The Philippine construction industry is expected to grow by 46 percent to P938 billion in 2014 from this year’s estimate of P643 billion, on the back of the country’s robust macroeconomic conditions and strong domestic consumption, according to BCI Asia Philippines Inc.
In a presentation of the Philippine Construction Market Outlook Report 2014 Friday, BCI Asia Philippines country manager Dean Borg noted that the bullish outlook for 2014 was also anchored on the growing remittances from overseas Filipino workers, tourist arrivals, increased infrastructure spending by the government and the rising percentage of construction expenditure in the Gross Domestic Product.
Local stakeholders including architects, engineers, real estate firms have also showed strong optimism on construction prospects for 2014.
“Construction in the Philippines has continued on a path of positive growth over the past few years. [The year] 2013 was termed in our previous outlook as ‘A New Birth,’ with confident levels of growth rates of construction starts and positive construction data indicators,” Borg said.
“BCI Economics has recognized that these positive trends experienced in the Philippines reflect a stronger growth than other counterparts in Southeast Asia. With GDP and related construction growth trends slowing in neighboring countries, we have coined this latest construction outlook for 2014 ‘Growth—Against the Asian Odds,” he added.
BCI Economics is the analysis and forecasting arm of BCI Asia Pty Ltd., Asia’s leading information service for the construction industry.
Based on the report, the year 2014 “will bring about new challenges as the sector aims to sustain the growth from the previous year—an aim that is perceived to be doable by the GDP projections for 2014, which considers the construction sector to be one of its primary driving forces.”
Of the P938 billion worth of construction projects expected next year, P505 billion will be for building constructions, defined by BCI as non-infrastructure projects including office, community, education, health, hotel, industrial, recreation, residential and retail.
Civil constructions, meanwhile, are expected to account for P433 billion, which may likely be spent for infrastructure (including transport and township, car park, landscape) and utilities.
“Utilities construction starts are forecasted to equate to 56 percent of total civil construction starts for 2014, while infrastructure construction starts will comprise 44 percent. Infrastructure (including transport) projects are expected to reach over P191 billion throughout 2014, signaling the government’s goals to improve the country’s public structures,” the report stated.
“Government plans to supply more energy to aid in national advancement is evident in the utilities forecast for 2014, which should reach more than P241 billion. This effort has the potential to counteract high electricity costs, among other things,” it also said.
These estimates, however, may change to the extent that some projects may be deferred, particularly in the Visayas region in light of the recent devastation wrought by supertyphoon “Yolanda,” while infrastructure spending by the government may also increase and be fast-tracked, thus adding to projected values for civil constructions.
Deferral and abandonment rates of construction projects have also already started to ease and decrease over time, according to BCI Asia.
“The abandonment rate for projects within the Philippines has settled at 2.8 percent during the third quarter of 2013, while deferral rates are at 10.7 percent. The low abandonment rate is an indication of the strength of the overall construction industry for the past quarter, and seems to be remaining steady,” the report said.