Singapore construction sector to see soft recovery this year: report
Singapore’s construction sector will see a soft recovery in 2021 and regain momentum over the next five years, in line with global recovery from the pandemic, says Turner & Townsend in its insight report on the sector.
In particular, construction activity in the year will “continue to be driven mainly by the public sector” at 65%, up from 62% in 2020, it says.
Prospects for construction demand are expected to improve, albeit marginally. To that end, the Building and Construction Authority estimates construction demand for 2021 to be between $23 billion and $28 billion.
Meanwhile, demand from the private residential segment is anticipated to remain soft this year with a reduction in the number of land parcels put
up for sale in the first half of 2021. “However, the demand for collective sales could pick up later this year, as developers may start looking to replenish their land banks,” it notes.
Turner & Townsend projects a low demand for new office and retail developments with opportunities for more office restacking and consolidation fit-out works, as businesses consider more flexible working models to ensure the relevance of office workspace.
It highlights that although construction output is due to rise to the range of $24 billion to $27 billion in 2021, the increase would be largely due to the backlog created during the pandemic. This is in contrast with the construction output of $19.5 billion generated in 2020.
Tender pricing for new projects is also expected to increase between 6% and 10%, driven by factors such as: contractors allowing for labour shortages, increases in key construction material costs (reinforcement), availability of contracting resources, and the implementation of Covid-19 safe management measures.
The consultancy therefore expects that it will “take some time” for tender prices to stabilise.
Looking ahead, further industry consolidation is expected, and Singapore’s construction supply chain is likely to face continued challenges with upstream and downstream disruptions, it adds.