Public Sector Demand to Sustain Construction Demand in Singapore During 2020

January 2020

The Building and Construction Authority (BCA) of Singapore has released its projections for 2020. The agency projects total construction demand (value of construction contracts to be awarded) to remain strong in 2020 on the back of sustained public sector construction demand. The total construction demand for the year is expected to range between SGD 28 billion (USD 20.7 billion) and SGD 33 billion (USD 24.4 billion).

Public sector construction demand, which is expected to be between  SGD 17.5 billion (USD 13 billion) and SGD 20.5 billion (USD 15.2 billion) constituting about 60% of the projected demand. Public sector construction demand is expected to be spurred by larger and more complex infrastructure projects, such as the Integrated Waste Management Facility, infrastructure works for Changi Airport Terminal 5, Jurong Region MRT Line and Cross Island MRT Line.  Private sector construction demand is projected to be between SGD 10.5 billion (USD 7.8 billion) and SGD 12.5 billion (USD 9.3 billion) this year, supported by projects such as redevelopment of en-bloc sale sites, recreational developments at Mandai Park, Changi Airport new taxiway and berth facilities at Jurong Port and Tanjong Pagar Terminal. The forecast for 2020 excludes any construction contracts by the two Integrated Resorts (IRs), Marina Bay Sands and Resorts World Sentosa (RWS), pending confirmation on the timeline and the phasing of the expansion projects. The two IRs have announced expansion plans worth investment of SGD 9 billion (USD 6.7 billion), with MBS adding a new entertainment arena and hotel tower, and RWS extending Universal Studios Singapore to include two new attractions – Minion Park and Super Nintendo World.

During 2018, total construction demand expanded by 9.5% to reach SGD 33.4 billion (USD 24.7 billion), higher than the upper bound of BCA’s 2019 forecast, mainly due to a stronger than expected increase in industrial construction demand for petrochemical facilities despite the slowdown in manufacturing sector. Total preliminary construction demand last year for the public and private sector was SGD 19 billion (USD 14 billion) and SGD 14.4 billion (USD 10.7 billion) respectively.

Over the medium term, BCA expects construction demand to stay steady, reaching between SGD 27-34 billion (USD 20-25.2 billion) for 2021 and 2022 and SGD 28-35 billion (USD 20.7-25.9 billion) per year for 2023 and 2024. Demand will continue to be supported by the public sector, with building projects and civil engineering works each taking up about half of the demand. BCA expects private sector construction demand to stay at a moderate level in view of the likely continued global economic uncertainties and the current overhang in the supply of private residential housing units. The planned expansion of the two Integrated Resorts could be positive for private sector demand, depending on their eventual construction timelines and phasing.

(Sources: Building and Construction Authority, Singapore; Channel NewsAsia)

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