Islamist militants in the Philippines have executed a German who survived being held for nearly two months by Somali pirates eight years ago, after talks for his release in exchange for a 30 million-peso (S$854,000) ransom collapsed.

A video released by the brutal Abu Sayyaf group on Monday (Feb 27) afternoon showed Mr Jurgen Kantner, 70, a sailing enthusiast, his hands tied behind his back, being beheaded at a jungle clearing.

He could be heard on video saying "Now he'll kill me", before a man began cutting his head off with a large knife.

In a statement, peace adviser and chief hostage negotiator Jesus Dureza said the government "strongly condemns the barbaric beheading".

"Up to the last moment, many sectors... exhausted all efforts to save his life. We all tried our best. But to no avail," he said. He added: "Terrorism has no place in a country like ours and we as a people must confront violent extremism every time it rears its ugly head."

A police report released on Sunday said Mr Kantner was executed at around 3.30pm, on Sunday, in Buanza district, Indanan town, Sulu province, 1,500km south of the capital Manila.

Mr Kantner was beheaded by men under a certain Muammar Askali, alias Abu Rami, purportedly a unit leader of the brutal Abu Sayyaf group, linked to the Islamic State in Iraq and Syria.

Mr Kantner was abducted while he and his wife, Ms Sabine Merz, were cruising a dangerous area of the Philippines, by the Abu Sayyaf, an insurgent group known for kidnapping and ransoming foreigners. Ms Merz was killed, purportedly when she tried to fight back with a shotgun.

The couple have been sailing the oceans for many years aboard their 53-footer, the Rockall.

They were held for 52 days in Somalia in 2008 before their captors freed them, reportedly after a six-figure ransom had been paid.

Philippines Foreign Minister Perfecto Yasay, speaking on the sidelines of the United Nations Human Rights Council in Geneva, said on Monday Mr Kantner may have been killed because he was sick, Reuters reported. The Philippines was also working with its allies to determine the exact locations of the rest of the hostages held by the group, he said, adding that Manila would also continue to retain its "no ransom" policy.