Semi-annual | Manila | 02 February 2023

Opportune time to pump prime

Philippines sustains manufacturing luster as
sunshine industries, new trade blocs emerge

Insights & recommendations

The Philippines is receiving renewed interest from Japanese manufacturers. The Philippine
government has also received investment commitments from other major trade partners and
these pledges should receive a boost from trade deals likely to be ratified by the Philippine
senate. Over the past 12 months, we also saw major investments being funneled into food
manufacturing, e-commerce, and logistics segments. The development of new industrial parks
and facilities in central and southern Luzon should provide potential locators with more options
and opportunities to haggle for more attractive land leasehold and warehouse lease rates.
Colliers recommends that developers to explore sunrise industries such as electric vehicles (EVs),
a new priority of the Philippine government. We also encourage developers to closely track the
progress of the Philippine Development Plan which covers the development of more ecozones.
2023–27
H2 2022 Full Year 2023 Annual Avg
In 2022, industrial demand was led by FMCG,
3PLs, e-commerce, and agro-industrial
locators. We expect these segments to 122 ha 170 ha 60 ha
Demand
dominate take-up in the next 12 months.
Colliers sees the delivery of 132 ha (326 ac)
of new industrial supply in CALABA in 2023
with the completion of three industrial parks 63 ha 132 ha 26 ha
Supply
in Batangas and Laguna.
Annual Avg
HOH/ YOY/ Growth 2023–27/
End H2 End 2023 End 2027
Colliers recorded a marginal increase in land
leasehold rates in H2 2022 as e-commerce
+4.3% +1.5% +1.3%
and logistics firms took up space. In 2023,
we expect continued rise in warehouse lease
Rent PHP85 PHP86 PHP91
rates with the potential expansion of semi-
conductor firms.
Colliers expects vacancy to decline in 2023
as manufacturing investments materialize
-1.5pp -1.0pp -1.0pp
and take-up space. Among the firms likely to
occupy space in the next 12 months include
Vacancy 5.7% 4.7% 4.7%
chemicals and automotive manufacturers, as
well as transport and logistics companies.
Source: Colliers
Note: USD1 to PHP55 as of the end of Q4 2022. 1 sq m = 10.76 sq ft; 1 ha = 2.5ac; pp = percentage point. Data in the table above represents land
leasehold rates. FMCG = Fast-Moving Consumer Goods. 3PLs = Third-Party Logistics. CALABA = The Cavite, Laguna, Batangas corridor.
1
“The Philippine government is working on reviving the manufacturing as one of the major pillars of
the country’s economic revival. No less than President Marcos has ordered the development of the
country’s manufacturing abilities, and this should benefit the industrial sector in general. Over the
near to medium term, the sector’s growth is likely to be supported by investments from new trade
deals and the emergence of new industries including the electric vehicle (EV) industry. In our view,
Investment Promotion Agencies (IPAs) need to further improve the country’s manufacturing
competitiveness and business environment to entice more industrial locators.”
Joey Roi Bondoc
Director, Research

Recommendations PEZA has also identified at least 13 new types of

Diversification is key
Property firms should consider developing
industrial parks and facilities that will cater to a
wide gamut of locators. Colliers believes that this
direction is important if developers want to
capture industrial locators from various
industries including fast-moving consumer goods
(FMCG), automobile parts, electronics, and
logistics. These segments recently captured big-
ticket investments from locators that took up
industrial spaces in central and southern Luzon.
Upcoming locators
Central CALABA
Luzon
Pampanga
Bulacan
Manila
Cavite Laguna
Batangas
Source: Colliers
The development of more economic zones is
part of the Philippine Development Plan (PDP)
2023 to 2028 crafted by the Marcos
Administration. In our view, this supports the
government’s push for industrialization which in
turn should benefit industrial parks and facilities
across the country.1 Recently, the Philippine
Economic Zone Authority (PEZA) approved the
creation of 29 new economic zones in the
country, most of which are industrial estates.
1Peza cheers inclusion of ecozones in PH development plan 2023-
2028
ecozones, including e-commerce zones, biotech
centers, defense industrial complexes, halal and
food production hubs, and jewelry parks, among
others. Colliers believes that developers can
maximize opportunities by actively participating
in overseas investment promotion missions
mounted by IPAs such as PEZA. These events
should urge developers to highlight the
Philippines’ strength as a manufacturing hub as
well as the advantage of locating in economic
zones.
Upcoming industrial supply, 2023-2024
North-Central Luzon
243 ha
Upcoming Industrial
Supply (2023-2024)
Metro
Manila
CALABA
(Cavite-Laguna-Batangas)
Upcoming Industrial
132 ha
Supply (2023-2024)
Source: Colliers
Refocus on electronics and key trade
partners
Data from the Philippine Statistics Authority
(PSA) show that in 9M 2022, electronic products
accounted for about 62% of total Philippine
exports. Colliers believes that this sub-segment is
likely to influence industrial space absorption
especially in the CALABA region in 2023.
The Joint Foreign Chambers of the Philippines
(JFC) is targeting to generate USD128 billion
(PHP7.0 trillion) of foreign direct investment (FDI)
from 2021 to 2030. According to JFC, expected
investments will be driven by the manufacturing
and energy sectors. Manufacturing investments
will likely come from the expansion of
semiconductors and electronics firms.2
The Congress is currently looking at improving
tax incentives under the CREATE (Corporate
2JFC eyes $128B in FDI by 2030
2
Recovery and Tax Incentives for Enterprises) Law
to boost the competitiveness of the country’s
semiconductor manufacturing industry. In 2021,
the electronics, electrical products, and
semiconductors manufacturing segments
received PHP364.3 billion (USD6.6 billion) in tax
incentives.3
PEZA also disclosed that Japanese investors
remain keen on investing in the country. As of
8M 2022 Japan, a key trade partner of the
Philippines, accounted for 27% of total PEZA-
approved investments. PEZA expects the
expansion of Japanese locators particularly in the
chemicals, automotive, computer and optical
products, and transport and logistics industries.4
CALABA still preferred by
manufacturing firms
In H2 2022, we recorded vacancy in the CALABA
corridor dropping to 5.7% from 7.2% in H1 2022.
Take-up was mainly driven by e-commerce and
logistics firms, as well as a home improvement
retailer. Colliers believes that industrial parks in
CALABA continue to be preferred by expanding
manufacturing firms in the country. Indonesian
ice cream manufacturer AICE recently disclosed
that it will open a plant in LIMA Estate in
Batangas, its largest in the ASEAN region.5
Japan’s Kurabe International is also building a
manufacturing facility inside LIMA Estate which
will break ground in 2024.6 Meanwhile, consumer
goods manufacturer Unilever will launch its new
manufacturing facility in Cavite in Q1 2023.7
Vacancy in CALABA
Region IV-A H1 2022 H2 2022
Cavite 8.0% 6.5%
Laguna 5.8% 4.3%
Batangas 7.8% 6.3%
Average 7.2% 5.7%
Source: Colliers
IHS Markit reported that the Purchasing
Managers’ Index (PMI) of the Philippines reached
53.1 in December 2022. This is the 11th
consecutive month the headline index was above
the 50-neutral mark, signifying an expansion in
manufacturing activities. In our view, the
improving manufacturing competitiveness
should result in the inflow of more foreign
investments. Data from PSA show that
3SEIPIsees slower growth this year; 4PEZA sees Japanese locators
continuing to drive ecozone growth; 5Indonesia’s ice cream maker
builds its biggest plant in PH; 6Japan’s Kurabe plans P2-B plant in
LIMA Estate — AIC; 7Unilever, EU firms pledge billion-peso
investments to PBBM
manufacturing accounted for 27% of the total
PHP68.3 billion (USD1.2 billion) approved foreign
investments in 9M 2022. Colliers believes that
these investments should benefit industrial
parks in CALABA and Central Luzon once they
materialize and start taking up industrial space.
According to PSA, close to 80% of the approved
investments were funneled into the
CALABARZON+ and Central Luzon regions in 9M
2022.
The Regional Comprehensive Economic
Partnership (RCEP) is touted as the world’s
largest trade and investment agreement. To
capture benefits especially for the country’s
manufacturing and exports sector, the Trade
department is hoping that the Philippine senate
will ratify the trade agreement this year.8
The trade agreement aims to raise Philippine
exports through the reduction of tariff rates and
other trade costs. RCEP covers about 50.4% of
the country’s export market, and 58% of total
FDIs.9 The country’s electronics, automotive, and
industrial equipment sectors are also likely to
benefit from stronger ties with key
manufacturing markets such as Japan, China and
South Korea.
Warehouse and land lease
rates rebound
In H2 2022, Colliers recorded warehouse lease
rates growing by 4.0% HOH, after dropping by
3.8% in H1 2022. Meanwhile, land leasehold
rates increased by 4.3% in H2 2022. Colliers
expects land leasehold and warehouse lease
rates to increase by 1.5% and 5.8%, respectively,
in 2023, supported by robust demand from
existing as well as new FMCG, 3PLs and e-
commerce firms in central and southern Luzon.
We are seeing rising interest from EV
manufacturers looking for industrial space.
During his trip to China in early January 2023,
President Marcos invited manufacturers of EVs
to invest in the Philippines.10 The demand for EVs
should be supported by President Marcos’
approval to remove tariffs on EVs and their
parts.11
+CALABARZON – Cavite-Laguna-Batangas-Rizal-Quezon; 8DTI pins
hopes on Senate for RCEP approval in early 2023; 9NEDA pushed
for RCEP agreement; 10‘Concessions’ for China EV makers eyed;
11Philippines to cut tariffs on electric vehicles, parts
3
For further information, please contact:

Joey Bondoc Richard Raymundo

Director | Research | Philippines Managing Director | Philippines
+63 2 8858 9057 +63 2 8858 9028
Joey.Bondoc@colliers.com Richard.Raymundo@colliers.com

Martin Aguila Brent Respicio

Senior Analyst | Research | Research Analyst | Research |
Philippines Philippines
+63 2 8863 4116 +63 2 8863 4197
Martin.Aguila@colliers.com Brent.Respicio@colliers.com

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