The construction sector, which saw projects delayed due to the Covid-19 pandemic, is expected to see recovery over the next five years, with the public sector supporting growth in the medium term.

Contracts are expected to grow to between $23 billion and $28 billion this year, National Development Minister Desmond Lee said yesterday.

This is up from the $21.3 billion worth of projects estimated to have been awarded last year - projections for which were revised downward by $10 billion in September after demand took a hit amid market uncertainties and disruptions.

"The growth of the construction industry in the medium term will be supported by public sector developments such as public housing, transport and healthcare infrastructure. Private sector demand is projected to improve steadily, in tandem with the recovery of the global economy," said Mr Lee.

"In sum, we expect sustained recovery of construction demand over the next five years," he said at a seminar organised by the Building and Construction Authority (BCA) and the Real Estate Developers' Association of Singapore.

The public sector will contribute about 65 per cent of the overall construction demand for 2021, Mr Lee added. This figure - which ranges from $15 billion to $18 billion - is higher than the $13.2 billion worth of public sector projects last year.

Public sector projects include the Jurong Region Line and the Cross Island Line.

But demand by the private sector is unlikely to return to pre-Covid-19 levels, as investors are likely to remain cautious, the minister added.

Hence, private sector demand this year is expected to be between $8 billion and $10 billion - similar to the $8.1 billion last year, a drop from the $14.5 billion in 2019.

But as the global economy gradually recovers, construction demand in the private sector is also expected to improve steadily to reach between $11 billion and $14 billion per year from 2022 to 2025, BCA said.

This, however, is still contingent on the successful deployment and effectiveness of Covid-19 treatment and vaccines as well as easing of lockdown restrictions.

This forecast does not take into consideration the potential new contracts for Changi Airport Terminal 5 and the expansion of the two integrated resorts, as the project timelines are still under review due to Covid-19 disruptions.

Mr Lee acknowledged that the construction industry is still facing "significant headwinds", especially with the current labour crunch.

"Manpower costs have increased and become a lot more uncertain," he said. The Government will continue to monitor the situation and adjust measures to support the sector, he added.

A spokesman for the Singapore Contractors Association Limited (Scal) said firms are still grappling with challenges such as supply chain disruptions, rising material and manpower costs, and pressing demands to make up for lost time in the completion of projects.

Mr Thomas Ang, president of the Specialists Trade Alliance of Singapore, said it will be some time before the construction industry sees a full recovery.