Construction demand in 2019 to be driven by infrastructure and industrial building projects

By Amy Tan / EdgeProp | January 19, 2019 12:00 AM SGT
Total construction demand in 2019 is expected to be in the range of $27 billion to $32 billion, according to the Building and Construction Authority (BCA) in a release on Jan 14. This is comparable to the estimated $30.5 billion construction contracts awarded in 2018.
The public sector is expected to account for between $16.5 billion and $19.5 billion, contributing to 60% of projected construction demand in 2019. It is bolstered by major infrastructure and a pipeline of major industrial building projects.
Construction contracts worth $10.5 billion to $12.5 billion are expected to come from the private sector this year, representing about 40% of total construction demand. The bulk will come from the redevelopment of successful en bloc sites transacted in the recent collective sale cycle from 2H2017 to 1H2018, says Teo Jing Siong, group director of BCA’s strategic planning office, who spoke at a seminar organised by BCA and the Real Estate Developers Association of Singapore (REDAS) on Jan 14.
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Private residential developments are expected to bring in $4.3 billion to $4.7 billion in construction demand this year, slightly lower than last year’s $5.2 billion, says Teo. The rest will come from new industrial developments.
In 2018, total preliminary construction demand for the public and private sector was $18.4 billion and $12.1 billion respectively, according to BCA. This fell within forecast numbers due to strong demand from institutional building and civil engineering projects, growth in the manufacturing sector and more private residential redevelopment projects from en bloc sales in 2017 and 1H2018.
Construction contracts worth $10.5 billion to $12.5 billion are expected to come from the private sector this year
Private sector projects worth $10.5 billion to $12.5 billion are expected to make up 40% of total construction demand (Credit: Samuel Issac Chua/EdgeProp)
To help firms improve productivity, BCA will expand the Building Innovation Panel (BIP) to cover any type of innovation that can improve Singapore’s built environment. The inter-agency platform accelerates the regulatory clearance of technologies that improve construction productivity. Innovations can include advanced and sustainable building materials, technologies for green buildings and automation.
Additionally, BIP can help match inventors of an innovation with developers so that it can be implemented in an actual project and eventually across the industry.
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“With stable and sustainable construction demand fundamentals, firms in the sector will have more opportunities to invest in innovation. This is important, given that the way we build is increasingly being transformed by the use of technology,” said Zaqy Mohamad, Minister of State for National Development and Manpower in his address at the BCA-Redas Build Environment and Property Prospects Seminar.
He added that the BIP will review policies, regulations and requirements that may inhibit innovation. It will also facilitate the early involvement of relevant regulatory agencies as soon as promising solutions have been identified.
In the medium term, BCA foresees steady improvement in construction demand with spending between $27 billion and $34 billion per year for 2020 and 2021. This could increase to between $28 billion and $35 billion per year for 2022 and 2023.
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The public sector is expected to remain a key contributor with spending estimated at $16 billion to $20 billion per year from 2020 to 2023 with similar proportions of demand from building projects and civil engineering works.
In addition to public residential developments, public sector construction demand over the medium term will remain supported by big infrastructure projects such as the Cross Island Line, developments at Jurong Lake District and Changi Airport Terminal 5.
Elsewhere, private sector construction demand is expected to gradually increase in the medium term, in line with growth in other economic sectors.