Property slowdown hits demand in construction sector

SINGAPORE — A deepening slowdown in Singapore’s housing market is having a domino effect on the city’s construction industry, with expected building demand this year expected to fall from a record last year, official estimates showed.

Construction deals are expected to reach between S$29 billion and S$36 billion this year, down from a record S$37.7 billion last year, said the Building and Construction Authority (BCA), with most of the contracts expected to come from industrial projects and a pipeline of institutional and civil engineering works.

Construction demand from the private sector is expected to fall to between S$11 billion and S$15 billion, compared with S$18 billion last year, as developers turn cautious amid a slowdown in private home sales and global economic uncertainties.

Public sector projects are expected to account for about 60 per cent, or between S$18 billion and S$21 billion, of the demand this year.

“(It is) partly because of the global uncertainty in the economy. Locally, for some specific market sectors, for example residential, we don’t think it will be as bullish as it was in the past years,” BCA chief executive officer John Keung told reporters at the BCA-REDAS Built Environment and Property Prospects Seminar yesterday.

“But then, if you look at (all) construction demand, we believe that the public sector projects such as infrastructure and institutional buildings like hospitals will pick up,” he added.

Last year’s “exceptionally strong” performance was ramped up by a high volume of institutional and civil engineering contracts, including the Sengkang General and Community Hospitals, the Tampines Town Hub project and various major contracts for the Thomson-East Coast MRT line and the coming Changi Airport development.

And although construction demand will decrease this year, the slowdown is likely to be cushioned by a rise in private sector engineering projects, such as proposed infrastructure works for the development of the Changi East Runway 3, the BCA said.

Mr Lee Yi Shyan, Senior Minister of State (National Development and Trade and Industry), who was officiating at the seminar, noted that construction productivity improved by about 1.2 per cent per year from 2010 to 2013.

But he urged the industry to become more efficient.

“Our end goal is to see a more efficient industry structure. We should orientate the industry towards Design for Manufacturing and Assembly in order to achieve higher manpower savings while raising the quality of the finishing components. Our construction sites will also become safer, cleaner and quieter.”

Mr Lee said that in the second Construction Productivity Roadmap, a key focus will be on training workers for new materials, technologies and construction methods.

The BCA forecast that annual construction demand will range between S$27 billion and S$36 billion over the next two years, and between S$26 billion to S$37 billion in 2018 and 2019, sustained by mega public sector infrastructure projects required to meet long-term population needs.