The Philippines’ industrial and logistics sector will be transformed as the country’s e-commerce industry creates a new type of demand from occupiers. This will be driven by strong urban population growth, youthful demographic which are highly digitally connected, supporting domestic consumption across the Philippines.
This was revealed by JLL, the country’s premier real estate consultancy firm, during its first logistics real estate focused summit, “A Compelling Case of Logistics Development: Philippines,” which was recently held in coordination with the Urban Land Institute.
JLL Philippines’ Director for Industrial and Logistics, Tom Over, shared that Southeast Asia is considered a significantly large and growing consumer market, with its current population of approximately 660 million generating an economy worth USD 6.7 trillion in 2018.
A large social media presence has led to the popularity of mobile shopping. Google and Tamasek are predicting a ten-fold growth in e-commerce over the period 2015-2025 in the Philippines. This surge in e-commerce and shift to convenience has created an extensive demand for logistics services that has created an enormous opportunity in supply chain expansion both on a national and regional scale.
“While logistics performance in Southeast Asia continues to improve, logistics providers in the region have to develop, innovate, evolve, expand, and progress in order to keep up with the demands of the e-commerce and logistics industries,” said Over.
Impact of growth on logistics and real estate
JLL recognizes that in order to sustain the growth of the Philippine manufacturing and retail industries, there needs to be an effective industrial and logistics sector that can provide suitable support services for businesses throughout every link of the supply chain.
In a rapidly evolving marketplace, seamless and reliable infrastructure and data are needed for logistics to be efficient and effective. Future logistics and distribution require the proper real estate development, strategy, location and facility type that suits advanced supply chain functions.
Over said that companies are investing in their supply chains, reorganizing their networks across the Philippines requiring larger, higher quality facilities to operate.
JLL believes that this provides an opportunity for investors to diversify into industrial real estate development which provides different income profile compared with other asset classes, lower capital expenditure, and future conversion to commercial uses.
Over added that the adoption of technology is another way to cope with the many logistics challenges and demands of the fast-growing Philippine consumer market.
“Property technology or PropTech can be applied to map out logistics and distribution prospects to show where future growth will be in light of the infrastructure projects,” said Over. “JLL believes in the potential of PropTech, and so the company invested in a technology called MapIT, which is an interactive map that delivers real-time, forward-thinking, and accurate location-based data and analytics in support of real estate location and investment decisions.”
Christophe Vicic, JLL Philippines Country Head, added: “Industrial and logistics real estate has evolved across the globe and investors are putting up large sums of capital to chase these types of products. From our end, JLL is committed to help investors navigate through the rapidly evolving industrial and logistics market so they can make the most sound real estate investment possible.”