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SINGAPORE CONSTRUCTION PROSPECTS 20211

REVIEW OF CONSTRUCTION DEMAND2 IN 2020

1. Impacted by the COVID-19 pandemic which disrupted project implementation

schedules, the 2020 construction demand declined by 36% to a preliminary estimate of $21.3

billion (Chart 1), but was within BCA’s revised forecast of $18 billion - $23 billion released in

September 20203. The public sector construction demand reduced from $19.0 billion in 2019

to $13.2 billion in 2020, due to postponement of some major infrastructure projects which

required more time to assess the pandemic impact on resource management and project

schedules. Likewise, the private sector construction demand also decreased from $14.5

billion in 2019 to $8.1 billion in 2020, weighed down by the market uncertainties amid a

COVID-induced economic recession.

Chart 1: Construction Demand (Contracts Awarded), 1997-2020p

1 All currencies stated in this paper are in nominal Singapore dollars unless otherwise stated. 2 Construction demand is measured by the total value of construction orders or contracts awarded. Reclamation contracts are excluded from this paper unless otherwise stated. 3 Based on BCA’s mid-year forecast review released in September 2020, the total construction demand forecast in 2020 was at $18 billion - $23 billion, with the public sector construction demand projected at $11 billion - $14 billion and the private sector construction demand projected at $7 billion - $9 billion.

21.3

8.1

13.2

0

5

10

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45

$billion Total Private Sector Public Sector

p : Preliminary

Note : Contracts awarded exclude reclamation projects

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Public Sector

2. Total public sector construction demand decreased by 31% to $13.2 billion in 2020.

Construction demand for most development types declined, except for the office building

segment which was supported by the construction award of ICA’s new annex building at

Kallang Road. Despite a significant reduction of the total public sector construction demand

from the preceding year, a number of notable projects were awarded in 2020, such as NEA’s

state-of-the-art Integrated Waste Management Facility, LTA’s first contract for the Rapid

Transit System to Johor Bahru, Integrated Train Testing Centre, and various contracts under

Jurong Region MRT Line as well as PUB’s various contracts for the Deep Tunnel Sewerage

System (DTSS) (Phase 2).

Private Sector

3. Similarly, the private sector construction demand was weighed down by the adverse

impact and disruption caused by the COVID-19 pandemic, and contracted by 44% to $8.1

billion in 2020. Nevertheless, the development of various Government Land Sales (GLS) sites

and past en-bloc sale sites continued to support the private residential construction demand

to a level similar to that in 2016-2017. Furthermore, the construction of a few attractions under

the Mandai Park’s rejuvenation project also alleviated the decline in the overall private sector

construction demand in 2020.

CONSTRUCTION DEMAND OUTLOOK IN 2021 4. Looking ahead, prospects for construction demand is expected to improve in 2021.

Based on the feedback received in BCA’s latest Development Plans Survey (DPS) conducted

in Oct/Nov 2020 as well as the prevailing economic outlook (Table 1 & Chart 2), the total

construction demand is expected to reach between $23 billion and $28 billion in 2021.

The public sector is expected to continue to drive total construction demand in 2021,

contributing about 65% amid an anticipated stronger demand for public housing and

infrastructure projects. While total private sector construction demand in 2021 is expected to

be comparable with the 2020’s level, it could potentially perform better if the anticipated

economic recovery picks up pace and business sentiments improve.

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Chart 2: Construction Demand (Contracts Awarded), 1997-2021f

Residential Construction Demand

Public Housing

5. Public residential construction demand is expected to rebound from $2.8 billion in 2020

to between $3.4 billion and $4.2 billion in 2021. New public housing units are slated for

developments at areas such as Tengah, Toa Payoh, Hougang, Pasir Ris, Geylang and

Woodlands. Furthermore, construction demand from rejuvenation projects to improve living

environment of existing HDB estates under the Home Improvement Programme (HIP),

Neighbourhood Renewal Programme (NRP) and Lift Enhancement Programme (LEP) is

anticipated to remain firm in 2021.

Private Housing

6. Underpinned by the redevelopments of the remaining past en-bloc residential sites, the

private sector residential construction demand is projected to be between $2.9 billion and

$3.4 billion in 2021, comparable with the $3.0 billion in 2020. Although the demand may not

recover to the $5 billion a year recorded pre-COVID in 2018/19, there could be further upside

if the upstream private residential property market continues to stay resilient. Some of the

upcoming major condominium projects scheduled for development include The Ryse

Residences, Ki Residences, Provence Residence, redevelopments of Katong Park Towers,

35.5

30.8

35.8

38.8

27.0

26.4

24.8

30.5

33.5

21.3

28

23

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25

30

35

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45$billion

p : Preliminary f : Forecast

Note : Contracts awarded exclude reclamation projects

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City Towers and Landmark Tower as well as development of GLS sites at Bernam Street and

Canberra Link.

Commercial Construction Demand

7. Despite the various challenges induced by the COVID-19 pandemic, total commercial

building construction demand is anticipated to hold up well and expand to between $1.6 billion

and $2.0 billion in 2021, from $1.6 billion in 2020. A number of major retrofitting projects on

hotel premises in central area to enhance assets’ value are scheduled to proceed in 2021 in

anticipation and preparation of future recovery in tourism. In addition, major redevelopment

projects to revitalize Singapore’s city skyline are expected to come on stream, which include

Shaw Tower redevelopment at Beach Road and Keppel Towers redevelopment at Tanjong

Pagar Road.

Industrial Construction Demand

8. Market sentiments for industrial investments are likely to remain cautious in the year

ahead, in view of the uncertainties surrounding the COVID-19 situation and risks of periodic

resurgence of infections around the world. Total industrial building construction demand is

projected to moderate to between $2.8 billion and $3.7 billion in 2021, from $4.2 billion in

2020. Public sector industrial building demand is likely to soften to between $0.5 billion and

$0.8 billion in 2021, following the award of various sizeable projects in the last two years. On

the other hand, while the private sector industrial building construction is not expected to

return to pre-COVID level yet, it is likely to improve gradually from $1.7 billion in 2020 to

between $2.2 billion and 2.9 billion in 2021, supported by upcoming development of various

high-specification industrial buildings and data centres to meet business needs, such as

Perennial Business City and other business park developments at North Buona Vista Drive

and International Business Park.

Institutional & Other Building Construction Demand

9. Similarly, total institutional building construction demand is projected to be between $2.8

billion and $3.9 billion in 2021, moderating from $4.1 billion in 2020. Following the award of

several sizeable public sector educational and healthcare facilities in 2018 and 2019, public

sector institutional building construction demand is anticipated to stay at a moderate level of

between $2.0 billion and $2.8 billion in 2021, comparable with $2.7 billion in 2020. Some of

the key public sector projects earmarked for construction include MOH’s SGH Elective Care

Centre with the new National Dental Centre development and LTA’s Integrated Transport

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Hub at Jurong East. Likewise, private sector institutional building construction demand is

likely to stay low at between $0.7 billion and $1.1 billion in 2021, with supports from key

private educational building projects in the pipeline such as Lasalle College of the Arts at

Albert Street and International French School extension at Ang Mo Kio.

Civil Engineering Construction Demand

10. Civil engineering construction demand is projected to recover strongly to between $9.7

billion and $10.9 billion in 2021, expanding from $5.6 billion in 2020. Similar to the period

during 2016-2019, major public sector infrastructure works are expected to remain the main

driver and contribute about 90% of the total civil engineering construction demand. Key

projects anticipated to be rolled out in 2021 include various contracts for Jurong Region MRT

Line, Cross Island MRT Line Phase 1 and Deep Tunnel Sewerage System (DTSS) Phase 2.

In addition, construction of berth facilities at Jurong Port and various cabling and utilities

projects are also expected to support private sector civil engineering construction demand in

2021.

CONSTRUCTION OUTLOOK FOR 2022-2025 (Excluding Changi Airport Terminal 5 development and Integrated Resorts expansion)4 11. Taking into account the upcoming pipeline of public sector construction projects over

the medium term and the latest economic outlook on private sector construction demand,

total construction demand is projected to reach between $25 billion and $32 billion per annum

for 2022 to 2025.

12. The public sector will continue to lead the demand and is expected to contribute

between $14 billion and $18 billion per annum in 2022-2025, with building projects and civil

engineering works each taking up about half of the share. Besides public housing

developments, public sector construction demand over the medium term will be supported by

various large infrastructure and institutional building projects such as Cross Island MRT Line

(Phases 2 & 3), Downtown Line Extension to Sungei Kadut, cycling path networks, Singapore

Science Centre relocation, Toa Payoh Integrated Development, Alexandra Hospital

redevelopment and a new integrated hospital at Bedok.

4 The medium-term construction demand projection excludes any potential awards of construction contracts for the development of Changi Airport Terminal 5 (T5) and its associated infrastructure projects as well as expansion of Integrated Resorts (IRs) in view that their construction timelines are still under review due to impact of COVID-19 pandemic.

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13. In anticipation of a gradual recovery of the global economy contingent on the

successful deployment and effectiveness of COVID-19 treatments and vaccines as well as

easing of lockdown restrictions, the private sector construction demand is projected to

improve steadily over the medium-term (i.e. approximately between $11 billion and $14 billion

per annum in 2022-2025). In addition, there is potential for further upside should the planned

expansion of the two Integrated Resorts (IRs) proceed during this period.

PIPELINE OF PROJECTS EMPLOYING DESIGN FOR MANUFACTURING & ASSEMBLY

(DfMA) TECHNOLOGIES

14. The industry continues to see strong support for the use of DfMA technologies in

projects. As indicated in table below, there will be 85 upcoming public and private projects in

Singapore prescribing DfMA technologies, for construction tenders expected to be called in

2021 and 2022. The use of Prefabricated Prefinished Volumetric Construction (PPVC) and

Advanced Precast Concrete System (APCS) will remain as the most widely adopted DfMA

technologies in the coming two years.

≤S$40

mil S$40 mil < X ≤ S$85 mil

S$85 mil < X ≤ S$150 mil

S$150 mil < X ≤ S$300 mil

>S$300 mil

Total

Prefabricated Prefinished Volumetric Construction (PPVC)

0 6 28 1 0 35

Advanced Precast Concrete System (APCS) 3 10 14 3 2 32

Hybrid/ Multi-tech 0 2 0 1 4 7

Structural Steel 0 0 1 2 4 7

Mass Engineered Timber (MET) 2 1 1 0 0 4

Total No. DfMA project 5 19 44 7 10 85

Prefabricated MEP Systems 1 0 4 1 7 13

Disclaimer: The above information is provided to the best of BCA’s knowledge. All figures in the above table, including project values, are indicative only, and subject to change without notice. BCA will not be liable for any loss or damages (including any special, indirect, incidental or consequential damages) which may be incurred from any use of or reliance on the information contained in the above table.

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IMPACT ON CONSTRUCTION OUTPUT5

15. Based on the contracts awarded in the past few years and taking into account the

construction demand forecast for 2021, total nominal construction output in 2021 is projected

to increase to between $24 billion and $27 billion, from the estimated $19.5 billion in 2020.

The projected pickup in total construction output in 2021 is supported by an anticipated

improvement in construction demand in 2021 and the backlogs of remaining workloads

impacted by the COVID-19 outbreak during 2020.

Chart 3: Construction Output (Certified Progress Payments), 1997-2020p

KEY CONSTRUCTION MATERIALS

16. In 2020, the average market price of ready-mixed concrete softened slightly over the

year while that for reinforcement bars hovered around $712 per tonne to $720 per tonne

before trending up towards the year end. Driven by the cost impact of COVID-19 pandemic,

the overall yearly average of BCA’s Building Works Tender Price Index (TPI) is estimated to

have increased by about 3% to 5% in 2020.

5 Construction output is measured by the total value of certified progress payments for all projects.

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40$billion

p : Preliminary

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Ready-Mixed Concrete

17. In tandem with the sharp reduction in total construction output due to COVID-19

impact, total demand for ready-mixed concrete decreased by 42% to 7.2 million m3 in 2020,

from 12.5 million m3 in 2019 (Table 2). For 2021, the demand for ready-mixed concrete is

expected to increase to between 9.5 million m3 and 11.0 million m3 in view of higher

resumption of construction activities leading to increased construction output.

18. The preliminary average market price of Grade 40 pump ready-mixed concrete6 was

$94.30 per m3 in December 2020, a decrease of 1.7% as compared to a year ago. The RMC

price is unlikely to increase significantly in 2021 as any upside in raw material prices is

expected to be constrained by the prevailing competitive RMC supply market due to the

anticipated relatively lower construction output in 2021 as compared to the volumes in recent

years prior to COVID-19 pandemic.

Precast Concrete

19. Similarly, due to the impact of COVID-19, the preliminary estimate of precast concrete

consumed by the construction sector in 2020 dropped to 0.7 million m3. Based on the

projected construction activities, the precast concrete demand for 2021 is estimated to

expand to between 0.9 million m3 to 1.1 million m3. From 2022 to 2023, the demand for

precast concrete is expected to be between 1.0 million m3 to 1.2 million m3 per year. With the

various measures including requirement of projects to adopt more buildable designs and

residential projects on GLS sites to adopt DfMA technologies, the demand for precast

concrete will continue to increase beyond 2023.

Reinforcement Bars (Rebars)

20. The total net imports plus local production (without factoring in stock levels) of rebars

was about 0.8 million tonnes in 2020. The main import sources in 2020 were Turkey (28%),

Qatar (24%), China (20%) and Ukraine (20%). For 2021, the net imports plus local production

(without factoring in stock levels) for rebars is estimated to increase to between 1.1 million

and 1.3 million tonnes, in anticipation of a higher level of construction activities.

6 The market prices are based on contracts with non-fixed price, fixed price and market retail price.

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21. The average market price of rebars7 in Singapore hovered around $712 per tonne to

$720 per tonne from January to October 2020, about 5% lower than the price level recorded

during the same period in the preceding year. However, it has since increased to $809 per

tonne in December 2020 due to rising costs of raw materials like iron ores and steel scraps

as well as tight supplies from countries like China.

22. The global outlook for steel in the year ahead is expected to improve, albeit with some

uncertainty. The World Steel Association forecasts that the global steel demand could

increase by 4.1% in 2021, mainly driven by countries gradually reopening from their

lockdowns and the recovery of economic activities. While prices could increase due to

environmental protection measures, there are also various downside risks to the global steel

outlook due to uncertainties of how the COVID-19 situation would unfold.8

Plant & Equipment

23. The average rental rates (excluding operators) of mobile and tower cranes continued

their uptrend in 2020 and increased by an average of about 3% as compared to a year ago.

For 2021, local suppliers generally expect rental rates to either remain at current levels or

increase further, supported by an anticipated sustained demand for cranes in view of

increased construction activities following resumption of operations.

CONSTRUCTION COSTS

24. The overall yearly average of BCA’s Building Works Tender Price Index (TPI)9 is

estimated to have increased by about 3% to 5% in 2020 (Chart 4) mainly on account of

significant increases in manpower-related costs and productivity loss from COVID-19

measures. Looking ahead, the current elevated manpower-related costs as well as rising

global material costs due to supply chain disruptions are likely to continue to impact on

construction costs and tender prices in 2021.

7 The prices refer to 16mm to 32mm High Tensile rebar and are based on fixed price supply contracts with contract period 6 months or less. 8 The Worldsteel Association: Worldsteel Short Range Outlook October 2020, 15 October 2020 9 BCA TPI excludes piling works, sub-structure works and mechanical & electrical works as these cost items are either project specific or not feasible to compile due to lack of data.

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Chart 4: Annual BCA’s Tender Price Index for Building Works, 2010 = 100

CONCLUSION

25. Weighed down by the severe disruption caused by COVID-19 pandemic, total

construction demand declined to $21.3 billion in 2020, a significant reduction from the $33.5

billion recorded in 2019. Nevertheless, effective containment of the pandemic coupled with

promising strong infrastructure construction demand and more positive investment

sentiments will lend support to total construction demand in 2021 which is anticipated to

improve to between $23 billion and $28 billion in 2021. Over the next few years, the medium-

term construction demand is expected to continue to be supported by an abundant pipeline

of larger and more complex building and infrastructure projects as well as gradual recovery

in both domestic and external economies.

26. For the Built Environment (BE) sector to become more resilient and stronger following

the challenges and disruptions posed in a COVID-19 environment, all stakeholders need to

continue the transformation efforts by leveraging innovative technology and upskilling

workforce to embrace digitalisation in order to navigate the new normal and strengthen their

competitiveness. Although COVID-19 has brought about challenges and risks, it has also

80

85

90

95

100

105

110

115

120

125

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020p

Index

p : Preliminary figure

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presented unique opportunities to accelerate our continual transformation efforts of our

systems and processes and elevate the BE sector collectively to the next level so that we

could deliver high-quality projects in a safe, productive and sustainable manner.

BUILDING AND CONSTRUCTION AUTHORITY 18 January 2021

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Table 1: Contracts Awarded (Excl. Reclamation) by Sector & Type of Work

Billion Dollars

Both Sectors 27.03 26.40 24.80 30.54 33.52 21.3 23.0 - 28.0

Building Work 21.56 17.43 15.45 21.07 24.51 15.7 13.3 - 17.1

Residential 7.77 6.48 6.25 9.02 8.57 5.8 6.3 - 7.6

Commercial 2.18 2.96 1.86 1.46 1.84 1.6 1.6 - 2.0

Industrial 5.78 3.68 4.18 4.81 7.51 4.2 2.8 - 3.7

Institutional & Others 5.83 4.31 3.17 5.79 6.59 4.1 2.8 - 3.9

Civil Engineering Work 5.47 8.97 9.35 9.46 9.02 5.6 9.7 - 10.9

Public Sector 13.25 15.39 15.83 18.30 19.03 13.2 15.0 - 18.0

Building Work 9.44 7.89 7.55 9.07 11.28 8.3 6.0 - 7.9

Residential 3.81 3.26 3.24 3.84 3.59 2.8 3.4 - 4.2

Commercial 0.30 0.10 0.13 0.09 0.06 0.4 0.1 - 0.1

Industrial 1.24 0.84 1.67 0.78 2.67 2.4 0.5 - 0.8

Institutional & Others 4.09 3.70 2.51 4.36 4.96 2.7 2.0 - 2.8

Civil Engineering Work 3.81 7.50 8.29 9.22 7.75 4.9 9.1 - 10.1

Private Sector 13.78 11.01 8.96 12.24 14.50 8.1 8.0 - 10.0

Building Work 12.12 9.54 7.91 12.00 13.23 7.4 7.4 - 9.2

Residential 3.96 3.22 3.01 5.18 4.98 3.0 2.9 - 3.4

Commercial 1.89 2.86 1.73 1.36 1.79 1.2 1.5 - 1.9

Industrial 4.53 2.84 2.50 4.03 4.84 1.7 2.2 - 2.9

Institutional & Others 1.74 0.62 0.66 1.43 1.63 1.4 0.7 - 1.1

Civil Engineering Work 1.66 1.47 1.06 0.24 1.27 0.7 0.6 - 0.8

Source : Building and Construction Authority, Singapore, as at 18 Jan 2021

2016 20182020

(Preliminary)

2021

(Forecast)2015 2017 2019

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Table 2: Basic Construction Materials

Demand

Year Ready-Mixed

Concrete (Mil m3)

Steel Rebars (Mil tonnes)*

2019 12.51 1.37

2020 (p) 7.20 0.83

2021 (f) 9.50 – 11.0 1.1 – 1.3

Current Market Prices

Year

Ready-Mixed Concrete

(Grade 40 Pump) ($ per m3)

Steel Rebars (16-32mm)

($ per tonne)

Dec 2019 95.90 713.90

Dec 2020 (p) 94.30 809.00

*: This refers to net imports plus local production (without factoring in stock levels)

p: Preliminary figures

f: Forecast

Source: BCA as at 18 Jan 2021