Singapore Construction Market Trends Beyond 2016
News of a possible $34 billion dollar demand in Singapore construction was the talk of 2016.
Interest in public contracts skyrocketed when news broke that up to $21 billion dollars could go toward water and sewage, public buildings, airports, and more.
In fact, according to the Strait Times, these specific public works projects are still scheduled to get underway in 2016-2017:
- Kranji and Pan-Island expressway improvement
- Construction of the new National Cancer Center
- New state court buildings
- Water reclamation projects
- Changi airport renovation
It’s safe to say this ambitious infrastructure investment made public civil engineering the top trend of 2016.
But 2016 was a unique year that turned nearly every industry on its heels.
So what does this mean for 2017?
Let’s talk about what trends and possible surprises are on the horizon.
The Brexit Effect on The Singapore Construction Industry
In January of 2016, Singapore’s building and construction Authority (BCA) announced the largest project demand in public contracts since 2002.
The BCA projected, at a minimum, a $16 billion dollar annual investment in public contracts over the next four years.
This announcement came off the heels of a lackluster 2015 for the Singapore Construction industry, so where does this forecasted demand stand now?
Just five months after the BCA’s announcement, the historic Brexit vote occurred which shook the markets worldwide.
Because of this sudden uncertainty in the global market, Singapore’s Ministry of trade lowered their expected annual growth to a 1-2% range.
But despite Brexit and lower economic growth expectations, Singapore construction actually grew by 3.3% in 2016.
2016 did see a decline in private construction projects which triggered a 17% drop from the first quarter, however, that was offset by a sharp increase of public contracts.
If this post-Brexit resilience continues, we may see continued growth in the Singapore construction industry, particularly in the public sector.
But should we count out the private sector in 2017?
Private Sector Outlook
Let’s start with the good news.
According to recent BCA statistics, the private sector has already locked in $7.79 billion dollars in sales. That’s just shy of the department’s minimum private construction growth forecast of $8.5 billion for the year.
Now, the bad.
According to the Singapore Business review, the industry experienced a disappointing fourth quarter due in part to the decrease in private construction projects.
The last few years have seen an over production of private residential units and marked decreases in sales, leading to low private sector growth expectations for 2017.
In light of the recent growth and investment in the public sector, your best bet is to keep your investor’s eye on those companies nabbing major public contracts.
2017 Is All About Transportation
As of now, the strongest market trends point directly to public infrastructure, and this is only expected to increase through 2020 if public contracts’ sales continue to remain strong.
And a large swath of those sales is coming directly from transportation projects.
In 2015, Singapore formally announced their intention to invest $20 billion US dollars in public transportation projects starting in 2016.
This investment in transportation is expected to stretch over the next four years with a continued focus on the Tuas Seaport and both Changi and Jewel Airports.
You should also keep your eye on Singapore’s growing investment in Mass Rapid Transit systems. The Cross Island Master Plan, Tuas Extension, and the Downtown Line Project are all expected to draw in huge public contract sales over the next few years.
As of 2016, the Singapore government has sold almost 13 billion dollars worth of public contracts, with final annual sales forecasted between $18 billion and 20 billion U.S. dollars.
But it’s not just transportation contracts up for grabs.
Singapore Construction and Energy
A fascinating trend to watch is the growing relationship between Singapore construction and emerging energy industries.
Interest sparked in 2014 when the Singapore Liquefied Natural Gas Corporation sold a major contract to Samsung to build a new natural gas terminal.
On the other side of the coin, there are also trends in the renewable energy industry to look out for as well.
The Sustainable Energy Association of Singapore estimates the country can produce up to 10% of their total energy output for the next four years with renewable energy alone.
Moreover, Singapore recently participated in the Asia clean energy Summit, signaling the government’s increased interest in moving forward with renewable energy projects.
Unexpected Market Trend: The Aging Industry
Perhaps one of the most interesting Singapore construction trends to watch is the population, specifically the aging population.
As a country’s elderly population increases, so does the need for healthcare services. Where there’s a need for services, there’s a need for new offices, care centers, and hospitals.
Singapore’s own rising senior population forced the Ministry for Health to announce forthcoming investments in more healthcare services and resources.
In his speech at the SG50 Scientific Conference on Aging, Mr. Gan Kim Yong stressed the need to create a “robust home and community care ecosystem” to accommodate longer life spans and the rising senior populace.
The Ministry for Health also announced plans to build more senior healthcare facilities and increase home care options.
This increased focus on healthcare could potentially lead to big contracts for the Singapore construction industry in 2017 and onward.
Renewed Focus on Senior Urban Planning
But this new focus on creating more services for Singapore’s elderly population doesn’t begin and end with healthcare.
In his SG50 speech, Ghan also discussed plans to expand urban planning projects to accommodate seniors as well. He highlighted the need to create more accommodating public transit systems and urban housing plans, signaling a forthcoming demand for more infrastructure spending in the long-term.
This is a trend you don’t want to miss.
In fact, according to the United Nations Department of Economic and Social Affairs, Singapore’s senior population is expected to increase by more than 22% percent in 2020.
The Singapore construction industry is poised to be dominated by public contracts in 2017, but you never know what could shake up the global markets next.
Stay on top of growing trends in infrastructure, but don’t forget to keep an eye out for developments in energy and aging industries.