Higher construction costs not to be passed down to flat buyers

Cheryl Chiew27 Jul 2021

HDB BTO flat

These higher construction costs stem from factors such as increased manpower costs and reduced productivity due to having to implement safe management measures.

Despite the increase in construction costs due to the COVID-19 pandemic, the Government will not pass down the higher cost to homebuyers, said Minister of State for National Development Tan Kiat How in Parliament on Monday (26 July).

He explained that the higher cost was due to several factors, including an increase in manpower costs due to border measures limiting the entry of foreign workers as well as additional costs and reduced productivity due to the implementation of safe management measures at worksites.

He shared that the Government has rolled out various support measures, such as wage offsets, to help mitigate some of the cost increases facing construction companies.

Nonetheless, tender prices for public sector construction projects, which include public housing and upgrading projects, have “generally increased this year compared to pre-COVID levels”.

“We recognise that public housing projects are necessary to serve the needs of Singaporeans, so we will press on to deliver these projects, and maintain a steady supply of public housing to meet demand,” said Tan.

“Increase in cost will not be passed down to flat buyers.”

Tan made the statement in response to Member of Parliament Tin Pei Ling’s question on how the pandemic impacted construction costs in Singapore.

He also revealed that the hike in construction costs had no adverse effect on demand for green buildings.

In fact, the gross floor area (GFA) of developments “applying for Green Mark certification has remained steady at around half of overall construction demand since 2018”.

“One possible explanation is that the cost premium of fulfilling the Green Mark requirements is small in proportion to overall construction costs, at less than 5% for most projects.”

Moreover, the energy savings derived from greening a building outweigh the upfront investment costs, he said.

An office building with more than 15 storeys that achieves Green Mark Platinum standard, for instance, can save about $300,000 in operating costs annually.

“The Government remains committed to pursue our sustainable development agenda under the Singapore Green Plan 2030,” said Tan.

“Some infrastructure projects may face construction delays in the immediate term, but we will press on with our plans and sustainability efforts,” he added.

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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg 


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