SINGAPORE – The construction sector is poised to take a $10-billion hit this year, as public sector projects get pushed back and demand drops sharply for projects in the private sector.
The projected construction demand for 2020 has been revised to between $18 billion and $23 billion following a mid-year review, the Building and Construction Authority (BCA) said on Thursday (Sept 17). This is sharply down from BCA’s January forecast of $28 billion to $33 billion for the year.
The downward revision is largely due to a drop in private sector construction demand.
Some public sector projects have also been postponed from this year to next year as contractors and suppliers have asked for more time to assess the impact of Covid-19 on resource management and project implementation timelines, said BCA.
This year’s forecast for public sector contracts is $11 billion to $14 billion while the private sector is $7 billion to $9 billion.
In 2019, the value of public sector contracts was $19.03 billion while private sector contracts were worth $14.5 billion, totalling $33.52 billion after rounding off the figure.
The construction sector has been one of the hardest-hit industries amid the fallout from the pandemic, contracting 97.1 per cent from the first to the second quarter.
It also saw one of the largest declines in employment – by 13,600 workers, second to only the food and beverage services sector. Most works were halted during the circuit breaker period when Singapore was battling an outbreak in workers’ dormitories.
On Thursday, BCA said construction demand is expected to recover to some extent from 2021.
Public residential developments and upgrading works, developments at the Jurong Lake District, construction of new healthcare facilities and various infrastructure projects such as the construction of the Cross Island MRT line will support demand.
BCA noted that it is important that the construction industry remains vigilant to prevent a resurgence of Covid-19 cases, which could bring the sector to a halt again.
BCA will be providing an update on the projected construction demand for 2021 and 2022 in early next year.
On Thursday, Minister for National Development Desmond Lee said in a Facebook post that the construction industry has realised the need to build up capability for sustainable business development.
He noted that a new planning and coordination regime for business continuity and the role of technology and digitalisation to build up industry resilience in the long run were some issues raised by participants at a leadership webinar co-organised by the BCA and the Construction Industry Joint Committee on Wednesday.
"In spite of the restart, the industry still faces challenges," he said. "The silver lining is that we expect demand to pick up to some extent next year, and there will be a pipeline of public sector projects coming on stream next year."
Straits Construction executive director Kenneth Loo said the $10-billion downward revision was quite “substantial” but “not unexpected”.
“There was no work for around four months during the circuit breaker period and before the dorms were cleared, so the one-third drop is quite reflective of these months,” he said.
Teambuild Engineering and Construction executive director Johnny Lim said it is “a matter of timing” for tenders to be awarded for upcoming planned projects, barring any unforeseen circumstances.
He added: “In the past month, private residential sales have picked up and if demand picks up, private developers will be more optimistic and looking for land more aggressively – it’s a chicken and egg thing.”