CONSTRUCTION starts as measured by building permit approvals rose 114.1% year on year to 38,389 in the second quarter, the Philippine Statistics Authority (PSA) said Tuesday.

This was the highest growth rate posted since at least 2006, according to initial data on the PSA’s OpenStat database.

The approved building permits cover 7.14 million square meters (sq.m.) of floor area valued at P84.36 billion. Floor area and value totals were up 148.2% and 194.3%, respectively, from a year earlier.

Permits for residential projects increased by 102.8% to 27,375. These projects were valued at P43.79 billion with a floor area of 4.21 million sq.m.

Single-detached homes accounted for 22,563 permits, followed by apartments at 4,457, duplexes and quadruplexes 287, condominiums 36, and other residential projects 32.

Non-residential project approvals rose 119.2% to 5,550, worth P32.83 billion and involving a floor area of 2.86 million sq.m.

The non-residential projects included 3,841 commercial buildings, 949 institutional buildings, 395 industrial buildings, 206 agricultural buildings, and 159 “other non-residential” buildings.

Permits for additions to existing structures numbered 1,174 in the second quarter, while those for alterations and repairs of existing structures numbered 4,290.

Region IV-A (Calabarzon) accounted for the largest number of approved building permits in the second quarter with 9,773, followed by Central Visayas with 5,608 and Ilocos Region with 4,659. Together, these three regions accounted for around 52.2% of total approved construction permits during the period.

By value, Calabarzon construction projects amounted to P20.09, followed by the National Capital Region (NCR) with P16.56 billion and Ilocos Region with P9.97 billion. These three accounted for 55.2% of construction value in the second quarter.

“The latest PSA data on building permits showing a stark pickup in growth was driven in large part by base effects as economic activity picked up relative to the extreme lockdowns experienced in 2020. This reflects pent-up (demand for) permits as construction activity was finally allowed to resume in some parts and on a staggered and limited basis,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a statement.

Mr. Mapa also flagged the increase in permits granted in Calabarzon, which mirrored the developments noted in the Bangko Sentral ng Pilipinas’ (BSP) residential real estate price index (RREPI) report.

“The RREPI remains in contraction according to the central bank as the overall market was weighed down by the steep drop in condominium prices and prices in NCR in general. RREPI also shows that housing prices outside NCR and for single detached units have picked up, with is reflected in the permits data. This trend suggests that the Philippines is also experiencing the global phenomenon of migration from the urban centers to the areas outside the city with Filipinos in search of more space,” he said.

“Despite this development, signs of a real estate bubble have yet to manifest in a palpable manner. BSP’s RREPI remains negative and previously frothy condominium prices appear to have been deflated by the pandemic. Meanwhile, rental inflation has continued to slow and settled at 1.1% in August.”

Residential property prices declined in the first quarter, mainly dragged down by the lower cost of condominium units and duplexes due to weak demand. The RREPI was down 4.2% year on year in the three months to March, the steepest decline recorded since the index was launched in 2016.

In an e-mail, Asian Institute of Management Economist John Paolo R. Rivera said most companies have invested in the provinces where restrictions are fewer than in the NCR. “The dispersion of construction from NCR contributed to this,” he said.

Mr. Rivera is hopeful that the succeeding quarters for construction permits will continue to show improvement.

“This improvement may be driven by confidence in the economic environment both in the NCR and provincial areas. Of course, once herd immunity is achieved, the accelerator effect can fully manifest,” he said.

Meanwhile, Mr. Mapa, in a separate e-mail to BusinessWorld, said the prospects for recovery in building permits will be determined by how effective the government’s new measures and guidelines are in containing the virus.

“Should cases spike again, we could very well be returning to ECQ (enhanced community quarantine) levels, which would have a negative impact on construction activity and building permits as well,” he said, referring to the government’s strictest form of lockdown.

The Inter-Agency Task Force on Emerging Infectious Diseases on Monday released new guidelines for the pilot implementation of localized lockdowns and a new alert level system in Metro Manila beginning Thursday, the day after the modified ECQ in the Philippine capital ends.

Under the new guidelines, lockdowns will be localized at city level depending on the case transmission rates and healthcare utilization rates. The new alert system will consist of five levels, with level 5 equivalent to ECQ. — Bernadette Therese M. Gadon