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Market Intelligence | Philippines July 14, 2021

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DoubleDragon, Jollibee sign P3.97-B deal for CentralHub expansion, eye PH’s first industrial REIT
NEWS

DoubleDragon and its industrial leasing unit CentralHub Industrial Centers Inc. have signed a PHP3.97 billion (USD82.7 million) deal with Jollibee Foods Corp. (JFC) to create the Philippines’ first and largest industrial real estate investment trust (REIT). Under the agreement, Jollibee is set to acquire common shares of CentralHub and infuse its 16.4 hectares (40.5 acres) of industrial properties currently used as commissaries. The additional commissary assets will increase CentralHub’s total industrial land portfolio to 39.8 hectares (98.3 acres). CentralHub currently has a portfolio of industrial warehouse complexes which are utilized as commissaries, cold storage facilities, and logistics distribution centers.

RESEARCH VIEW

In our view, the launch of REITs in the Philippines can help boost economic performance and put the country’s real estate sector at par with neighboring Asian countries, which have more mature capital markets. Colliers sees the industrial sector thriving further as we see the growth of e-commerce and completion of key infrastructure projects across the country. In our opinion, developers can better capture opportunities by modernizing logistics facilities. Colliers believes that developers should refurbish their warehouses to meet the demands of tenants and ensure the smooth and cost-efficient system of transferring goods from logistics facilities to markets and households. We also encourage investors to consider diversifying their industrial assets into REITs to access a cheaper source of capital in upgrading properties. This project should signal the start of a more diversified REIT market in the Philippines.

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Infrastructure spending doubles to P39B in May
   

NEWS

Data from the Department of Budget and Management (DBM) showed that government infrastructure spending reached PHP78.9 billion (USD1.6 billion) in May 2021, 102.5% higher than the PHP38.9 billion (USD810 million) spent in May 2020. The growth is attributed to the infrastructure projects currently being implemented by the Department of Public Works and Highways (DPWH) nationwide. In 5M 2021, total infrastructure disbursements amounted to PHP332.3 billion (USD6.9 billion), 41.3% higher than the PHP235.2 billion (USD4.9 billion) recorded during the same period in 2020.

RESEARCH VIEW

In 2021, the government plans to spend about PHP1.02 trillion (USD20 billion) for infrastructure projects. This is 47% higher than the 2020 spending of PHP681 billion (USD14 billion). The 2021 infrastructure spending budget will likely account for about 5.1% of the country’s GDP. Colliers believes that infrastructure projects are likely to improve accessibility and connectivity and raise property prices and land values. We recommend that developers closely monitor the upcoming infrastructure projects likely to be completed from 2021 to 2022 such as the Estrella-Pantaleon Bridge, Cavite-Laguna Expressway (CALAX), Skyway SLEX Extension, NLEX-SLEX Connector, and the MRT-7 project.

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Duterte, in about-face, wants POGOs back to augment pandemic war chest

NEWS

President Duterte said that he wants online casinos and gambling activities to return to generate more revenues for the government. Earlier, some POGOs left the country due to the license fees, 5% franchise tax, and income taxes imposed on POGO workers. Data from the Philippine Amusement and Gaming Corporation (PAGCOR) show that about 31 out of 40 POGOs remain in the country and are allowed to resume operations. This is down from the 61 POGOs operating pre-pandemic.

RESEARCH VIEW

 In Q1 2021, office transactions in Metro Manila reached 157,000 square meters (1.7 million square feet), down from the 241,000 square meters (2.6 million square feet) posted in Q1 2020. POGO transactions accounted for 16% or 25,000 square meters (269,000 square feet) of office deals in Q1 2021, down 67% from the 76,000 square meters (818,000 square feet) posted in Q1 2020. As of Q1 2021, office space vacated by POGOs already reached 447,000 square meters (4.8 million square feet) from only 314,000 square meters (3.4 million square feet) as of the end Q4 2020. Colliers recommends that landlords continue offering PEZA-proclaimed spaces vacated by POGOs to occupants with immediate space requirements. Landlords should also target tenants from continuously growing industries such as health information management and e-commerce to help maintain stable occupancies of their buildings.

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Joey Bondoc

Associate Director

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Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

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Martin Aguila

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Martin Aguila graduated in February 2019 from the De La Salle University with a degree in AB Economics. He joined Colliers Philippines in the same month and works as an analyst under the Research department. He has presented in several property market briefings with developers and investors and has assisted in the preparation of reports related to property such as Market Intelligence, GDP Flash, Quarterly Market Updates and Radar Reports. He also helps the team maintain and develop databases.

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