Construction demand for 2022 to return to near pre-Covid-19 levels

The Building and Construction Authority estimated that contracts worth between $27 billion and $32 billion will likely be awarded this year. ST PHOTO: LIM YAOHUI

SINGAPORE - Work is picking up so fast in the construction sector that the industry will be close to the levels of activity it enjoyed before the pandemic shut down building sites across the island.

The Building and Construction Authority (BCA) estimated on Wednesday (Jan 26) that contracts worth between $27 billion and $32 billion will likely be awarded this year. That is around the same level recorded in 2019.

It added that projected demand from 2023 to 2026 will be between $25 billion and $32 billion a year.

The rebound theme was underlined by Minister of State for National Development Tan Kiat How, who told a BCA seminar on Wednesday that a steady level of construction demand and the backlog of work affected by the pandemic since 2020 were driving growth in the sector.

He also noted at the event at the BCA Braddell Campus that manpower issues were being resolved: "The inflow of foreign workers has steadily improved.

"As compared to the period when travel restrictions and tightened entry approvals were in place last year, the current monthly inflow of foreign workers has more than doubled."

BCA figures noted that progress payments for work being done are projected to hit $29 billion to $32 billion this year, up from the preliminary estimate of about $26 billion for 2021.

The public sector is expected to contribute about 60 per cent of the total construction demand this year, or around $16 billion to $19 billion.

This is supported by the strong pipeline of public housing projects, including those under the Home Improvement Programme, as well as healthcare developments and infrastructure work such as the Cross Island MRT Line (phase 1).

Private sector construction demand is anticipated to reach between $11 billion and $13 billion, comparable with 2021.

"Given the latest property cooling measures, residential building demand is anticipated to moderate year on year amid more cautious market sentiments," said the BCA.

However, commercial sector demand is expected to increase as hotels and attractions undergo refurbishment to prepare for a tourism revival while older premises are earmarked for redevelopment, it added.

Although the outlook for the construction sector is upbeat, it remains vulnerable, said Mr Teo Jing Siong, the BCA's group director of strategic planning and transformation.

He told the BCA-Redas (Real Estate Developers’ Association of Singapore) Built Environment and Property Prospects Seminar on Wednesday: "The situation is volatile - one of the risks is the Omicron variant. Although the variant is mild, if firms don't care about their workers, they may be knocked out when (they) end up with a lot of cases."

The challenges facing the industry were also noted by Mr Wong Heang Fine, group chief executive of infrastructure and urban consultancy firm Surbana Jurong.

He noted that supply chain disruptions, labour and material shortages and the resultant cost pressures remain the most pressing issues.

"Construction firms will need to look at alternative procurement approaches to mitigate fluctuations in raw material prices," said Mr Wong, adding that some companies are considering weaving material price fluctuation clauses into their contracts.

"As an industry, we need to take collective action to build a more sustainable future."

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