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More than half of Filipinos (52%) are satisfied with the country’s infrastructure, according to the Global Infrastructure Index 2024 released by Ipsos and Global Infrastructure Investor Association.
This result is higher than the 32-country global average of 40% and placed the Philippines as the fifth-most satisfied country in the Asia-Pacific region.
Source: Business World
State spending on infrastructure went up by 16.9% in September fueled by disbursements for finished transport projects, the Department of Budget and Management (DBM) said.
In the latest National Government disbursement report, spending on infrastructure and other capital outlays rose by P19.8 billion to P137.1 billion in September from P117.3 billion in the same month last year.
Month on month, infrastructure spending went up by 26.24% from P108.6 billion in August.
The DBM attributed the uptick in September disbursement to the payment for completed road network and bridge programs of the Department of Public Works and Highways (DPWH).
Higher disbursements were also made for various foreign-assisted projects of the Department of Transportation.
It also noted capital outlays for local counterpart requirements for implementing the Metro Manila Subway Project Phase 1, North-South Commuter Railway System, and the Davao Public Transport Modernization Project.
Funds were also used for the Department of National Defense’s (DND) Armed Forces of the Philippines modernization program, as well as the construction and repair of justice halls nationwide and implementation of the Department of Education’s computerization program.
In the January-to-September period, infrastructure spending rose by 14.6% to P982.4 billion from P857.6 billion in the same period in 2023.
“The robust spending growth for the period was largely credited… to infrastructure and other capital outlays with significant disbursements recorded in the DPWH for its banner infrastructure projects and the DND for its defense modernization projects,” the DBM said.
Overall infrastructure disbursements, which included transfers to local government units and subsidies to government-owned and -controlled corporations, went up by 12% to P1.14 trillion as of end-September.
“This was equivalent to 6.1% of GDP (gross domestic product) vis-a-vis 5.9% outturn for the same period last year and the 5.6% full-year target this year,” it said.
Philip Arnold “Randy” P. Tuaño, dean of the Ateneo School of Government, said the increase in infrastructure spending is likely to be sustained in the short term.
“(The increase was) due to a significant balance from various budget sources that remain available for release, and the prioritization of large-scale transport projects such as the Metro Manila Subway,” Mr. Tuaño said in an e-mail over the weekend.
He also expects a surge in infrastructure spending given that the 2025 midterm election is five months away.
“It should first be noted that infrastructure spending year on year had increased, and this will further increase going into the 2025 national budget,” Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said in a Viber message. “This is the underlying reason for spending improvements this year.”
The government’s infrastructure program for this year is set at P1.472 trillion, equivalent to 5.6% of GDP.
Mr. Ridon urged infrastructure agencies to improve absorptive capacity “particularly as 2025 is an election year in which the law mandates a suspension of project implementation for a specific period of time.”
“The challenges are that the absorption and burn rate by our key agencies, especially in infrastructure and agriculture, have been quite low,” former National Economic and Development Authority Secretary Cielito F. Habito, said at a conference at the University of the Philippines School of Economics on Friday.
Mr. Habito raised that there have been “questionable priorities” on allocations and utilization in some sectors.
“We allocate a lot of budget but it turns out it can’t be spent within the period it was meant to be used,” he said in mixed English and Filipino.
“This is a very important issue in our fiscal policy in general. It’s not so much the fiscal policy, but the implementation of the fiscal policies in that sense.”
Mr. Habito also mentioned the propensity of DPWH to “reblock” roads, calling it a “seemingly misplaced allocation of the budgets.”
He also said the government needs more public-private partnership types of projects given the shortage of public funds.
Source: Business World
According to recent reports from Leechiu Property Consultants, the economy, which showcases a gross domestic product growth rate of 6.3%, is a significant factor driving property demand in the Philippines. The said figure positions the Philippines as the second fastest-growing economy in the region, just behind Vietnam, which recorded a growth rate of 6.9%.
The country’s economic performance provides a foundation for sustained interest in the real estate sector. As the Philippines gears up to achieve upper-middle-income status by 2025, anticipated investments in the property market are expected to rise, reflecting growing confidence in the country’s economic prospects.
Investors and homebuyers alike are increasingly looking beyond Metro Manila to tap into the opportunities presented by these dynamic regions. The improvements in transportation infrastructure, such as new expressways and public transit systems, have made these areas more accessible and investor-friendly.
Stabilized demand amid declining launches
According to Colliers Property Market Report published for the third quarter of 2023, the demand for residential properties in Metro Manila remained tempered due to elevated mortgage rates. While the Bangko Sentral ng Pilipinas has initiated rate cuts, their immediate impact on consumer lending is limited.
Only 9,300 pre-selling units were sold in the first nine months of 2024, a 53% year-on-year decline. Colliers projects an annual average increase of 4,980 units in pre-selling take-up from 2024 to 2028, with a full-year growth of 6,830 units expected by the end of 2024.
Interestingly, there has been a growing preference for upscale and luxury units, which are now accounting for a larger share of overall pre-selling take-up. This trend reflects a shift in buyer profiles, as investors and high-income earners continue to fuel demand despite the economic headwinds.
Meanwhile, the supply in the Metro Manila condominium market remains constrained, with completions in the third quarter of 2024 amounting to just 830 units, bringing the year-to-date total to 9,860 units lower than the previously forecasted 11,290 units due to project delays.
The vacancy rate in Metro Manila’s secondary residential market increased to 17.4% in the third quarter of 2024, up from 17.2% in the previous quarter. The exit of Chinese Philippine Offshore Gaming Operators (POGOs) workers significantly contributed to this trend, particularly in the Bay Area.
On the rental front, recovery remains sluggish. In fact, residential rents grew marginally by 0.2% quarter-on-quarter (QoQ) and are expected to rise by 1.0% year on year by the end of 2024. Annual growth is forecasted at 2.1% from 2024 to 2028, with rental rates returning to pre-pandemic levels by the second quarter of 2028.
Capital values for residential properties grew by 0.5% QoQ in the third quarter of 2024, with an annual growth projection of 2.1% for the year.
One of the key elements sustaining demand in the residential market is infrastructure development, particularly in areas outside Metro Manila. Provinces such as Cavite, Laguna, and Batangas have emerged as focal points for growth, benefiting from enhanced connectivity and ongoing urban development projects.
Decline in office market growth
The office market experienced its first negative net take-up since 2021, recording a net absorption of -33,000 square meters (sq.m.) in the third quarter of 2024. This contraction was driven by the vacated spaces of POGOs following the government’s ban, coupled with rightsizing among outsourcing firms.
Notably, the vacancy rate in Metro Manila rose to 18.5% in the third quarter of 2024 from 18.3% in the previous quarter. However, demand for office space in the provinces outperformed Metro Manila, with provincial transactions accounting for 23% of total office deals during the period. Cebu and Davao emerged as key hot spots, with substantial leasing activity from outsourcing firms.
New office supply remained limited, with only 9,500 sq.m. completed in the third quarter of 2024. For the first nine months, total completions amounted to 176,400 sq.m. — a 47% drop compared to the same period in 2023. Colliers attributes this decline to construction delays, muted pre-leasing activity, and high vacancy rates in certain submarkets.
While average rents in Metro Manila declined by 0.6% QoQ, primary central business districts (CBDs) like Makati, Fort Bonifacio, and Ortigas demonstrated resilience with marginal increases. In contrast, secondary markets are likely to experience further rental declines.
Despite challenges, traditional firms drove demand in Metro Manila, accounting for 53% of transactions during the first nine months of 2024. Banking institutions, government agencies, and flexible workspaces were among the key contributors to this segment.
Shift to leisure-oriented developments
According to Leechiu Property Consultants, the full recovery of hotel, tourism, and leisure segment to pre-pandemic levels is projected by 2026, as the government and private developers invest heavily in infrastructure and accommodations.
Nationwide, the private sector has committed to 158 new hotel projects, totaling 40,084 rooms, generating P250 billion in investments, and creating 57,000 jobs.
Luzon accounts for 50% of the total pipeline, with key projects in Clark and Metro Manila. Visayas comes next with significant developments in Boracay, Mactan Island, and Panglao; while Mindanao contributes 8% of the pipeline, with notable projects in Davao City, Cagayan de Oro, and Siargao.
In response to tepid demand in Metro Manila, developers are shifting focus to leisure-oriented projects outside the capital, according to Colliers. Golf communities are gaining traction as lifestyle-oriented investments. These projects, priced between P175,000 and P590,000 per square meter, report take-up rates ranging from 43% to 100%.
Surge in retail demand
Colliers highlighted that mall operators are strategically refreshing retail spaces to entice more visitors and extend their dwell time, particularly in the run-up to the festive fourth quarter. In the third quarter of 2024, 104,800 sq.m. of retail space was absorbed, with food and beverage (F&B) brands leading the charge.
Expansion by foreign retailers, including brands from the home furnishing and personal accessory sectors, further amplified demand.
The market also saw the delivery of 86,900 sq.m. of new retail space during the quarter, including prominent developments like Opus Mall in Quezon City and expansions of SM City Caloocan and SM Bicutan.
On the other hand, developers are increasingly focusing on redeveloping existing malls to align with consumer demands for more immersive and experiential spaces.
Retail rents exhibited modest growth due to the influx of new supply, with a QoQ increase of 0.2%. Premium rents were observed in business hubs and malls with low vacancy rates.
Vacancy rates improved slightly to 15.1% in the third quarter, driven by robust retailer take-up. By yearend, vacancy is projected to inch up to 15.3% as new supply comes.
Source: Business World