Philippines real-estate growth in 2006 was an all-time high

Jun. 14, 2007

MANILA — The Philippine real estate industry continued its outstanding performance with a significant rise of 17.1 percent (at constant price) in Gross Value Added (GVA) in 2006, the highest annual growth achieved since 1967. The 2006 growth, an acceleration from its 15.4 percent performance in 2005, surpassed the high 16.1 percent growth recorded in 2004. Level-wise, real estate GVA at constant prices reached Php 14.3 billion in 2006, higher than Php 10.6 billion and Php 12.2 billion recorded in the years 2004 and 2005, respectively.

The robust annual performance in real estate industry was driven by increased renting and leasing operations as a result of the opening of upscale giant super malls and commercial and shopping centers. The growth was further buoyed by the strong production and sales of residential developments in subdivisions and high-rise condominium projects fueled by the significant contributions of the remittances of Overseas Filipino Workers (OFWs) and Filipino immigrants. Likewise, the growth of Business Process Outsourcing (BPO) sector continued to boost sales and occupancy of office spaces, especially in the leading commercial business districts in the country.

In the eighties, the performance of the real estate industry was affected by the economic and political developments in the country. While it grew by 13.6 percent and 13.9 percent in 1980 and 1982, respectively, the sector plummeted by 25.3 percent in 1984, its worst performance in almost 40 years. It was during this time that the economy declined by 7.3 percent due to a number of reasons, to include, decline in world demand for Philippine exports and shattered investment confidence in the country brought about by political events, among others. From 1991, the industry gradually increased, attaining a 10.7 percent growth in 1996 before slowing down in the next five years to a low of negative 10.7 percent in 2001, the second lowest annual growth rate since 1967.The slowdown was largely attributed to the 1997 Asian financial crisis, which was felt not only by real estate players and consumers but also by the entire economy.

Starting 2002 however, the industry picked up and remarkably recovered until its boom in recent years including the all-time high of 17.1 percent in 2006. Up until the first quarter of 2007, the growth showed brisk performance of the sector. Indicators such as expansion of existing malls and shopping centers, increased office space demands from the call center industry and business process outsourcing (BPO) sector, and stepped up priming activities of major real estate establishments likewise indicate that the growth could continue for the coming quarters.(PIA Dispatch)

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