Singapore construction outlook in the second half of 2021

Economic Recovery

Restrictions and other measures to curb the spread of the COVID-19 virus have inevitably caused disruptions in the construction market. Resource management and project timelines are not easy to plan amid market uncertainties, especially as tighter border measures restrict the inflow of workers. In 2021, many companies are bringing forward backlog of projects from 2020.

Nevertheless, despite all the challenges, some companies have shown the highest level of resilience and continue to thrive in 2021. According to BCI Asia Top Ten criteria for architecture firms and property developers, these companies’ portfolios comprise the greatest aggregate value of projects under construction during the last full calendar year, as well as meaningful sustainability efforts. For this they were awarded by BCI Asia as the most-active architecture firms and property developers in the annual BCI Asia Awards Top 10 2021.

See: BCI Asia Awards 2021: Singapore Top 10 Developers

Prospects for 2021 indeed look more positive than 2020 when lockdowns completely shut down economic activities—see the charts for details. A recovery of the volume of early-stage project development is pronounced in some sectors, but low in others like office and retail due to the change of consumer habits and the trend to remote work. Matthias Krups, Chairman and Founder of BCI Media Group, said, “If such data tells us anything, it is that it is important to keep a close eye on the market—where are the opportunities, where are the risks, and what is the data telling us today about the situation tomorrow, next year and beyond.”

“We have witnessed how resilient the construction sector in Southeast Asian region prove to be, and how well the industry responded to the series of lockdowns and stop-starts of economic activity. Overall, it is fair to say that the region’s construction market has come out at the other end of COVID with renewed optimism and energy,” he concluded.

Source: BCI Economics

Singapore Construction Outlook

The construction sector in Singapore is seen to be on the road to recovery in 2021 with a projected 21.4 per cent overall growth (SGD25,317 million) from the challenging year 2020. Affected by the pandemic, the overall sector suffered a decline of 37.7 per cent on a year-on-year basis in 2020; civil sector growth fell down by 13.4 per cent; and the building sector saw a 47.4 per cent decrease.

In 2021, many companies are bringing forward backlog of projects from 2020. This contributes to the rebound in construction activity, but due to the uncertain course of the pandemic, positive expectations are still tempered with caution; for example, project commencement may be hindered by Phase 2 Heightened Alert. Per 2 June 2021, the Building and Construction Authority (BCA) has stepped up its checks and conducted more than 900 inspections per week at worksites to ensure that builders are doing their part to reduce the risk of COVID-19 transmission, while keeping construction works going as much as possible. Such stringent requirements in procedures, testing and quarantines are among the highest construction cost drivers.

Source: BCI Economics

In the second half of 2021, it will be more important than ever for architecture firms and property developers to continue improving their agility and adaptability. Although the overall sector is forecast to improve gradually, the world remains increasingly disruptive so we need to stay vigilant. The BCI Asia Awards 2021 winners have proven that resilience is key in navigating the disruptions. Emerging stronger is indeed possible if they have a strategic plan and determination. With the vaccination programme has been rolling out, the outlook seems positive. The government has also committed to provide support through reliefs and grants, as well as public sector spending in developments such as health, transport and other infrastructure projects.

See: BCI Asia Awards 2021: Singapore Top 10 Architects

This year, the civil sector is poised to grow by an estimate of 44.3 per cent (SGD 11,891 million), while the building sector is anticipated to have a 6.5 per cent increase on annual terms (SGD 13,425 million). As shown in the forecast chart, utilities and health sector see the biggest jump at 192 and 60 per cent respectively. Infrastructure and residential remain strong—see the following pages for projects from BCI Asia Awards 2021 winners. Commercial developments, however, remain subdued due in part to the flexibility required in the new normal, including adopting remote or hybrid working arrangements, and the proliferation of e-commerce transactions.