2021 construction demand forecast at S$23-28b; public sector to drive bulk of demand: BCA

THE total construction demand in 2021 is projected to recover to between S$23 billion and S$28 billion, said the Building and Construction Authority (BCA) on Monday. This is up from 2020's demand of S$21.3 billion based on preliminary estimates, due to the ongoing Covid-19 pandemic.

Public sector projects are also expected to drive this year's demand - to between S$15 billion and S$18 billion, or some 65 per cent, with an anticipated stronger demand for public housing and infrastructure projects, said BCA.

Some upcoming major public sector projects scheduled to be awarded this year include contracts under the Jurong Region MRT line, the Cross Island MRT line phase 1, and the Deep Tunnel Sewerage System phase 2.

Meanwhile, private sector construction demand is projected to be between S$8 billion and S$10 billion in 2021.

BCA said it projects the bulk of the demand in the private sector to comprise development of the remaining en-bloc residential sites, major retrofitting of commercial developments and construction of high-specification industrial buildings for business needs.

Additionally, based on contracts awarded in the past few years and considering the construction demand for 2021, the total nominal construction output this year is projected to increase to S$24-27 billion, from the estimated S$19.5 billion in 2020.

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"An anticipated improvement in construction demand in 2021 and the backlog of remaining workloads impacted by the Covid-19 during 2020 will support the projected pickup in total construction output," said BCA.

Separately, the preliminary figure for 2020's construction demand - at S$21.3 billion, indicates a decline of 36.5 per cent. This falls within BCA's revised forecast of S$18 billion to S$23 billion.

In 2020, public sector construction demand dropped to S$13.2 billion from 2019's S$19 billion, due to the postponement of some major infrastructure projects that required more time to assess the pandemic's impact on resource management and project schedules, BCA said.

The private sector demand also fell from S$14.5 billion in 2019 to S$8.1 billion last year, due to market uncertainties amid the pandemic-induced economic recession.

In the medium term, BCA said it expects a steady improvement in construction demand. Demand is projected to reach between S$25 billion and S$32 billion per year from 2022 to 2025.

Similarly, the public sector is expected to lead the demand and contribute some S$14-18 billion per year from 2022 to 2025, with similar proportions of demand coming from building projects and civil engineering works.

Apart from public residential developments, public sector construction demand in the medium term will also be supported by large infrastructure and institutional projects.

These include phases 2 and 3 of the Cross Island MRT line, the Downtown line extension to Sungei Kadut and the cycling path networks.

Meanwhile, private sector construction demand is also expected to improve steadily in the same period, to reach between S$11 billion and S$14 billion per year.

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, said BCA.