Construction industry to bounce back by H2

CEBU, Philippines — The sluggish construction sector is seen to recover in the second half of this year, while the government is catching up with delayed projects due to the May 2019 election.

“We see ramped up construction in second half 2019 as the government catches up on its spending plan,” said Joey Roi Bondoc, senior research manager at Colliers International Philippines.

The Philippines’ second quarter GDP (gross domestic product) growth recorded the slowest in the country’s four-year history, due to the delayed 2019 national budget implementation and construction decelerating due to its ban leading up to May 2019 elections.

The Philippines’ GDP grew by 5.5 percent in second quarter this year, the slowest since the 5.1 percent posted in 2015.

The government attributed the slower than desired growth to the delayed in passing the 2019 national budget, El Niño phenomenon, the ongoing trade war between the United States and China, and the ban on public construction activities a month prior to May 2019 senatorial elections.

Colliers is optimistic that the economic growth will rebound for the remainder of the year, “as public construction restarted.”

“We see this having a positive impact on the property segment,” added Bondoc.

Public construction contracted by 27 percent in second quarter this year, but was offset by 23 percent rise in private sector construction, which accounts for about 70 percent of the country’s construction sector.

This indicates strong appetite for office towers, residential condominium, malls, hotels, and industrial parks throughout the country.

However, Bondoc warned that if the contraction of public construction persists for the remainder of 2019, it is likely to become a growing concern among developers as public projects such as roads, bridges, and airports should help decongest major urban centers.

The public projects also help dictate the long-term plans of developers.