PHL construction industry posted strong start in 2025 but faded late — Hearn & Hearn

THE construction industry’s performance in 2025 was a “tale of two halves,” with a strong start driven by infrastructure and industrial investment eventually fading due to significant headwinds and a cooling economy, according to Hearn & Hearn Consulting.

The firm noted that the initial half of the year saw strong expansion in construction output, supported by a steady rise in building permits and sustained lending for various projects. The growth was evident in the infrastructure and industrial segments, where high-value assets like large-scale warehouses were delivered across regional centers like Cagayan de Oro, Davao, and Cebu.

The momentum shifted in the latter part of the year as the broader economy cooled.

“The second half of 2025 experienced several headwinds; material and labor costs remained elevated, supply chain bottlenecks, weaker foreign direct investment, and compliance delays particularly on permits,” Hearn & Hearn Executive Director Michael Hearn said in the report on Wednesday.

Growth in gross domestic product fell below government targets, with the third-quarter expansion dropping to 4%, its weakest performance in four years. This was driven by the infrastructure corruption scandal, which slowed procurement and triggered a review of many major projects, it said.

The firm observed that there was a rising number of projects “in disarray,” due to mismanaged cash flows, out-of-sync programming, and non-compliant health and safety protocols. Project auditing and independent cost consultancy saw an uptake as developers and lenders sought to restore accountability and secure their capital.

Hearn & Hearn said milestones were nevertheless achieved in the green building sector, citing the WELL Gold Certification of LIMA Tower One in Batangas as a landmark achievement. It was the first such development in the Philippines to be certified under the WELL Core v2 standard. — Juliana Chloe A. Gonzales