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Radar Report: Property Upside Down South

The Cavite-Laguna-Batangas corridor is the Philippines’ primary industrial hub. The area continues to attract new and expanding manufacturing tenants.

The Cavite-Laguna-Batangas corridor is the Philippines’ primary industrial hub. The area continues to attract new and expanding manufacturing tenants. The region’s competitiveness as an industrial hub should further be enhanced by the infrastructure projects lined up by the government. These factors have also been enticing developers to build integrated communities and standalone residential projects to cater to rising demand in the region.

With continued interest in the area for industrial and residential investments, Colliers encourages developers to:

• Carve out space for industrial parks within townships
• Align industrial expansion plans with the government’s infrastructure program
• Modernize warehouses
• Implement strategic landbanking
• Expand township projects
• Further differentiate features of integrated communities
• Complement industrial parks with socialized and economic residential projects.

Colliers believes that robust industrial activities in the corridor are likely to continue over the next 12 to 24 months. With improving infrastructure connectivity and growth of commercial activities, we see the region also becoming a hotbed for township developments that feature residential projects. The industrial and infrastructure investments that support township development should further raise the CALABA region’s stature as a commercial business district outside Metro Manila.  

What should sustain residential demand in Southern Luzon? 

Aside from thriving industrial activities and the lure of improved infrastructure connectivity in Southern Luzon, Colliers believes that sustained regional economic growth, an influx of offshore gaming firms, and continued overseas worker remittance inflows should further propel residential demand in the Southern Luzon region.

Strong regional growth 

The Southern Luzon region’s (including Cavite, Laguna, and Batangas) economy, has been expanding by about 6.3% per year from 2016 to 2018. This makes Southern Luzon one of the fastest growing regions in the Philippines. The region’s economy is primarily driven by industrial activities, accounting for 54%of the region’s annual economic output. While industrial parks in the region benefit from robust manufacturing activities, another segment that captures the region’s economic gains is the property sector. This is shown by continuous growth in residential launches and take-up in the CALABA corridor. Colliers believes that sustained regional economic growth should further drive demand for properties in the area. 

Philippine Offshore Gaming Operators (POGOs) 

Offshore gaming firms from China have been dominating office space absorption in Metro Manila. The relentless growth of these firms is one of the reasons why they have started to occupy space in the capital region. With tight vacancy conditions in Metro Manila, these firms have started to occupy office space in Cavite and Laguna and this demand should spill over to the residential sector. We remain optimistic that POGOs are to continue to lead office space take-up over the next two to three years, especially with continued efforts from lawmakers to legitimize their operations.

Overseas Filipino Workers (OFWs)

Government data show that the Southern Luzon region remains a major source of overseas Filipino workers (OFWs). The region accounted for 18% of total OFWs as of 2018. This makes the corridor highly feasible for residential projects (house and lot or condominium units) that cater to the end-user market due to the large remittances. This explains why several horizontal projects posted take up rates of between 95% and 100% despite being launched only in 2017.