Construction pickup seen in second half

MANILA, Philippines - Construction is expected to pick up in the second half following a slowdown in the first six months of the year, the research arm of Metropolitan Bank and Trust Co. said.

“Even with the slow construction in the first half, expect new private construction activity to pick up albeit still at a slow pace in the second half as rehabilitation efforts gain momentum and given the low base come fourth quarter,” said Metrobank research analyst Mabellene Reynaldo.

“Real estate activity, on the other hand, is seen to remain solid for the rest of the year given high supply in 2013 and sustained demand,” she added.

The government earlier said it has released P32.2 billion in relief funds for communities devastated by Super Typhoon Yolanda in late 2013. The funds went to the restoration of power in the typhoon-hit areas, housing programs, and the construction of public buildings destroyed by the typhoon.

But Reynaldo cautioned that the wet season remains a risk in further expanding construction activities during the second half of the year.

“A possible downside risk, apart from slower-than- expected rehabilitation efforts, is lower activity in the second half given the wet season,” she said.

Latest government data showed new construction projects grew 5.3 percent to P69.9 billion in the second quarter. However, Reynaldo said this is a slowdown from the nine-percent expansion in the same period last year.

“Given the continued slow growth of new construction activity, overall construction value-added may continue to move at slower rate (during) the second half of the year. This assumes the lag between the approvals and actual construction,” Reynaldo said.

She noted that the contraction in new approvals during the last quarter of 2013 and the slow start seen in the first quarter might have resulted in the construction value-added’s growth of only 0.86 percent in the first half.

Reynaldo added the rehabilitation efforts are improving as new private construction approvals in the Eastern Visayas only contracted 0.1 percent in the second quarter from the 33.2-percent drop in the first three months of the year.