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Building approvals drop 65.5% in Q2 as lockdown halts construction

CONSTRUCTION STARTS, as measured by building permit approvals, fell 65.5% in the second quarter, during the strictest phase of the lockdown, the Philippine Statistics Authority said.

Approved building permits during the period totaled 16,004, against 46,453 a year earlier.

These projects involved 2.51 million square meters of floor space worth P25.02 billion, down 81.2% year on year.

Residential construction, which accounted for the bulk of approved permits during the three months to June, fell 65.3% year on year to 12,004. The decline was led by “other” residential properties (minus 95.7% to 3 applications), apartments/accessorias (minus 81.6% to 668), residential condominiums (minus 81.3% to 12), and single-detached homes (minus 65% to 10,469).

Permits for duplex/quadruplex construction, meanwhile, rose 0.4% to 852.

Non-residential permits likewise fell 64% to 2,265, led by the industrial category, which declined 71.4% to 183. Also posting declines were structures classified as institutional (minus 67.1% to 464), agricultural (minus 62.4% to 106), commercial (minus 61.9% to 1,441), and other non-residential buildings (minus 60.6% to 71).

Permits for additions to existing structures retreated 78.6% to 347, while those for alterations and repairs of existing structures fell 65% to 1,388.

Calabarzon — composed of the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon — topped the regions with 2,641 approved construction permits. Central Visayas and Ilocos Region followed with 2,347 and 1,737, respectively.

ING Bank NV Manila Branch Senior Economist Nicholas Antonio T. Mapa said the decline seen nearly across the board was due to the lockdown that was imposed to contain the spread of coronavirus disease 2019.

“The drop-off in construction can be tied to two factors, the first being the strict lockdown period which led to the stoppage of overall construction activity as Filipinos were forced to hunker down to avoid transmission of the virus,” he said by e-mail.

“Second, construction activity was also iced as the overall economy plunged into recession with job losses mounting while households and corporations looked to protect cash flows given the uncertainty,” he added. 

In the second quarter, the economy entered recession as gross domestic product (GDP) growth fell by a record 16.9%.

Unemployment also spiked to a record 17.6%, according to the April round of the Labor Force Survey.

Going forward, Mr. Mapa expects a “modest pickup” in construction activity as projects resume with lockdowns easing in many parts of the country.

“But with the economic outlook very bleak, we are not expecting projects in the pipeline anytime soon with previously planned construction projects also likely relegated to the back burner for now,” he said.

“With construction likely sidelined by the pandemic, we are not optimistic for a quick rebound in overall GDP numbers as investors hold back on big-ticket items while preserving cash until sentiment improves,” he said. — Michelle Anne P. Soliman

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