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SINGAPORE: Construction demand is expected to recover moderately in 2021, supported largely by public sector demand, with a number of “major” infrastructure projects to be awarded this year, said the Building and Construction Authority ( BCA) on Monday (January 18).
BCA projected that construction contracts worth S $ 23 billion to S $ 28 billion will be awarded in 2021.
That marks an improvement from the S $ 21.3 billion awarded in 2020, a sum within projections that had been revised downward in the wake of the COVID-19 pandemic.
WATCH: Construction demand will plummet this year after COVID-19 paralyzes projects
Speaking at a seminar on the prospects for the real estate sector on the same day, National Development Minister Desmond Lee said that the government will contribute around 65 percent, or S $ 15-18 billion, of total demand. of construction this year.
“This is higher than the S $ 13.2 billion in public sector projects in 2020.
“Public sector demand in 2021 will be driven by major public housing and infrastructure projects, such as the Integrated Transportation Center (of the Land Transportation Authority) in Jurong East, the Jurong Region Line and the Cross Island Line,” Mr. Lee said.
He added that there will be around S $ 6 billion in smaller public sector projects, which have a contract value of less than S $ 100 million, such as bike lanes and improvement works.
“This is comparable to the pre-COVID annual average, and will benefit our small and medium contractors,” he said.
But on the private sector construction side, demand is not expected to return to pre-COVID-19 levels just yet, as “investors are likely to remain cautious,” Lee added.
Demand for this sector is projected to be between S $ 8 billion and S $ 10 billion in 2021, with most of it coming from the development of the remaining residential block sites and major modernization of commercial developments, among others.
A STRONGER RECOVERY MAY BE ON THE HORIZON
The minister said authorities expect a “sustained recovery in construction demand over the next five years,” with initial forecasts that construction demand could further strengthen to S $ 25 billion to S $ 32 billion by 2022. and 2025.
“This forecast has not taken into account the potential new contracts for Changi Airport Terminal 5 and the expansion of the two integrated complexes, as these project schedules are still under review due to COVID-19 disruptions,” he added .
Over the medium term, growth in the construction sector will be supported by public sector developments, such as public housing, transportation and healthcare infrastructure, Lee said.
These projects will contribute from S $ 14 billion to S $ 18 billion each year in this period, added BCA.
But the sector still faces “major headwinds,” especially with a labor shortage situation amid the challenges of bringing in new foreign workers.
Recognizing such concerns, Mr. Lee said authorities have been working with industry partners to alleviate the jobs crisis.
READ: Migrant Workers Trapped Abroad Amid Border Restrictions; contractors struggle with the job crisis
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He cited how the Ministry of Manpower has worked with the country’s contractors association to “facilitate the matching of workers in Singapore with new employers” through a labor exchange platform.
Since last December, entry restrictions have also been relaxed to allow more new and existing work permit holders to enter Singapore.
“This was not an easy effort, given the global pandemic situation,” Lee said.
“It continues to require close coordination between agencies … to ensure that we can bring in enough workers to alleviate the labor shortage companies are facing, and still do so in a safe manner, with enough quarantine and testing facilities, in order to protect the public health.
“We will continue to monitor the situation and adjust our measures as necessary to support the sector,” he said.
READ: Authorities ease entry restrictions for new foreign workers to address job crisis
Mr. Lee, however, also said that the pandemic has emphasized the “need to build more resilience in the system and significantly reduce our over-reliance on foreign guest workers.”
To that end, authorities will continue to drive the adoption of digital technologies.
“We are also looking to further strengthen our policies to facilitate transformation and support businesses. We will announce more details during the Budget season this year, ”he added.
OUTLOOK FOR THE REAL ESTATE MARKET
Lee said the housing market has remained largely resilient, even amid the COVID-19 pandemic and its aftermath.
He noted that the pace of rise in private home prices has gathered momentum, sales from developers on new pitches have been “strong” and there has been healthy interest in land tenders.
But Mr. Lee warned that the real estate market “is not insulated” from global economic uncertainties, “nor setbacks for the recovery of the national labor market.”
He urged developers to be prudent in their land tenders and households to be cautious in their purchase decisions, “given the uncertain economic outlook and possible rise in interest rates.”
“The Government is closely monitoring the evolution of the real estate market. We will adjust our policies if necessary to maintain a stable and sustainable housing market for all Singaporeans, ”he said.
