Growing Infrastructure Investment to Strengthen Philippines Construction

Wednesday 8 June 2016, Amsterdam

A new report, now available on ASDReports, foresees a bright future for property insurance in Qatar, fuelled by projected infrastructure spending ahead of the 2022 FIFA World Cup, and investment in the non-oil sectors in order to diversify the economy.

Property insurance is expected to remain the largest in the non-life insurance sector over the next couple of years, to value QAR6.4 billion (US$1.8 billion) by 2019. In the last five years, the category’s gross written premium skyrocketed from QAR1.8 billion (US$500 million) in 2010 to QAR4.3 billion (US$1.2 billion) in 2014, at a CAGR of 24.0%.

Investment in construction projects will drive property insurance

The growth of property insurance will be influenced by an increased investment in construction activity, propelled by real estate and infrastructure and development in particular. The country is also looking to diversify its economy, with the government planning to spend QAR546.1 billion (US$150.0 billion) on infrastructure projects, as well as allocating more budget to non-oil sectors.

Qatar will also be the first Arab country to host the FIFA World Cup in 2022. The successful World Cup bid is accelerating large-scale infrastructure projects such as metro and light rail systems, the construction of roads, ports, stadia and related sporting infrastructure. Qatar’s real GDP is expected to rise from QAR280.9 billion (US$77.2 billion) in 2014 to QAR368.3 billion (US$101.2 billion) in 2019, at a CAGR of 5.6%.

The Qatari government plans to start investing in the non-oil sectors – an initiative that is also expected to support growth in property insurance. In 2015, India entered into a bilateral agreement with Qatar to invest in the country's infrastructure and information technology sectors as part of the Qatar 2030 vision initiative.A new report by Timetric’s Construction Intelligence Center (CIC) foresees a continued growth in the Philippine construction industry, which is forecast to reach US$47.0 billion in 2020.

According to the report, the rate of construction growth in the Philippines will remain relatively high up until 2020, bolstered by greater focus on infrastructure improvement and the continued expansion of residential and commercial buildings. Favourable government policies with regards to public-private partnership (PPPs) will also play an important role. Consequently, Timetric’s CIC forecast the Philippine construction industry to rise from US$30.2 billion in 2015 to US$47.0 billion in 2020, at a CAGR of 9.22%.

The residential market is expected to remain the largest in the Philippine construction industry over the next five years, to account for 33.9% of the industry’s total value in 2020. It will be supported by the expansion of the middle-class population, government efforts to urbanize underprivileged rural areas, and housing projects for low-and middle-income groups. The government’s Home Development Mutual Fund (Pag-IBIG Fund) financing scheme is expected to provide continued support to low-and middle-income households, which will help the market to grow further.

Moreover, the residential market is closely followed by the infrastructure market, which is expected to maintain second position. It is also expected to be the fastest growing in the industry, driven by government plans to develop high-speed rail links, highways, and sea ports through PPPs. For example, in 2015, Japan announced that it would provide PHP89.6 billion (US$2.0 billion) for the construction of the first phase of the North−South commuter rail project, one of the country’s major railway development projects.  As a result, Timetric expects the infrastructure market to reach US$14.7 billion in 2020, registering a nominal CAGR of 14.14%.

Danny Richards, Lead Economist at Timetric’s CIC comments: “The change in government in the Philippines, with the presumptive president-elect Rodrigo Duterte coming to office later this year, is not expected to derail the economic growth agenda, and the large-scale infrastructure development program, funded through PPPs, will continue to be promoted.”