Building permits decline in June

In June, the number of construction projects based on approved building permits in the Philippines decreased slightly compared to the same month last year, according to preliminary data from the Philippine Statistics Authority. A total of 17,081 construction projects were approved, marking a 0.3 percent decline from 17,126 projects in June 2023. Despite the slight reduction in project count, the total value of these projects increased by 22 percent to P74.34 billion in June, compared to P60.94 billion in the previous year.

Residential buildings constituted around 67 percent of the total construction projects in June. However, the number of residential projects fell by 2 percent to 11,392, with their project value dropping by 26 percent to P20.24 billion. In contrast, non-residential construction projects rose by 5 percent to 3,352 projects in June, accounting for a value of P43.80 billion, which is 56 percent higher than the P28.01 billion recorded in June 2023.

Buildings that underwent additions or expansions saw a 2 percent decline to 538 projects in June, with their value increasing by 19 percent to P728.84 million. Alterations and repairs declined by 7 percent to 1,189 projects, but the value of these projects surged by 112 percent to P8.82 billion. Other construction projects, including those not specifically categorized, rose by 34 percent to 610 projects, but their value decreased by 13 percent to P750.43 million.

Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the ongoing decline in construction permits, particularly for residential projects, to excess supply, higher vacancy rates, and the impact of the Middle East conflict on construction materials and costs. Additionally, underspending by the government on infrastructure and the flood control controversy also affected construction activity.

Ricafort suggested that catch-up spending by the national government in infrastructure, based on better governance standards, could drive economic growth and construction activity in the coming months.