Developers urged to grow industrial segment to attract foreign expansion

Property developers must consider expanding their presence in the industrial segment to attract foreign companies diversifying their supply chains, property consultancy Colliers Philippines said.

In its first half Metro Manila Industrial Report, Colliers said China and Taiwan companies that have shown interest in expanding here.

“The Philippines needs an efficient supply chain system to capture investments amid Trump’s new tariff impositions,” Colliers said.

“This is also crucial in future-proofing the industrial sector, enabling the Philippines to attract foreign direct investment amid challenges posed by elevated tariffs.”

US President Donald J. Trump in July imposed a 19% tariff on exports from the Philippines, Cambodia, Malaysia, Thailand and Indonesia.

According to Colliers, property firms must consider developing industrial parks and facilities to cater to more locators. It also cited opportunities to expand in Central Luzon, which hosts high-value manufacturers in industries like pharmaceuticals, fiber cement products, tire, and semiconductor segments. 

In Central Luzon, Colliers projects 900 hectares of new industrial space to be delivered between 2025 through 2028.

“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 said.

For the second half of the year, semiconductors, consumer goods, cosmetics, and automotive firms are expected to drive demand in the industrial segment.

“Industrial space absorption should partly be supported by Chinese and Taiwanese firms expanding in the Philippines. Colliers sees the Philippines likely benefiting from the China+1 strategy,” according to the report.

The China+1 strategy refers to China-based companies diversifying their production operations to add more sites.

Colliers also cited the potential of ‘sunrise industries’ such as electric vehicles (EVs), as it expects more interest from EV firms looking for an industrial base in the region.

“Over the near to medium term, the Philippine government should entice other thriving sectors such as pharmaceutical firms and encourage them to manufacture in the Philippines,” it said.

Source: Business World

Green is good: Why more developers eye green certifications for buildings

Philippine property developers are increasingly seeking green certifications for office buildings not only because of government energy mandates but also rising demand from multinational companies.

It’s no longer uncommon to find developers touting the sustainable features of their new office buildings, which have received certifications like Leadership in Energy and Environmental Design (LEED), Building for Ecologically Responsive Design Excellence (BERDE), Excellence in Design for Greater Efficiencies (EDGE) and WELL Building Standard.

To get a green building certification, a project must meet certain environmental and sustainability standards. These usually ensure that a building meets high standards of energy efficiency, resource conservation, air quality, among others.

“We see the increase (in green certifications) because of the mandates by the government, such as the Department of Energy, to comply with the laws to Republic Act No. 11285 or known as the Energy Efficiency and Conservation Act,” Jess Niño H. De Villa, Head of Engineering, Energy and Environment of Knight Frank said.

The law requires Philippine businesses to monitor energy consumption, which is the top contributor to net-zero emissions.

“Certification helps ensure compliance with these requirements, avoiding potential fines or legal issues, making it a top reason for properties to adopt green certifications in the Philippines,” Mr. De Villa said.

Green certifications can make a big difference in attracting potential tenants.

“A green-certified building can be more attractive to potential tenants who prioritize environmental responsibility. Green certification can set a building apart, making it a preferred choice for tenants and investors who value sustainability,” he added.

As of now, 31.2% of the 8.5 million square meters (sq.m.) of existing office supply within Metro Manila have varying levels of LEED certifications, Mr. De Villa said.

He noted the NEO Property Management’s real estate portfolio in the Philippines was the first in the world to secure the International Finance Corp.’s (IFC) EDGE Zero Carbon certification. NEO’s entire portfolio is powered by Cleanergy, which delivers 100% renewable energy.

While the cost of securing green certifications can be costly, it can still be worth it for developers.

“In general, (the cost of the) certification is still quite low in terms of the savings that you can be able to gain and for the revenue,” Mr. De Villa said.

STRONG DEMAND

Demand for green certified buildings in the Philippines is also driven by multinational companies.

“It’s largely because of the Western companies and Western tenants moving to the country, requiring their buildings to be LEED certified. Their head offices in, let’s say, London and the US, have certain requirements for the office space that they need to occupy here,” Leechiu Director of Research Roy Amado L. Golez, Jr. said.

Mr. Golez said most of the newer buildings are compliant with green building standards, mainly because they don’t want to lose out on the tenants whose parent companies are based or headquartered in Western countries.

“It has become a must-have. If you don’t have it, your market might be smaller,” Mr. Golez said.

CBRE Philippines Country Head Jie C. Espinosa said global companies make green building standards a “first hurdle” when choosing office spaces.

“There are certain cases, that these occupiers consciously negotiate provisions in their contract, that down the road developers need to be proactive in providing sustainable features into their buildings,” Mr. Espinosa said.

Green leases, rental agreements where tenants and landlords set sustainability-related targets, benefit both parties by raising the value of the property and creating incentives for tenants.

Mr. De Villa said domestic companies also see green-certified office buildings as an ideal location for their operations, as they also seek to comply with evolving environmental standards.

He also noted that tenants that want to integrate sustainability in their operations are willing to pay premium rates to secure office spaces in buildings with green certifications.

ADOPTION HIGH IN METRO MANILA

Central business districts in Metro Manila have seen significant gains in green building adoption in recent years, CBRE Philippines Director of Advisory and Transactions Services Garri Amiel P. Guarnes said.

Based on CBRE data, the office segment in Fort Bonifacio has seen its green building adoption rate jump to 73% in 2024 from 63% in 2022.

For Alabang, the green building adoption rate inched up to 67% this year from 49% two years ago.

The green building adoption rate in Ortigas rose to 66% in 2024 from 42% in 2022, while in Quezon City, it went up to 45% in 2024 from 42% in 2022.

However, green building adoption in provincial locations is lower than in Metro Manila, Mr. Guarnes said.

“This was due to developers being more focused towards third-party outsourcers but moving forward, these companies or the clients they serve would implement their sustainability targets,” he said.

In Davao, 24% of the office stock is green certified, followed by Cebu with 23%, Iloilo with 16% and Pampanga with 8%.

However, Cebu is leading in terms of the rate of increase in adoption, Mr. Guarnes said.

In Cebu, 44% of the recent completions between 2020 and 2024 have green certifications, while 16% are still under application.

FIVE-STAR BERDE

For Aboitiz InfraCapital, Inc., its 800-hectare LIMA Estate in Lipa-Malvar, Batangas, is one of the strongest examples of a green-certified property.

“It’s been recognized as a five-star BERDE, which means it is implementing sustainable practices that are aligned with the global standards,” Aboitiz InfraCapital, Inc. Economic Estates Vice-President for Inventory Generation Group Jolan P. Formalejo said.

BERDE is a local green building system rating that was developed by the Philippine Green Building Council.

Mr. Formalejo said the developments inside the estate, such as the Outlets at Lipa and the LIMA Tower 1 were five-star BERDE certified in 2022.

LIMA Tower 1 holds a BERDE certification for environmental sustainability, and has pre-certification from the WELL Building Standard, which assesses features promoting health and well-being.

“Hopefully, once we start to operate LIMA Tower 1, all the tenants will appreciate the operational savings that they can achieve,” Mr. Formalejo said.

He said the Smart Water Network, wherein its water facilities turn into interconnected and intelligent systems, operated by LIMA Water Corp., resulted in 30% savings in operations and uptime of 99.3%. It is also less than 5% in terms of wastage of non-renewable water.

“Soon we will be developing our Tower 2. We’ll also gear up for these certifications,” he said, adding that The West Cebu Estate and Mactan Economic Zone 2 Estate are aiming for five stars this year.

Mr. Formalejo noted these green certifications make the locators feel secure knowing their business operates inside a sustainable development along with the assurance that all these facilities and systems are future proof.

Source: Business World

Luxury hospitality seen as growth niche for Philippine developers

Property consultants said residential oversupply could push more Philippine developers to pursue luxury hospitality projects.

“With over 7,000 islands, it has all the ingredients, but it seems that Philippine hotel developers are conservative,” Bill Barnett, founder and managing director of Thailand-based hospitality consulting group C9 Hotelworks, said in an interview.

Mr. Barnett, who has served as a consultant for various hotel and residential developments across the Asia-Pacific, said many of the Philippines’ hotels and resorts are “family-run, so they tend to look at the industry and do what their friends do.”

“If somebody does one thing, they all do it,” he added.

Mr. Barnett also noted that some hospitality developers tend to be “commodity minded.”

“Meaning, they think more is better. More rooms, more things… You can’t commoditize luxury because somebody else can come in and lower their prices,” he added.

He also noted the oversupply of condominium units in Metro Manila would prompt developers to shift to the luxury segment.

“I think, now with real estate being overbuilt, Philippine developers will have to find a niche,” he said. “The real estate situation in the country triggers more luxury…because of the oversupply.”

For a luxury hospitality development to be attractive, Mr. Barnett said it is important to have easy access to its location.

“You can’t stay there if you can’t get there,” he said. “There should be enough flights which make it attractive, not only for guests, but to transport staff, and even goods and services.”

He also noted that luxury hospitality properties must have a unique selling point, with many travelers seeking localized experiences. Mr. Barnett also cited the importance of unique food & beverage concepts, strong internet connectivity, and exclusivity of location.

Alfred Lay, director for hotels, tourism, and leisure at Leechiu Property Consultants, said there are over 35 luxury hotel projects ongoing in the Philippines, accounting for over 7,500 hotel rooms over the next four years.

“If you include projects which have yet to be announced, then the number climbs to 50 luxury hotels and adding over 10,000 high end room keys,” he said in a Viber message.

However, air access remains a key roadblock in making the Philippines a fully realized luxury destination, Mr. Lay said.

“If you’re a high-spend international traveler, you don’t want connecting flights just to get to your resort — you want to land straight into places like El Nido or Siargao. Where we’ve got international airports near tourist hubs, you’ll notice the luxury hotels follow, such as Mactan, Panglao Island, Boracay,” he added.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said luxury hotels are expected to perform well amid high occupancy rates and the entry of foreign hospitality brands into the country.

“Even if foreign arrivals to the Philippines dropped marginally in the first five months of 2025, there’s still a healthy level of occupancy, especially in Metro Manila hotels,” he said via telephone.

In the first half of the year, five-star hotel occupancies remained steady at 67% from the same period in 2024. This comes as foreign arrivals in the Philippines remain below pre-pandemic levels at 2.54 million as of end-May.

However, Colliers noted that the Philippines has a 4% penetration rate of branded hotels, way behind Singapore (45%), Indonesia (10%), and Thailand (8%).

“I think it will take a few more years for the Philippines to be at par with Thailand, Singapore, of course, Indonesia, especially if you look at our recovery rate pre-pandemic,” he said.

Source: Business World