Construction in the Philippines will continue to grow rapidly

Construction Intelligence Center 3 May 2017 ASIA BUSINESS

Construction in the Philippines is set to grow at a rapid pace over the forecast period 2017–2021, according to the latest research from Timetric's Construction Intelligence Center (CIC).

The industry’s output value in real terms is expected to rise at an average of 9.8% a year over the forecast period. The Philippine construction industry is consequently expected to rise from $34.0bn in 2016 to $54.3bn in 2021, measured at constant 2010 US dollar exchange rates.

The industry's growth will be supported by the country’s development plan 2017–2022, as well as population growth, urbanization, and favorable government policies with regards to public-private partnerships (PPPs).

In February 2017, the government launched the Philippines Development Plan 2017–2022, with an aim to make the Philippines an upper-middle-income country by 2022. Consequently, it plans to reduce unemployment from 5.5% in 2016 to 3.0% by 2022.

To achieve this, the government is developing Special Economic Zones and Tourism Enterprise Zones (TEZs) to attract both manufacturing and service companies. Additionally, under the 2017 Investment Priorities Plan (IPP), the government plans to provide financial incentives to new Information Technology (IT) and Business Processing Outsourcing (BPO) companies to set up their facilities in the country.
 
Residential construction is the largest market — it accounted for 31.4% of total output value in 2016. The market is expected to be supported by the expansion of the middle-class population, urbanization, government efforts to develop underprivileged areas, and construction of affordable housing projects for low- and middle-income groups.

Additionally, the government’s Pag-IBIG Affordable Housing Program, under which it plans to provide financial support to low- and middle-income households, is also expected to support the growth of the market over the forecast period.
 
Accounting for 21.0% of the construction industry’s total value in 2016, infrastructure construction was the second-largest market in the Philippine construction industry during the review period.

The market is expected to be supported over the forecast period by government plans to develop high-speed rail links, highways and sea ports. In November 2016, the government announced its plan to spend around $5.7bn to build a new railway line between Manila and Sorsogon.

Additionally, the government is investing on the development of roads and ports under the National Tourism Development Plan (NTDP) 2016–2022. Under the NTDP, it plans to build 2,620km of roads across the country, with an investment of PHP94.3bn ($2.0bn) by 2022.

* For more information on the Construction in the Philippines: Key Trends and Opportunities to 2021, visit the Construction Intelligence Center Report Store.

* Makati (pictured) is a city in the Philippines' Metro Manila region and the country's financial hub.

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