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Market Intelligence | Philippines December 1, 2021

Cold storage facilities, Retail real estate, SM City Grand Central, Industrial real estate

This week, Colliers Research provides insights on the joint venture agreement between AC Logistics and Glacier Megafridge Inc. and the growing cold storage sector; a new SM mall in Caloocan and the current state of the retail sector; and Aboitiz Infracapital allotting 2022 CAPEX of PHP120 billion to expand its industrial estates and digital infrastructure business.

 

AC Logistics, Glacier Megafridge to build cold storage facility

SUMMARY

AC Logistics Holding Corp. and Glacier Megafridge Inc. signed a joint venture agreement to construct and operate a cold storage facility in Cagayan de Oro. The facility would preserve and prolong shelf life of both local and imported meat and poultry, fish catch, and farm produce from traders. The facility is scheduled to open in 2022 and will cater to local and multinational companies in Northern Mindanao.

RESEARCH VIEW

Data from the Philippine Statistics Authority showed that the share of warehousing and storage to total Gross Value Added reached 34.3% in H1 2021, up from 33.6% year-on-year. In our opinion, demand for cold storage facilities will likely hinge on the growth of grocery and perishable food item deliveries. To meet the growing demand for e-commerce as well as online groceries, Colliers recommends that developers continue modernizing their warehouses and construct more cold storage facilities. We also recommend that industrial park developers eye parcels of land in viable locations in Northern-Central and South of Luzon such as New Clark City and CALABA (Cavite–Laguna–Batangas) region. The upcoming infrastructure projects in these areas should raise the attractiveness of these locations for manufacturing and warehousing and logistics investments.

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SM opens SM City Grand Central

SUMMARY

SM Prime Holdings recently opened SM City Grand Central located in Caloocan. The new mall has six floors with a gross floor area (GFA) of 116,000 square meters (1.2 million square feet), and 700 parking slots. SM City Grand Central is already 70% leased, housing several local and international brands, including The SM Store, SM Supermarket, Watsons, Miniso, Uniqlo, Crocs, Levi’s, Surplus Shop, ACE Hardware, and Pet Express, among others. The mall also features an indoor park called The Skylight Park which offers al-fresco dining.

RESEARCH VIEW

In 2021, Colliers sees the completion of about 137,000 square meters (1.5 million square feet) of leasable retail space, up 158% from the 53,100 square meters (571,400 square feet) in 2020. From 2021 to 2024, we see the annual completion of about 300,900 square meters (3.2 million square feet), up from our previous forecast of 291,000 square meters (3.1 million square feet) annually. Over the next 12 to 24 months, we recommend mall operators to be cautious of new supply. Developers should assess upcoming supply in anticipation of recovery in consumer spending and easing of quarantine restrictions. Colliers also encourages developers to reevaluate development plans by building more compact or district neighborhood malls (with leasable space of less than 50,000 square meters), which should serve immediate needs of consumers.

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Aboitiz InfraCapital eyes P20B capex in 2022

SUMMARY

Aboitiz Infracapital Inc. has allotted PHP120 billion for its capital expenditure in 2022, as it plans to expand its industrial estates and digital infrastructure business. It is also rebranding its economic centers to “economic estates,” namely, LIMA Estate, Mactan Economic Zone 2 Estate, and West Cebu Estate. The change comes as expansion plans for LIMA and West Cebu Estate are underway, which are expected yield up to 89,000 jobs combined. Aboitiz stated that it plans to further grow its business by eyeing project opportunities in industrial development, water, digital infrastructure, and transport sectors.

RESEARCH VIEW

Colliers believes that the growth of industrial sector beyond 2021 will hinge on the sustained demand in domestic manufacturing, e-commerce, and logistics across the country. Data from the Philippine Statistics Authority show that the manufacturing, transportation, and storage sectors covered 65% of total approved investments in 2020, from only 11% in 2019. We encourage developers to remain proactive in acquiring parcels of land that can be developed into industrial parks and in refurbishing existing assets to meet the growing demand for modern warehouses and other logistics facilities.

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