Construction in the Philippines – Key Trends and Opportunities to 2017

Timetric
August 23, 2013
71 Pages - SKU: TMTR5103752
Countries covered: Philippines



Construction in the Philippines – Key Trends and Opportunities to 2017

Synopsis

This report provides detailed market analysis, information and insights into the construction market in the Philippines, including:
  • The Filipino construction market’s growth prospects by sector, project type and type of construction activity
  • Analysis of equipment, material and service costs across each project type within the Philippines
  • Critical insight into the impact of industry trends and issues and the risks and opportunities they present to participants in the construction market in the Philippines
  • Assessment of the competitive forces facing the construction industry in the Philippines and profiles of the leading players
  • Data highlights of the largest construction projects in the Philippines
Summary

The construction industry in the Philippines grew at a review-period (2008-2012) CAGR of 10.27% and was largely unaffected by the financial crisis. Construction output recorded respective annual growth rates of 6.4% in 2009 and 20.9% in 2010, though the country’s construction output declined marginally by 2.2% in 2011. Review-period growth was supported by the growing business process outsourcing (BPO) industry, infrastructure development projects and a rise in income levels. The construction industry is expected to post a forecast-period (2013-2017) CAGR of 7.66% with growth originating largely from the government’s development plan for 2011–2016 to improve infrastructure, healthcare and competitiveness.

Scope

This report provides a comprehensive analysis of the construction industry in the Philippines:
  • Historical (2008-2012) and forecast (2013-2017) valuations of the construction market in the Philippines using the construction output and value-add methods
  • Segmentation by sector (commercial, industrial, infrastructure, institutional and residential) and by project type
  • Breakdown of values within each project type, by type of activity (new construction, repair and maintenance, refurbishment and demolition) and by type of cost (materials, equipment and services)
  • Analysis of key construction industry issues, including regulation, cost management, funding and pricing
  • Assessment of the competitive environment using Porter’s Five Forces
  • Detailed profiles of the leading construction companies in the Philippines
Reasons To Buy
  • Identify and evaluate market opportunities using our standardized valuation and forecasting methodologies
  • Assess market growth potential at a micro-level via 600+ time series data forecasts
  • Understand the latest industry and market trends
  • Formulate and validate business strategies by leveraging our critical and actionable insight
  • Assess business risks, including cost, regulatory and competitive pressures
  • Evaluate competitive risk and success factors
Key Highlights
  • The domestic economy expanded by 6.6% in real terms in 2012, up from 3.9% in 2011 and was above the government’s official target range of 5-6.0%. This expansion was mainly brought about by government spending and investment growth, which accelerated from 1.0% and 0.1% in 2011 to 11.8% and 8.7% respectively in 2012.
  • Economic prospects are positive with an average growth rate of 5.5% anticipated over the forecast period
  • The construction industry recorded a period of robust growth backed by a rise in employment and income levels. The number of new building construction projects with approved permits increased from 24,610 in the fourth quarter of 2011 to 27,931 in the fourth quarter of 2012, a year-on-year increase of 13.5%. In order to increase the nation’s investment attractiveness, enhance competitiveness and promote socio-economic development, the government unveiled the Philippine Development Plan (PDP) 2011–2016. The plan involves substantial investments in physical infrastructure, which it deems as roads, railways and energy; social infrastructure which it defines as education, healthcare and housing; and technology which it outlines as research and development.
  • The BPO industry is a key driver of office space development and the industry’s robust outlook is expected to benefit the expansion of office buildings. There has been a rise in purchasing power among the domestic population, owing to solid growth in the BPO industry and rise in remittances from overseas Filipinos. This, coupled with favorable economic conditions and a rising urban population, is expected to support a surge in retail activity.
  • The industrial construction market was the fastest-growing construction market in the Philippines during the review period, driven by a rebound in the nation’s manufacturing activity since 2010. The performance of the manufacturing sector is expected to improve over 2013–2014 with a surge in exports backed by an anticipated recovery in global economic conditions. Growth will also be supported by governmental efforts to ease procedures for establishing new businesses and reduce operational costs by initiating expansion measures.
  • A lack of adequate infrastructure has been a major deterrent to the business attractiveness of the Philippines. Although successive governments have increased infrastructure investment as a proportion of GDP at 3%, they are among the lowest in Southeast Asia. In order to enhance competitiveness in terms of physical infrastructure, the country is investing in infrastructure, with the intention of achieving an investment target of 6% of GDP by 2016.
  • With the intention of achieving energy independence by 2030, the Philippines Department of Energy (DoE) launched the 2012–2030 Philippine Energy Plan (PEP) in 2012. The energy and communications infrastructure category is expected to be the fastest-growing category in the infrastructure construction market over the forecast period.
  • The country is expected to witness a transformation from a nation of renters to homeowners, due to the availability of attractive financing options and prevalence of very low interest rates. The rapid increase in homeownership will also be supported by the rise of the younger population (20-30 years), who accounted for one-fifth of the national population in 2010. This trend of homeownership is expected to support the expansion of residential construction.


Additional Information

EXECUTIVE SUMMARY

The Philippine construction industry grew at a review-period (2008-2012) CAGR of XX.XX% and was largely unaffected by the financial crisis. Construction output recorded respective annual growth rates of XX.XX% in 2009 and XX.XX% in 2010, though the country’s construction output declined marginally by XX.XX% in 2011. Review-period growth was supported by the growing business process outsourcing (BPO) industry, infrastructure development projects and a rise in income levels. The construction industry is expected to post a forecast-period (2013-2017) CAGR of XX.XX% with growth originating largely from the government’s development plan for 2011–2016 to improve infrastructure, healthcare and competitiveness.
  • Commercial construction was the third-largest market in the Philippine construction industry, with a share of XX.XX% and a value of PHPXX.XX billion (US$XX.XX billion) in 2012. The market recorded a review-period CAGR of XX.XX% backed by strong growth in the BPO industry and a rise in overseas remittances from Filipinos, which spurred the expansion of the retail and tourism sectors. The commercial construction market is expected to remain buoyant over the forecast period, to post a CAGR of XX.XX%, driven by a rise in disposable income and the attractiveness of the Philippines as a leading BPO destination.
  • Industrial construction was the smallest market in the Philippine construction industry, accounting for only XX.XX% of the industry value in 2012. The market registered the fastest review-period CAGR of XX.XX%, which was largely due to the strong rebound in manufacturing activity since 2010. Manufacturing growth during 2010–2012 averaged 7XX.XX%, and was largely driven by shift in production due to an increase in labor costs in neighboring countries. The industrial construction market is expected to grow at a forecast-period CAGR of XX.XX%. An increase in the demand for automobiles and a rise in consumer purchasing power - coupled with solid growth in housing construction and infrastructure initiatives - are expected to result in a steady increase in industrial investments over the forecast period.
  • Infrastructure construction is the largest and fastest-growing market in the Philippine construction industry, accounting for an industry share of XX.XX% and valuing PHPXX.XX billion (US$XX.XX billion) in 2012. The market grew at a review-period CAGR of XX.XX% and is expected to post a forecast-period CAGR of XX.XX%. Although successive governments have increased their investments, the country’s infrastructural investments as a proportion of GDP stood at XX.XX%, one of the lowest in Southeast Asia. In order to enhance its competitiveness in terms of physical infrastructure, the government is investing heavily with the intention of achieving an infrastructural investment equivalent to XX.XX% of GDP by 2016. This, coupled with initiatives to increase flood security and energy independence, is expected to support the market’s expansion over the forecast period.
  • The Philippine institutional construction market valued PHPXX.XX billion (US$XX.XX billion) in 2012, registering a review-period CAGR of XX.XX%, driven by investments to develop the country’s educational institutions and increase access to healthcare facilities. The institutional construction market is expected to record a forecast-period CAGR of XX.XX%, driven by government measures to provide universal healthcare facilities, minimize the shortage of secondary schools and enhance the competitiveness of the country’s industrial and services sectors. The initiatives are included in the development plan for 2011–2016 and are likely to support the institutional construction market.
  • Residential construction was the second-largest market in the Philippine construction industry during the review period, valuing PHPXX.XX billion (US$XX.XX billion), representative of a share of XX.XX% in 2012. The market grew at a CAGR of XX.XX% and is expected to register a forecast-period CAGR of XX.XX%. The residential construction market recorded robust demand during the review period and is expected to remain solid over the forecast period, backed by population

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