Construction Demand set to Increase in 2010

Singapore’s construction sector demand is expected to reach between S$21 and S$27 billion for this year. The public sector is likely to be the main driver, contributing about two—thirds of the demand from civil engineering construction and subway—related projects. Singapore’s construction sector has seen demand slide since the boom times of 2008.

But the Building and Construction Authority (BCA) estimates that 2010 will be a better year. With strong demand from public sector projects like MRT lines and civil engineering works, total demand for the construction sector is forecast to go as high as S$27 billion this year.

Senior Minister of State for National Development Grace Fu said: "Public sector works will include large infrastructure projects such as the Downtown Line Stage 3 and various major road works. "In addition, the industry can look forward to more tendering opportunities in building projects. This will include the construction of new HDB flats to meet the ongoing demand for public housing."

The public sector is expected to contribute 65 per cent of construction demand this year. Private sector construction demand is expected to be slightly more upbeat than last year, amounting to between S$7 billion and S$9.1 billion. Private residential projects are also projected to increase gradually in tandem with the improved market sentiment. But analysts said as demand rises, there will be other risks.

Song Seng Wun, regional economist, CIMB—GK Research, said: "Basically, both the private sector and to some extent, the stimulus effects will still be adding on to the demand picture.

"So one of the bigger risks, other than material costs, would be labour costs for the coming couple of years if we see growth strengthen globally."

The BCA’s three—year forecast also suggested that demand would slowly fall to between S$18 billion and S$25 billion until the end of 2012. This is because government stimulus is likely to slow down and the private sector begins to bear more weight on its own.

Source: CNA, Yahoo