Property growth prospects in Southern Luzon despite the pandemic

The Cavite-laguna-batangas corridor is the Philippines’ primary industrial hub, which continues to attract new and expanding manufacturing locators.

Colliers Philippines believes that the region’s competitiveness as an industrial hub should be further enhanced by the infrastructure projects lined up by the government. This same factor has also been enticing developers to build integrated communities and standalone residential projects to cater to rising demand in the region.

Aside from thriving industrial activities and the lure of improved infrastructure connectivity in Southern Luzon, Colliers believes that sustained regional economic growth and continued overseas worker remittance inflows should further propel the residential demand in this region.

STRONG REGIONAL GROWTH

The economy of Region IVA, which includes the provinces of Cavite, Laguna, and Batangas, has been expanding by about 6.3 percent a year from 2016 to 2018—making Southern Luzon one of the fastest growing regions in the Philippines. This is primarily driven by industrial activities, which account for 54 percent of the region’s annual economic output. While industrial parks in the region benefit from robust manufacturing activities, another segment that captures the region’s economic gains is the property sector.

This is evident in the number of project launches and take-up in the CALABA corridor. Colliers believes that sustained regional economic growth should further drive demand for properties in the area.

STABLE OFWREMITTANCES

Government data showed that Southern Luzon remains a major source of overseas Filipino workers (OFWS). The region accounted for 18 percent of total OFWS as of 2018. This makes the corridor highly feasible for residential projects (house and lot or condominium units) that cater to the end-user market due to the large remittances. This explains why several horizontal projects posted take up rates of between 95 percent and 100 percent despite being launched only in 2017.

Colliers believes that parts of the CALABA region have become bedroom communities for employees in central business districts such as Makati, Bay Area, and Ortigas Center.

However, the population growth in the CALABA region (which grew to 14.4 million in 2018 from 12.4 million in 2010), coupled with growth in commercial and industrial activities and the need to create more business areas within the corridor, compelled the national government to implement more public projects to support the growing business activities within the CALABA and Metro Manila areas.

LAGUNA: RESIDENTIAL COMPLEMENTS INDUSTRIAL

Latest data from Philippine Economic Zone Authority (Peza) revealed that among the firms planning to expand existing operations in Laguna industrial parks are manufacturers of safety switches, semiconductors and packaging materials. Several Japanese firms have also committed to build warehouses.

Several infrastructure projects are in the pipeline and we see these further unlocking industrial and residential values in Laguna. These include the Cavite-laguna Expressway (Calax).

According to the Department of Public Works and Highways (DPWH), the road project is likely to ease congestion in Cavite and Laguna and provide efficient transport facilities to industrial areas in the two provinces. Among the areas likely to benefit from the project are Governor’s Drive, Aguinaldo Highway, Tagaytay, and Sta. Rosa. The project also aims to reduce travel time from Cavite Expressway (Cavitex) to South Luzon Expressway (SLEX) by about 45 minutes.

Another major road project in Metro Manila we see benefitting Laguna and nearby areas in Southern Luzon is the NLEX-SLEX Connector Road. The project aims to reduce travel time from NLEX to SLEX to just 20 minutes. It is due to be completed in 2021. The project is also likely to reduce travel time between two major industrial hubs—the CALABA region in Southern Luzon and Clark, Pampanga in Northern Luzon. Once completed, we see the project stoking demand for industrial space and residential projects in both CALABA and Pampanga.

The construction of the Southern Luzon line (PNR Batangas City Station) of the North-south railway project and the planned revival of a rail cargo line from Manila to Laguna should play a vital role in funneling major manufacturing

Condominium launches in Laguna appear to move in step with demand