CRC in Infrastructure and Industry — The Philippine construction industry isn’t tapping a market which could be worth at least PhP 641 Billion, say CRC consultants Dr. Winston Conrad B. Padojinog and Erica Myra P. Yap in a study commissioned by Habitat for Humanity’s Terwilliger Center for Innovation in Shelter in 2020.

According to the study (which can be downloaded for free here), the potential construction market value of the Philippine’s Owner-Driven-Construction (ODC) segment – also known as the incremental building housing segment – “can reach PhP 641.7 billion (US$ 12.8 billion).”

3.1 million households strong
People who belong to the ODC segment are those who have their own land and own their own residence – usually temporary dwellings that they would like to improve. But with an annual income of only PhP 90,000 to PhP 270,000, they don’t usually qualify for financing under the terms and conditions usually imposed by most commercial lending institutions. And since they already have property rights and residences, they usually aren’t covered by priority government housing.
As a result, the 3.1 million-household strong ODC segment represents about 55% of the large unserved “cannot afford” market.

“Affordability remains a major issue,” notes the study, “because the ODC market is constrained to allocate only about 2.04%, or PhP 6.7 billion (US$ 134 million) of total annual household expenditures to furnishing and routine household maintenance, which is almost 96 times lower than the construction market value.”

Bridging the gap and breaking into the ODC segment
But the study notes that some efforts are beginning to be put in place to help bridge this affordability gap and meet the needs of the unmet ODC segment. The study notes that “numerous microfinance institutions in the country are keen on breaking into this segment.” It also points out that the unserved segment (of which the ODC is a large sub-segment) of the Philippines housing market has been found to have a strong willingness to avail of such financing plans.

The CRC study suggested that the national government, the local government units, and private sector developers, working with NGOs like Habitat for Humanity, ought to partner with each other to figure out ways to address the needs of the ODC segment under the 2016 Balanced Housing Development Program Amendments law (Republic Act 10884). The study points out that this could “unlock opportunities for ODCs beyond what their private properties and limited household income can offer to significantly improve their lot and living conditions in a much shorter period of time.”

A large and focused segment
Interestingly, the study also notes that households belonging to the ODC segment are concentrated in regions, provinces, and cities undergoing rapid urbanization, where housing affordability is a major concern. The top three (3) regions where the ODCs are found as of 2018 are Regions VII (Central Visayas), XII (SOCCSKSARGEN), and IV-A (CALABARZON), particularly the provinces of Cebu, Davao del Sur, and Leyte and the cities of Davao, Cebu, and Bacolod.

The study notes that this allows for more efficient operations by stakeholders who want to help serve the ODC segment, as “concentrating resources and efforts on a large and focused segment such as the ODC in certain areas can lower costs and magnify the multiplier impacts.”

Scale economies, and magnifying opportunities and positive impact
Dr. Padojinog asserted this fact again at a “BAHAYnihan” online forum event held last October 2020, hosted by Habitat for Humanity Philippines, Habitat’s Terwilliger Center for Innovation in Shelter (TCIS), and the Center for Research and Communication. (The full video for which can be accessed here.)

“The sheer size of the ODC segment and its concentration in some areas,” Dr. Padojinog said near the conclusion of his talk, “can provide the necessary scale economies, and magnify opportunities and positive impact for stakeholders who come to address their needs.” • | RE de LEon | CRC ||
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