Public sector projects to drive construction sector’s recovery

19 Jan 2021

The Cross Island MRT Line, relocation of Singapore Science Centre and the Toa Payoh Integrated Development are amongst the upcoming major public sector projects that will contribute to construction demand in 2021.

Construction demand is projected to recover in 2021, driven by public sector which is expected to contribute 65% of total demand, revealed the Building and Construction Authority (BCA) on Monday (18 January).

BCA expects between $23 billion and $28 billion contracts to be awarded this year, up from the estimated $21.3 billion awarded in 2020.

The public sector is forecasted to contribute between $15 billion and $18 billion of total demand this year, on stronger demand for public housing and infrastructure projects.

“Some of the upcoming major public sector projects scheduled to be awarded this year include various contracts under the Jurong Region MRT Line, the Cross Island MRT Line Phase 1 and the Deep Tunnel Sewerage System Phase 2,” said BCA.

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Private sector construction demand, on the other hand, is expected to range between $8 billion and $10 billion this year, the bulk of which comprise “development of the remaining en-bloc residential sites, major retrofitting of commercial developments as well as construction of high-specification industrial buildings to meet business needs”.

Construction demand from the public sector fell to $13.2 billion in 2020 from $19 billion in 2019, as some major infrastructure projects which required more time to assess the COVID-19 pandemic’s impact on project schedules and resource management, were postponed.

Demand from the private sector also declined to S$8.1 billion in 2020 from S$14.5 billion in 2019.

Looking ahead, BCA expects construction demand to steadily improve over the medium term, hitting between $25 billion and $32 billion each year from 2022 to 2025.

The public sector is once again expected to lead, contributing $14 billion to $18 billion annually from 2022 to 2025 with similar proportions of demand from building projects as well as civil engineering works.

“Besides public residential developments, public sector construction demand over the medium term will continue to be supported by large infrastructure and institutional projects such as the Cross Island MRT Line (Phases 2 and 3), the Downtown Line Extension to Sungei Kadut, the cycling path networks, the relocation of Singapore Science Centre, the Toa Payoh Integrated Development, the Alexandra Hospital redevelopment and a new integrated hospital at Bedok,” said BCA.

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Construction demand from the private sector is also expected to improve, reaching $11 billion to $14 billion each year from 2022 to 2025.

“This is in anticipation of a gradual recovery of the global economy, contingent on the successful deployment and effectiveness of COVID-19 treatment and vaccines as well as easing of lockdown restrictions.”

Based on the contracts awarded over the last few years and the construction demand forecast, total nominal construction output for this year is forecasted to increase to between $24 billion and $27 billion, up from the estimated $19.5 billion in 2020.

The projected pickup in construction output will be supported by an expected improvement in construction demand this year as well as the backlog of remaining workloads impacted by the pandemic during 2020.

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