Friday, 16 Apr 2021

Singapore's construction demand for 2021 expected to rise up to $28b

SINGAPORE – Construction contracts for the built environment sector are expected to grow to between $23 billion and $28 billion this year, as the sector recovers from the impact of the Covid-19 pandemic, National Development Minister Desmond Lee said on Monday (Jan 18).

This is up from the $21.3 billion worth of projects estimated to have been awarded last year – a figure that was revised downward by $10 billion in September after demand took a hit owing to the pandemic, with projects postponed in light of market uncertainties and disruption.

The growth is expected to continue over the next five years to between $25 billion and $32 billion, Mr Lee said at a seminar organised by the Building and Construction Authority (BCA) and the Real Estate Developers’ Association of Singapore.

The public sector will contribute about 65 per cent of the overall construction demand for 2021, he added. This figure – which ranges from $15 billion to $18 billion – is higher than the $13.2 billion worth of public sector projects in 2020.

Upcoming public sector projects include the Jurong Region Line, the Cross Island Line and Phase 2 of the Deep Tunnel Sewerage System, which will convey used water from the western part of Singapore to the Tuas plant for treatment.

There will also be around $6 billion worth of smaller public sector projects which are less than $100 million in contract value, such as cycling paths, parks, and upgrading works – comparable with the annual average before Covid-19 hit, Mr Lee noted.

But demand for projects by the private sector is unlikely to return to pre-Covid-19 levels, as investors are likely to remain cautious, he added. Hence, demand in 2021 is expected to be between $8 billion to $10 billion – similar to the figure of $8.1 billion in 2020, a drop from $14.5 billion in 2019.

But as the global economy gradually recovers, construction demand in the private sector is also expected to improve steadily in the medium term to reach between $11 billion and $14 billion per year from 2022 to 2025, the BCA said. But this is still contingent on the successful deployment and effectiveness of Covid-19 treatment and vaccines as well as easing of lockdown restrictions.

This forecast does not take into consideration the potential new contracts for Changi Airport Terminal 5 and the expansion of the two Integrated Resorts, as the project timelines are still under review due to Covid-19 disruptions.

Mr Lee acknowledged that the construction industry is still facing significant headwinds, especially with the tight manpower situation. He said the Government will continue to monitor the situation and adjust measures to support the sector.

The private property market has remained resilient, with the pace of increase in private housing prices gathering momentum since the second quarter of 2020, he noted. He urged developers to remain prudent in their land bidding and work with agents to market their projects responsibly, and for households to exercise caution in their property purchase decisions.

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“The Government is monitoring the developments in the property market very closely,” he said.

Efforts to encourage the industry to adopt technology and reduce reliance on foreign workers will also be stepped up, said Mr Lee. This includes taking a “more aggressive approach” to drive Design for Manufacturing and Assembly (DfMA) across the entire sector in the coming years. More will also be done to drive Integrated Digital Delivery (IDD) , he added.

DfMA involves construction being designed for manufacturing off-site in a controlled environment, before being assembled on-site, while IDD uses digital technologies to integrate work processes and connect stakeholders working on the same project throughout the construction and building process.

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