Construction boom likely to hit RP within the decade

Economy

Written by Cai U. Ordinario / Reporter

Monday, 19 July 2010 20:52

THE Philippines is likely to experience a construction boom within the decade because of the urgent need to address the country’s infrastructure constraints, according to an economist from the University of Asia and the Pacific (UA&P). Dr. Victor Abola, executive director of the First Metro Investment Corp (FMIC)-UA&P Capital Markets Research, said the boom will more likely be due to the housing deficit of more than 3 million units. Abola said the current production of housing units is only 250,000 every year. This is also why a real-estate bubble was not possible in the Philippines. A bubble may only occur in high-end luxury developments but not in mid- or low-income market projects, he said. “We will have a construction boom in this decade because of two things—infrastructure and housing boom. How can we have a bubble in housing when we have a shortage of more than 3 million units? Ang production natin is only 250,000 a year,” he said. “People who talk about a bubble are looking most probably in the higher-priced luxury apartments. There, there could be a bubble kasi people buy it, many of them for investment purposes. But if you are buying for your own self, its not, you’re not buying for investments but for your own use,” Abola explained. Manolito Madrasto, executive director of the Philippine Constructors Association (PCA) said the construction industry expects better prospects this year. He said the PCA is looking at a growth forecast of 7 percent to 9 percent. This is only a conservative estimate, he said, however, and the industry could still reach a double-digit growth, depending on the demand for real estate and infrastructure projects which will provide a boost to the sector. “In the PCA, we are trying to be as conservative as possible. We don’t want to raise the hopes too high,” Madrasto said. The latest data from the National Statistics Office (NSO) showed that the total value of construction during the first quarter of 2010 rose 59.5 percent to P47.3 billion from P29.7 billion recorded during the same quarter of 2009. The NSO said that the value of residential-building construction had an increase of 24.6 percent amounting to P21.3 billion from P17.1 billion during the same quarter of 2009. The value of nonresidential building construction posted a growth of 130.5 percent amounting to P22.3 billion from P9.7 billion registered during the same quarter of 2009. The combined value for additions, alterations and repairs, the NSO said, reached around P3.7 billion or a 27.4-percent increase from P2.9 billion registered during the same period of 2009. The NSO said the value of construction for the National Capital Region (NCR) had remained highest at P23.4 billion, accounting for 49.4-percent share of the total value. Construction value in Calabarzon (Region IVA) and Central Luzon (Region III) ranked a far second and third with shares of 16.5 percent with P7.8 billion and 7.8 percent with P3.7 billion, respectively. In Photo: A construction worker balances himself precariously atop a building being constructed in Manila. An economist has predicted a construction boom in the country because of an acute housing deficit. (Bloomberg News)