automakers.
THE entrance
gate to the First Philippine Industrial Park is shown in this photo. The
country’s largest builders are expanding industrial estates amid demand from
Japanese automakers following a government move to grant more incentives to the
car industry, Bloomberg reported yesterday. -- WWW.FPIP.COM
“We haven’t
seen this kind of interest from Japanese companies since the mid-1990s,” said
Rick M. Santos, chairman of CBRE Group, Inc. in Manila. “The industrial sector
gets a boost from robust foreign demand.”
That is
attracting builders such as Ayala Land, Inc. and Megaworld Corp., which are now
developing industrial properties to diversify their portfolios, recognizing the
increasing demand for industrial space, said Antton Nordberg, head of research
at KMC MAG Group, Inc., Savills Plc’s Manila associate.
President
Benigno S. C. Aquino III met business groups in Japan this month, after policy
makers on May 29 approved tax incentives for automakers to support production
of new car models in the country.
These are
meant to help stimulate an economy growing at its weakest pace in three years.
“Japanese
manufacturers are closely looking at setting up shop in the Philippines,” said
Carmelo Maria Luza Bautista, president of GT Capital Holdings, Inc., the
Philippine partner of Toyota Motors Corp.
Japanese
companies including Toshiba Corp. and Seiko Epson Corp., enticed by cheaper
labor and real estate costs, have also expressed interest to expand operations
in the Philippines.
The average
annual rent in Philippine industrial estates is as much as $5 per square meter,
compared with China’s $7, according to data from CBRE.
Ayala Land,
the country’s largest builder by revenue, has at least 100 companies in its
244-hectare manufacturing hub south of Manila, company Vice-President Maria
Rowena M. Tomeldan said.
Commercial
space in Megaworld’s first industrial estate, unveiled last year, is sold out,
while half of the industrial lots in the 350-hectare area south of Manila have
been sold, the company said in an e-mail reply to questions. Tenants are mostly
Japanese and Chinese manufacturers.
About 14
Japanese companies agreed last year to locate in an industrial estate
partly-owned by Tokyo-based trading house Sumitomo Corp. and partner First
Philippine Holdings Corp., the Manila-based company said in its annual report.
The
Philippines wants a larger share of Japanese companies leaving China. After his
visit to Japan, Mr. Aquino said that 11 Japanese companies signed letters of
intent to invest or expand operations in the country.
LAND BANKING
CBRE
estimates industrial rent in the next two years will rise at a slower pace than
the country’s inflation rate -- forecast at 2.5% next year -- as developers
keep prices low to attract more locators.
“Right now,
it’s a price war,” said Jan D. Custodio, head of CBRE’s global research and
consultancy in Manila.
Philippine
industrial parks sit on former US bases and rice fields that have been turned
economic zones north and south of the capital.
Ayala Land
expects all plots at a 31-hectare industrial estate north of Manila to be
“fully sold out within the second quarter” after it was unveiled in January,
Ms. Tomeldan said.
First
Philippine may expand its industrial park to 2,000 hectares from the current
450 hectares, the Philippine Star reported on May 26, citing President Elpidio
L. Ibañez. It will invest more than 1 billion pesos ($22 million) to expand,
according to its annual report.
Despite
cheaper labor and property costs, logistics costs are high in the Philippines,
KMC MAG’s Mr. Nordberg said.
Investing in
industrial estates in the also is complicated by manufacturing logjams and poor
infrastructure.
Vista Land
& Lifescapes, Inc. President Paolo A. Villar said the company doesn’t plan
to expand in the sector because while manufacturing is improving, it’s still
hampered by expensive power costs.
Still,
“industrial property provides a good diversification opportunity by presenting
diversified tenant, credit profiles, geography and industries to maximize
returns,” Claro dG. Cordero, Jr., head of research and valuation at real estate
advisory firm Jones Lang La Salle, said. -- Bloomberg
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