We all know that Lazada, Shopee, and Zalora are few of the biggest online platform that is continuously attracting customers from around the country. Some shoppers stopped going to malls because the growing e-commerce has so much to offer such as lower prices, more options that can be viewed anytime, and the convenience of delivery. Speaking about the boom of e-commerce, as an investor who is interested in the real estate industry here in the Philippines, it’s time for you to know that the logistics sector is expected to be the next hype here in the country as more doors of opportunities opened for developers like Ayala.
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Study shows that logistics is growing together with the property market and our economy. And as the players of the market surge the values of the land, the challenges in transportation, and the competition growth when it comes to formulating strategies, logistics is going through a significant transformation. As a matter of fact, there are brand new regional areas that are becoming a logistics combat zone. And though these regional locations seem to be miles away from the Metro, the improvement of accessibility and realization of infrastructure scheme back up these battlegrounds.
It is true that the top conglomerates here in the country started to build their industrial estates and ventured into the logistics sector. One good example is Ayala Land Inc. (ALI). ALI is developing its warehouse facilities and industrial parks via Prime Orion Philippines, Inc. (POPI). Considering ALI’s acquisition of POPI, the logistics subsidiary is now called the Ayala Land Logistics Holdings Corporation. To add, ALI started to break the ice for its Laguindingan Technopark costing P172-billion and located in Cagayan De Oro. Apart from ALI, big companies such as SM Investment Corporation, Metro Pacific Investment Corporation, JG Summit, Inc. and Filinvest Land, Inc. play a big part in the logistics sector.
While there is a growing market for logistics, the challenges this sector face should be watched for, especially the land values in Metro Manila. Since there is a land value hike, the price per SQM of industrial lands in the areas in Makati and Mandaluyong is now at P250,000 while P10,000 per SQM in Taguig, Valenzuela, and Muntinlupa. Lease rates have also gone up from P400 to P650 per SQM in Makati and Mandaluyong, from P200 to P350 per SQM in Las Piñas, Parañaque, and Muntinlupa, and from P150 to P250 per SQM in Quezon City and Valenzuela. Because of this, the ideal percentage of rate of return, which is at 15% for a traditional warehouse business model, is getting harder to achieve.