Construction sector in the Philippines - statistics & facts
The construction sector plays an important role in the Philippine economy, contributing seven percent of the country's gross domestic product (GDP) in 2023. With the national government’s infrastructure program, the sector brought in about 14.2 million Philippine pesos in foreign investments and employment opportunities for thousands of Filipinos. Despite headwinds caused by the impact of the COVID-19 pandemic, the sector is poised for growth as the economy recovers. However, inflation and soaring interest rates may continue to challenge private construction.
Despite this, several factors continue to challenge private construction in the Philippines. Preliminary figures have placed the average nominal lending rate of banks at the highest value since 2017, while the inflation rate stood at about six percent. As of the fourth quarter of 2023, the average cost per square meter of residential construction reached 11,310 Philippine pesos, while non-residential construction was at 10,210 Philippine pesos. In Metro Manila alone, the wholesale price index of construction materials registered five percent growth in 2023, with fuels and lubricants having the highest price index. The retail price index of construction materials also increased in the same year, especially for tinsmithry materials. Such factors may continue to affect construction costs, cause a decline in investment in new projects, and cause delays in project completion. The private sector remains hopeful that these issues will ease in the upcoming years and help them to rehabilitate.
Improving the nation’s infrastructure with “Build Better More”
Superseding the “Build! Build! Build!” program, the Philippine government’s flagship infrastructure project (IFP) was renamed “Build Better More” (BBM) to continue its goal of achieving a more developed and connected life among Filipinos and generating new jobs. As of April 2024, the National Economic and Development Authority (NEDA) reported that 35 percent of the 185 identified projects were ongoing, with less than one percent completed since 2022. The BBM project started with 197 IFPs, of which 73 were continued from the former program. This nine-billion Philippine peso project focuses on improving physical connectivity, water resources, and agriculture, with official development assistance (ODA), the General Appropriations Act (GAA), and public-private partnerships (PPP) as the main sources of project financing. The BBM project also increased government spending on infrastructure and capital outlays by more than 450 percent in the last decade. Among the big ticket projects are the Metro Manila Subway Project, North-South Commuter Railway Extensions (PNR North 2, PNR South commuter), PNR South long haul, Bataan-Cavite interlink bridge, Panay-Guimaras Negros bridge, Taguig integrated terminal exchange, and the New Manila International Airport.Inflation rate to challenge private construction sector recovery
The unforeseen challenges caused by the global coronavirus (COVID-19) pandemic resulted in delays and cancellations of construction projects, both private and public. Local construction companies and contractors identified the difficulty of closing projects as a major challenge, as supply chains and employment were disrupted. As restrictions eased and businesses resumed operations, construction projects also slowly recovered. In particular, the number of non-residential buildings constructed registered its peak volume in 2023, mainly contributed by commercial building construction. Meanwhile, the volume of residential buildings constructed remained lower than in 2019.Despite this, several factors continue to challenge private construction in the Philippines. Preliminary figures have placed the average nominal lending rate of banks at the highest value since 2017, while the inflation rate stood at about six percent. As of the fourth quarter of 2023, the average cost per square meter of residential construction reached 11,310 Philippine pesos, while non-residential construction was at 10,210 Philippine pesos. In Metro Manila alone, the wholesale price index of construction materials registered five percent growth in 2023, with fuels and lubricants having the highest price index. The retail price index of construction materials also increased in the same year, especially for tinsmithry materials. Such factors may continue to affect construction costs, cause a decline in investment in new projects, and cause delays in project completion. The private sector remains hopeful that these issues will ease in the upcoming years and help them to rehabilitate.
