MANILA, Philippines — Brutal inflation, which soared to 14-year highs in past months, left construction costs more expensive by the day in the country’s economic capital, so said a global engineering consultancy firm.
In the 2023 iteration of the International Construction Costs Index, Arcadis reckoned that Manila’s ranking of 81 out of 100 cities stayed put compared to the previous outing. This meant that the cost of construction in the Philippine capital was higher than in other countries in the region like Malaysia, Vietnam and India.
What was telling was the impact of rising inflation on the prospects of the Philippines’ construction market. Inflation is decelerating, however, retreating to 6.6% in April. As it is, the impact on the local sector came down to labor gaps, material costs turning pricey, and rising fuel prices as Arcadis sees it.
“Despite these obstacles, the industry was able to adapt well by implementing measures such as bundling packages for different projects to save time and cost, using locally sourced materials that meet standards, and early collaboration with suppliers to ensure the availability of required items and goods on site,” said Arcadis country sales/client development director Joycelyn Pagcatipunan.
Inflation in the Philippines was fueled by supply chain bottlenecks, a weak peso, expensive fuel prices, and consumer spending driven by domestic economy’s reopening in 2022.
Rising construction costs are nothing new, since businesses and firms here and abroad, endured inflation. One of the ways they could recoup expenses is by passing on the burden of expensive prices to consumers and clients.
For context, the report covered 100 cities across six continents. The list was built by comparing 20 different building types, a survey of construction costs, a market conditions review, and indexing against prices of buildings in Amsterdam.
Geneva, London, New York and San Francisco topped the list’s most expensive cities to build in according to the 2023 list.
“Moving forward, challenges are expected to persist, but the industry is likely to continue to innovate and find new ways to mitigate high costs and maximize efficiency,” Pagcatipunan added. — Ramon Royandoyan