Deep state pockets set to drive construction recovery in Singapore

After a predicted slump of 36.5% in demand for construction in Singapore last year owing to the coronavirus pandemic, public sector orders are projected to drive a recovery this year to between S$23bn and S$28bn (US$17-21bn), Singapore’s Building and Construction Authority (BCA) said today.

That would be an improvement from the S$21.3bn in demand – a preliminary estimate – seen in 2020.

Public sector orders would contribute some 65% of the total new demand this year, with contracts scheduled to be awarded in public housing and infrastructure projects, including on the Jurong Region MRT Line, the Cross Island MRT Line Phase 1 and the Deep Tunnel Sewerage System Phase 2.

These will account for between S$15bn and S$18bn in anticipated demand.

Public sector demand dropped from S$19bn in 2019 to S$13.2bn in 2020, as Covid disrupted project schedules.

The projected increase in public sector construction demand for this year and beyond excludes any potential awards of construction contracts for the development of Changi Airport Terminal 5 or the expansion of Integrated Resorts because their construction timelines are still under review due to the impact of the pandemic.

Private sector construction demand is projected to remain suppressed at between S$8bn and S$10bn in 2021. The Covid-induced recession saw private sector demand fall from S$14.5bn in 2019 to S$8.1bn in 2020.

BCA projects the bulk of private sector construction demand in 2021 to comprise development of the remaining en-bloc residential sites, major retrofitting of commercial developments as well as construction of high-specification industrial buildings to meet business needs.

Forecast for 2022 to 2025

BCA expects a steady improvement in construction demand over the medium term. It is projected to reach between S$25bn and S$32bn per year from 2022 to 2025.

The public sector is again expected to lead, contributing contribute S$14bn to S$18bn per year from 2022 to 2025 with similar proportions of demand coming from building projects and civil engineering works.

Besides public residential developments, public sector construction demand over the medium term will continue to be supported by large infrastructure and institutional projects such as the Cross Island MRT Line (Phases 2 and 3), the Downtown Line Extension to Sungei Kadut, the cycling path networks, the relocation of Singapore Science Centre, the Toa Payoh Integrated Development, the Alexandra Hospital redevelopment and a new integrated hospital at Bedok.

The private sector construction demand is expected to improve in the medium term to reach between S$11bn and S$14bn per year from 2022 to 2025. This is in anticipation of a gradual recovery of the global economy, contingent on the successful deployment and effectiveness of COVID-19 treatment and vaccines as well as easing of lockdown restrictions.

Construction Output

Based on the contracts awarded in the past few years and considering the construction demand forecast for 2021, the total nominal construction output in 2021 is projected to increase to between S$24bn and S$27bn, from the estimated S$19.5bn in 2020.

An anticipated improvement in construction demand in 2021 and the backlog of remaining workloads impacted by the COVID-19 during 2020 will support the projected pickup in total construction output.

Digital transformation

The Alliance for Action ("AfA") on Digitalising Built Environment, an industry-led and government-supported coalition, has identified digitalisation as an important enabler to help the industry build smarter.

AfA introduced a set of data standards for the Common Data Environment to facilitate information flow for building projects across digital platforms shared by various building professionals and companies.

Image: Singapore skyline, by Swapnil Bapat/Unsplash

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