By Bernadette Therese M. Gadon | BusinessWorld
July 26, 2023
APPROVED building permits rose 7.1% in the third quarter, when the economy opened up further as the pandemic receded, the Philippine Statistics Authority (PSA) said.
Construction starts, as measured by building permit approvals, rose to 40,384 in the three months to September, according to preliminary PSA data.
This was a turnaround from the revised 2% decline posted in the second quarter of 2022. In the third quarter of 2021, the growth rate was 8.7%.
The projects covered by the building permits were valued at P106.06 billion — up 5.8% — with a floor area of 8.62 million square meters (sq.m).
“The pickup in this sector is tied largely to the reopening of the economy post lockdowns,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said in an e-mail.
Residential construction made up the bulk of approved building permits, growing 9.2% year on year to 29,208. These projects were valued at P48.09 billion with a combined floor area of 4.43 million sq.m.
Single-detached homes accounted for 24,725 permits, followed by apartments (4,052), duplexes and quadruplexes (385), other residential projects (37), and condominiums (9).
Non-residential permits, which accounted for 18% of the total, expanded 14.9% year on year to 7,287. The projects covered by these permits were valued at P49.21 billion, with a combined floor area of 4.06 million sq.m.
The leading non-residential categories were commercial (4,972 buildings), institutional (1,162) and industrial (565).
Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) led the regions with 10,866 permits during the period, followed by the Central Visayas (4,777) and Central Luzon (4,704). Altogether, these regions accounted for 50.4% of all approved construction permits.
By value, projects in Calabarzon were worth P24.11 billion, followed by those in the National Capital Region (P16.92 billion) and Central Luzon (P16.55 billion). These three accounted for 54.3% of the value of construction projects in the third quarter.
Inflation exceeded 6% during the three months to September 2022, with the Russia-Ukraine war affecting oil prices, which cascaded onto the prices of other commodities.
Mr. Mapa said that increased demand also forced construction prices higher last year.
Though inflation eased from its 8.7% high in January to 5.4% in June, Mr. Mapa said the high interest rate environment can still affect construction in the coming months.
The Bangko Sentral ng Pilipinas paused the benchmark rate at 6.25% for two consecutive meetings, with plans to keep it unchanged until later in the year.
“Given the rapid rise in borrowing costs we can expect the momentum to slow or even reverse as surging interest rates cap appetite for such outlays,” he said.