Building approvals rise 16.7% in Q3 led by residential projects

By Marissa Mae M. Ramos
THE NUMBER of approved building permits rose 16.7% in the third quarter to 42,111 projects, led by residential construction, the Philippine Statistics Authority (PSA) said.
Citing preliminary results, the PSA said growth in approved permits outstripped the 1.1% rise from a year earlier and the 11.7% gain in the second quarter.
The third quarter’s approved permits were equivalent to 9.727 million square meters (sq.m.) of floor space worth P104.849 billion.
Residential construction accounted for 72.8% of the approved permits, equivalent to 30,638 projects, up from 26,227 a year earlier.
Approved residential permits were equivalent to 5.242 million sq.m. and were valued at P48.479 billion, up 32.9% from a year earlier.
Most categories of residential projects posted double-digit gains. Approved condominium projects grew 80.8% to 47 permits while apartments/accessorias and single-detached houses grew 29.9% to 4,461 permits and 15.3% to 25,583 permits, respectively.
Approved duplex/quadruplex projects fell 3.9% year-on-year during the third quarter to 490 permits while permits for other residential properties dropped 24% year-on-year to 57.
Non-residential construction approvals rose 14.4% year-on-year to 5,983 projects amounting to P47.050 billion with a total floor area of 4.296 million sq.m.
Approvals for commercial buildings rose 13.9% year-on-year during the quarter to 3,630 projects while institutional building projects were up 37.8% at 1,330.
Calabarzon — the region south and east of Metro Manila which includes the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon — reported the highest number of construction starts at 10,752 permits or 25.5% of the total. Central Visayas and Central Luzon had 5,815 approved permits (13.8%) and 4,749 (11.3%), respectively.
By province, Cavite had the highest number of approved permits at 4,367, or 10.4% of the total, followed by Batangas with 2,677 approved permits (6.4%) and Cebu with 2,432 (5.8%).
The National Capital Region (NCR) captured the largest share of projects by value at P29.29 billion or 28.0% of the total. This includes residential projects worth P16.612 billion.
The value of projects approved in Calabarzon was P20.833 billion, or 19.9% of the total while Central Visayas and Central Luzon accounted for P15.777 billion (15.0%) and P9.241 billion (8.8%), respectively.
“The spike may have been caused by the continuing infrastructure push by the government that is also causing the rise in private construction,” according to Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. (UnionBank).
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC), concurred.
“[I]ncreased government spending on infrastructure may have led to the creation of new residential, commercial, and industrial areas, or at the very least, made more of these areas more accessible to key cities around the country.”
“The country’s biggest property developers, retail chains, and other businesses have continued to expand especially in fast-growing/developing areas outside Metro Manila, amid the availability of more land/space for new property developments at lower cost/price,” he added.
The government’s “Build, Build, Build” program hopes to expand infrastructure spending to 7.3% of gross domestic product by 2022.
Both economists expect the government’s infrastructure projects to open up more opportunities for the real estate market.
RCBC’s Mr. Ricafort added that the government “could open up new frontiers for residential, commercial, and industrial areas, as well as make existing residential, commercial, and industrial areas more accessible to central business districts/key cities around the country.”
UnionBank’s Mr. Asuncion added: “[A]pproved construction permits may rise in the next quarters driven by easing expectations of inflation. I anticipate demand for residential construction to be further rising.”
“For real estate in 2019, I do expect further growth particularly in the middle market and increasing demand outside of the usual growth centers of the country. Construction will be brisk into 2019,” he said.