UMVA has learned that the construction sector is on the brink of a sharp cost surge as geopolitical turmoil in the Middle East drives fuel prices to record highs.
Rising diesel and oil rates have pushed the price of reinforcing steel to an eye‑watering P45 per kilogram, a level that is forcing developers to abandon high‑rise towers in favor of low‑rise, horizontal projects where steel consumption is far lower.
Horizontal and township developments are now seen as safe harbors because they allow builders to pause or scale back when sales falter or material costs spike, unlike skyscrapers that lock developers into rigid timelines regardless of market turbulence.
“We are witnessing a clear pivot in developer strategy,” said an associate director at a leading consulting firm in an email to our team, explaining that the fear of runaway expenses is reshaping project portfolios.
Inflation, which surged to 7.2% in April, is amplifying the pressure. Projections suggest that if oil steadies near $140 a barrel through September, annual inflation could linger between 4.5% and 4.8%, with short‑term peaks topping 7%.
Uncertainty is prompting a cautious “wait‑and‑see” mentality. Developers hesitate to launch new high‑rise ventures, worried that prolonged geopolitical tension will further inflate fuel and material costs, squeezing both builders and homebuyers.
Materials that rely heavily on imports and petrochemicals—especially metals and paint—are expected to bear the brunt of price hikes, while other inputs may see more modest increases.
Overall construction material costs are forecast to climb 3.17% as raw‑material procurement becomes more expensive, driven directly by higher fuel and transport fees and indirectly by the energy‑intensive nature of steel, cement and glass.
Current estimates place the cost of constructing a mid‑rise residential building between P35,640 and P54,215 per square meter, while high‑rise projects now demand between P43,640 and P78,465 per square meter.
Despite the tightening market, an oversupply of condominium units in Metro Manila is giving buyers leverage. Prospective owners can negotiate better payment terms, discounts, and promotional offers, turning the affordability challenge into a potential advantage for those willing to wait and bargain.
