Philippine Building Permit Approvals Dip 1.2% in July Amid High Costs

Approved building permits in the Philippines dropped to a three-month low in July, with a 1.2% year-on-year decline to 15,890 permits, according to preliminary data from the Philippine Statistics Authority (PSA). This marks a reversal from the 5.1% growth observed in June, indicating a dampening effect on construction starts. The total floor area covered by approved projects decreased by 5.7% to 3.49 million square meters, and the total value fell by 0.9% to P47.22 billion. Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, cited elevated financing costs, high construction material prices, and declining business sentiment as contributing factors. He suggested that developers might be prioritizing commercial and government projects with more defined terms over residential projects facing uncertain market conditions. Residential building permits fell 6.7% year-on-year to 9,805, though their total value increased by 2.3% to P20.79 billion. Single homes, comprising 84.4% of residential constructions, saw a 1.1% dip to 8,274. Apartment building permits, however, declined sharply by 35.9% to 1,262, while permits for duplex or quadruplex homes rose 28.5% to 212. In contrast, non-residential construction projects grew by 7.9% year-on-year to 3,662, accounting for 23% of total constructions. These projects totaled P20.48 billion, down 7.7% from a year earlier. Approved commercial buildings rose 7.2% to 2,431, making up 66.4% of all non-residential construction. Institutional building projects inched up 3.8% to 651, while industrial construction permits rose 28.3% to 408. Agricultural projects surged 43.3% to 139 approvals, while other non-residential constructions fell 61.6% to 33. Permits to build additions to existing structures grew 15.6% to 504, and alteration and repair permits totaled 1,287, up 4.2% from a year earlier, valued at P4.42 billion. Regionally, Calabarzon recorded the highest number of approved permits with 3,617, representing 22.8% of the total. Central Luzon followed with 1,861 (11.7%), and Central Visayas with 1,326 (8.3%). Mr. Agonia noted that construction appetite is concentrating in growth corridors outside of Metro Manila. Ser Percival K. Peña-Reyes, Senior research fellow at the Ateneo Center for Economic Research and Development, stated that demand in Calabarzon is supported by strong economic activity and population growth, expecting uneven permit growth ahead. Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., views the July decline as a pause rather than a trend reversal, anticipating a gradual recovery in residential construction as financial conditions improve. Mr. Agonia foresees building permit approvals moving in a "bidirectional" manner, with developers navigating weak residential demand while gearing up for non-residential projects benefiting from the government's infrastructure rebound plans. Source: BusinessWorld Economy