BCA expects 2022 construction demand between S$27b and S$32b, supported by public sec

BCA expects 2022 construction demand between S$27b and S$32b, supported by public sector projects

Jan 26, 2022

THE Building and Construction Authority (BCA) has projected the total value of construction contracts awarded in 2022 to be between S$27 billion and S$32 billion, it said on Wednesday (Jan 26).

In his presentation on Singapore construction prospects, group director of BCA's strategic planning and transformation office Teo Jing Siong said the construction sector's prospects are "bright" and that average annual demand from 2023 to 2026 should be between S$25 billion and S$32 billion.

He noted that this projection does not include the expansion of the integrated resorts, which would cost roughly S$5 billion to S$7 billion, as well as the development of Changi Airport Terminal 5.

Still, Teo said that the sector will first need to get over the "humps" of the Omicron variant, as well as supply disruptions over the next few months, before the industry can look forward to long-term growth.

He also encouraged companies to continue adopting innovative technologies, upskilling their workforce, using less foreign manpower and becoming more productive and less reliant on labour-intensive construction.

Some 60 per cent of the total construction demand, contributing between S$16 billion and S$19 billion, will likely be from the public sector, amid a strong pipeline of public housing projects, healthcare developments and infrastructure works such as the Cross Island MRT Line (Phase 1).

Meanwhile, construction demand from the private sector is expected to reach between S$11 billion and S$13 billion in 2022, which is comparable with the volume in 2021.

BCA said while the latest property cooling measures may moderate residential building demand, commercial building demand may increase instead as hotels and attractions undergo refurbishment amid a rebound in tourism, and older commercial premises are earmarked for redevelopment.

The construction of energy storage facilities and biopharmaceutical manufacturing plants may also boost private industrial building demand.

In 2021, the preliminary total construction demand was about S$30 billion, up 42 per cent on year, boosted by public housing and infrastructure projects, and an improvement in investment sentiments.

The figure, however, is already higher than an earlier forecast of between S$23 billion to S$28 billion for 2021. BCA said this was mainly due to an increase in tender prices from manpower and materials cost inflation.

Regarding output, the value of certified progress payments is projected to increase to between S$29 billion to S$32 billion for 2022, from the preliminary estimate of about S$26 billion for 2021, to account for a steady level of construction demand and backlog from the pandemic.

As for the medium term, the BCA expects total construction demand to reach between S$25 billion and S$32 billion per year from 2023 to 2026, also led by the public sector.

BCA expects about half the public construction demand to come from building projects, and the other half from civil engineering works. It noted that major developments in the pipeline include MRT projects, the Toa Payoh Integrated Development and new hospital developments.

Teo also said that public residential construction demand should moderate to about S$4.8 billion to S$5.1 billion, lower than the preliminary demand of S$5.5 billion seen in 2021. Between S$3.5 billion and S$3.7 billion are expected to go towards new flats, while S$1 billion is expected to be used to upgrade existing HDB flats.

"HDB did announce that they will ramp up (demand), but by the time they ramp up, the effect will only come in 2023 due to the time lag between launches and construction commencement," he said.

Meanwhile, the private sector construction demand should remain steady and reach about S$11 billion to S$14 billion per year.

Additionally, Teo said that there will be 109 projects in the next 2 years using Design for Manufacture and Assembly technologies, with the Advanced Precast Concrete System being the most widely used in residential, healthcare and school projects.

He also noted that geopolitical tensions could further impact the price of construction materials, which are already set to rise.

Currently, ready-mixed concrete demand is expected to increase to between 12.5 million and 14 million cubic metres, from 11.6 million cubic metres in 2021. Demand for precast concrete is also projected to rise to between 1.6 million and 1.8 million cubic metres, up from 1.1 million cubic metres in 2021, while steel rebar demand is expected to climb to between 1 million and 1.2 million tonnes, up from 0.9 million tonnes last year.