Media Release: Regions top real estate constructions

Despite a slowdown in residential construction, real estate sector posted growth in

regions, according to Philippine Statistics Authority (PSA).

“The recent statistics released by PSA is a welcome development for regions” Gus Agosto Faculty
of School of Business and Economics, University of San Carlos said in a briefing in Cebu City.

PSA recently reported a 4.3% contraction in residential construction and 46.6 % decline in
residential construction in the fourth quarter of 2017. However, as embedded in the same report,
other regions outrank National Capital Region, in terms of number of construction.

Calabarzon led other regions with a total construction of 7,292. Central Luzon ranked second with
3,611 constructions. Other regions in the top five were Central Visayas and Davao Region.

A lot of developers and investors are now pouring investments in regions.

“We’re seeing a lot of new growth areas that will unlock new opportunities in different
regions across the country,” Agosto said.

The decline in residential construction is normal sans the quarter to quarter report of the
previous years. In the second quarter, residential construction posted a negative growth compare
to last year, but it bounces back in the third quarter. Nevertheless, real estate is one of the driver
in economic growth in the last quarter according to the National Economic Development
Authority.

“The decline and adjustments in terms of residential real estate is a signal to players to conduct
market analysis. Real Estate practitioners must also venture other regions and be trained in
marketing non-residential development such as commercial, industrial, agricultural and
institutional. ” #

Importance of macroeconomic analysis in

real estate practice
Having a view on the macroeconomic trends is critical when analyzing the real estate market. Real
estate does not operate in a vacuum. Thus, it is essential for a real estate practitioner to grasp
the role of the industry and knows the current events and how macroeconomic affect the real
estate market, both in the aggregate supply and demand and the expectation of the buying
public.

Real estate plays an important role in the economy. Residential real estate provides housing for
families. It is the greatest source of wealth and savings for many families. Commercial real estate,
which includes apartment buildings, create jobs and spaces for retail, offices and manufacturing.
Real estate business and investment provide a source of revenue for millions.

Real estate, renting, business and construction are both measured by, and contributes to Gross
Domestic Product (GDP). As shown in the graph, its growth continues. In 2016, it contributed P1.8
trillion, 13 percent of the country’s gross domestic product. It exceeded its 2000 record of P3.5
trillion. At that time, real estate, renting and business was a hefty 9 percent component of GDP.

Private construction, which is mostly done by property developers and individuals, contributed
P1.2 trillion in the gross domestic product. It is one of the contributor in providing
employment and help in lowering unemployment rate.

Beside GDP, real estate market in the country is fueled by increasing foreign direct
investment. Since 2007, the accumulated foreign direct investment totalled to P 2.1
Trillion. Meanwhile, the overseas Filipino workers remittances increases by 17% .
From 22 Million in 2013 to $ 26.8 Million in 2016.
Understanding key real estate relationships has a strategic implication on real estate decision
making and portfolio management. The changing real estate environment can be linked to the
macro-economy. Knowing the relationship between macroeconomic variables and real estate
performance , and knowing whether these links are consistent or changing overtime ca provide a
useful tool in leveling up our service to our clients and to our daily real estate practice.