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.
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. Growth was evident in the infrastructure and industrial segments, where high-value assets like large-scale warehouses were delivered across regional centers.
The momentum shifted in the latter part of the year as the broader economy cooled, with several headwinds emerging. Material and labor costs remained elevated, supply chain bottlenecks persisted, weaker foreign direct investment slowed growth, and compliance delays particularly on permits hindered progress.
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.
As a result, a rising number of projects were left 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.
Despite the challenges, milestones were achieved in the green building sector, with the WELL Gold Certification of LIMA Tower One in Batangas being a notable achievement. It was the first such development in the Philippines to be certified under the WELL Core v2 standard.
