Rise of EVs to bring opportunities for commercial real estate

With the adoption of electric vehicles (EVs) continuing to grow in the Asia Pacific region, so does the need for more charging stations. This is something that not only presents opportunities for EV charging system manufacturers, but also for commercial real estate owners and investors.

“The growing number of EVs in Asia Pacific will require a significant increase in charging facilities. CBRE estimates the number of public charging points across the region will rise from around two million in 2022 to around 10 million by 2030,” CBRE Asia Pacific said in a report.

The report noted that the EV market in Asia Pacific has grown significantly over the past two years, with the region accounting for nearly two-thirds of global EV sales in 2022.

“As EV adoption continues to gather pace, demand for public charging infrastructure in Asia is also rapidly increasing, primarily due to the prevalence of apartments where the installation of private chargers is subject to regulatory restrictions and administrative barriers,” CBRE said.

“All of these converging trends present a significant opportunity for real estate owners and investors to gain access to or expand their presence in the EV public charging infrastructure market,” it added.

Growing EV usage

CBRE noted that the growing adoption of EVs is a global trend as worldwide sales have grown 85 percent in 2022 from 2020 when sales took off due to vehicles and charging infrastructure becoming more accessible.

From a local perspective, the Electric Vehicle Association of the Philippines (EVAP) noted that EV sales in the first quarter of the year have already grown 15 percent compared to the previous year as it reached 2,536 units.

The group is projecting total registered electric vehicles in the country to reach 6.6 million units by 2030.

Supporting the projected growth of the EV market, the Philippine government is also looking at incentivizing the manufacture of four million EV units in the next 10 years through an EV incentives scheme to develop the sector.

“Based on our calculations, we are looking at incentivizing four million EVs in the next 10 years, majority of which will be two wheelers and e-trikes, along with e-PUVs (public utility vehicles) and e-bus,” Trade Undersecretary Rafaelita Aldaba said recently.

Aldaba said the purpose of the incentives scheme is to narrow the cost gap between EVs and the traditional vehicle models, adding that this is in line with facilitating and accelerating the shift to EVs.

On top of this, the Philippine government is also planning to provide consumers with direct financial rebates or discounts when they purchase an EV.

Aldaba said they are looking at providing a P10,000 subsidy for buyers of two-wheeler EVs, P20,000 for three-wheeled EVs and P500,000 for e-PUVs.

Opportunities for real estate

CBRE said that the commercial real estate industry, such as offices, shopping malls as well as industrial facilities, play an integral role in the development of public charging infrastructure for electric vehicles as it offers a range of options for public charging points.

“From retail malls and office complexes to industrial warehouses, electric vehicle charging infrastructure is fast becoming a norm across Asia Pacific as landlords and occupiers gear up for the electric mobility era,” CBRE Asia Pacific senior director for advisory and transaction services Sidharth Dhawan said.

To determine optimal charging solutions, CBRE is advising landlords to review visitor profiles and behaviour and assess the technical specifications and capabilities of properties earmarked for the installation of charging points.

With many large corporations committing to net-zero targets, CBRE said adding sustainability-related amenities such as environmental-friendly vehicles and electric vehicle chargers is a priority in corporate office campuses.

The real estate services firm noted, however, that the demand for charging points is stronger in decentralized office locations such as in business and science parks in the suburbs as employees based in these locations drive to the office.

For shopping malls, CBRE noted that EV chargers are becoming more common, with landlords providing charging facilities for electric vehicles belonging to tenants, employees and shoppers.

“From landlords’ perspective, providing electric vehicle charging points can increase customers’ dwell time while boosting spending,” CBRE said.

“Given that charging an electric vehicle usually takes at least half an hour, owners of electric vehicles will seek out locations providing a wide range of entertainment options to occupy their time while they wait,” it added.

Similarly, CBRE emphasized the strong potential for fast chargers in industrial and logistics facilities.

“Compared to other types of commercial real estate, occupiers of logistics facilities have stronger demand for DC (direct current) fast charging due to vehicles’ bigger battery sizes and less idle time for charging,” CBRE said, adding that heavy-duty trucks for long-haul travel will require extra on-the-road fast charging points along key transportation infrastructure.

The report also highlighted the need for more EV chargers in transport hubs.

“CBRE expects motorway service stations to undergo a transformation far beyond just adding electric vehicle chargers and/or hydrogen fuel to their offering,” the real estate service firm said.

“Owing to the time taken to charge their cars, users of electric vehicles spend longer periods of time at service stations and have therefore come to expect a more comprehensive retail and leisure offering. Better seating areas and upgraded F&B options will be essential to attracting and retaining consumers,” it added.

Challenges in installing EV infra

With the demand for public EV vehicle chargers now taking off, CBRE recommends landlords and investors to formulate strategies to expedite the installation of charging points in their portfolios.

“In addition to constraints on building specifications, landlords and investors must consider a range of potential risks,” CBRE said.

In terms of power supply and safety, CBRE noted the generally more stringent safety measures for fast chargers, adding that typically requires the installation of a master switch for all electric charging facilities.

It also pointed out challenges for older buildings, which usually have limited spare power supply and capacity as well as the for emerging markets which may have an inadequate or unstable power grid.

CBRE also identified the longer payback periods as well as short product life cycle as other risks in installing EV charging infrastructure.

“The coming years may see the introduction of revolutionary charging technologies, rendering slower charging systems obsolete,” CBRE said.

“Asset owners may face the prospect of investing in upgrading or replacing charging facilities even before they generate profits,” it added.

Recommendations for landowners and investors

To be able to capitalize on the opportunities for EV charging infrastructure, CBRE recommends landowners to incorporate these charging solutions into new projects at the design stage.

“Evaluate the feasibility of enhancing existing car parking facilities with electric vehicle charging infrastructure,” CBRE said.

Also emphasized the need to consider enhancing power grids, safety standards and other building features to ensure they are capable of accommodating future upgrades catering to EV charging infrastructure.

It also urged landlords and investors to collaborate with professional consultants to formulate EV charging infrastructure strategies as well as partnering with charging point operators (CPOs) and EV manufacturers.

“Experienced consultants can assist in preparing feasibility studies, sourcing and selecting CPOs; calculating optimal charger ratios; and monitoring installation costs and progress,” CBRE said.