Up to $34b worth of construction contracts expected in 2016, with highest share of demand from public sector in 14 years

Construction demand fell short of expectations last year.
Construction demand fell short of expectations last year.ST PHOTO: KUA CHEE SIONG

SINGAPORE - Construction demand fell short of expectations last year, but it could improve this year, driven by public sector projects, official estimates show.

The Building and Construction Authority (BCA) said on Friday (Jan 15) that construction demand this year could come in at between $27 billion and $34 billion.

Of that, about 65 per cent, or $18.5 billion to $21.5 billion, of the construction contracts are expected to come from the public sector.

Projects will include the upgrading works from the Home Improvement Programme for HDB flats, the new National Cancer Centre, State Courts' new building at Havelock Square, JTC's Integrated Logistics Hub, PUB's water reclamation and sewerage projects, Changi Airport's 3-runway system, improvement works to the Kranji Expressway and Pan-Island Expressway, and the remaining contracts for the Thomson-East Coast MRT line.

If the estimates for 2016 are met, BCA said this would be the highest proportion of construction demand from the public sector since 2002.

Demand from the private sector, however, will likely slow down due to "less favourable economic conditions and an increased supply of completed private housing projects and offices", BCA said.

Last year, contracts for buildings and other infrastructure projects amounted to about $27.2 billion, lower than initial projection of $29 billion to $36 billion.

BCA added that this was due to the rescheduling of "a few major public infrastructure contracts such as MRT projects, from the fourth quarter last year to early this year".

Slightly more than half of the construction contracts last year were awarded by the public sector, at $14 billion, while $13.2 billion were private sector deals.

BCA said total construction output or progress payments made for the work done last year remained high at about $35 billion, on account of strong construction demand in the preceding two years.

This contributed to about 4.7 per cent of Singapore's gross domestic product (GDP) in 2015, it added.

The total construction output this year is expected to decline to between $32 billion and $34 billion, partly due to the lower construction demand in 2015.

For 2017 and 2018, BCA expects average construction demand to be sustained at between $26 billion and $35 billion, and $26 billion to $37 billion in 2019 and 2020.

BCA estimates that the public sector will account for between $16 billion and $20 billion of construction demand per year from 2017 to 2020.

Of these, 60 per cent of the demand will come from building projects and the rest from civil engineering works.

BCA added that civil engineering construction demand is likely to remain strong beyond 2016, owing to major projects, including the construction of new MRT lines, the North-South Expressway, associated infrastructure works for Changi Airport Terminal 5 and phase two of the Deep Tunnel Sewerage System.