Cold storage is set to become one of the next popular investment sectors in Philippine property as demand for vaccines, foods, and import goods drive activity in cold chain logistics, according to leading real estate services company Santos Knight Frank.

The Philippine cold storage industry’s capacity is set to grow by 10% in 2021, according to the Cold Chain Association of the Philippines. During a webinar hosted by Santos Knight Frank, AmCham Philippines, and BDO Unibank, the association’s President Anthony Dizon said around 50,000 new pallets are to be commissioned this year that will add to the existing 500,000 pallets across the country. 60% of the additional capacity will be in Luzon while 40% will be in Mindanao.

“The need for cold chain capacity should continue to grow as a function of population growth, economic recovery and consumption preferences, with special attention to the continuing development of e-commerce platforms,” says Dizon.

At least two agro-industrial business corridors have been identified by the government so far, namely the Taguig Agro Industrial Hub and the New Clark City Agro Industrial Hub, both of which will likely be important considerations for future cold storage expansion.

The growth of the cold storage industry goes hand-in-hand with the overall expansion of industrial and logistics real estate, according to Santos Knight Frank.

Kash Salvador, Head of Investment & Capital Markets of Santos Knight Frank: “The property landscape has experienced a tremendous shift since the pandemic, yet the industrial and logistics real estate sector, including cold storage, remains to be the most stable asset globally. In the Philippines, more investors are looking to place significant capital into the industrial sector, including cold chain logistics.”

To further unlock real estate opportunities for industrial and logistics, Salvador recommends property owners and landlords to explore converting their existing non-core assets near Metro Manila for industrial and logistics use.

Salvador continues: “In Metro Manila, the former industrial areas have been converted into commercial properties, limiting the options for locators in the city. While there are opportunities outside Metro Manila, locators are balancing the costs between staying within the city and exploring provincial areas, considering aspects such as connectivity, infrastructure, and power. This presents property owners with a huge opportunity to cater to these occupiers.”

Salvador concludes: “Overall, the strong demand for industrial and logistics is key to recovery. It not only helps the real estate sector but also increases the economic activity across the country.”

Dizon says: “Cold storage is one of the most resilient industries. Whatever happens in the economy, there will always be a need for food.”