Singapore boasts of world class infrastructure which can give any big city a run for its money. It is imperative to understand that the Singaporean economy, however small, is fueled in part by the construction sector. The good news is that this sector will be seeing well than expected growth this year. The Building and Construction Authority, BCA, suggested that they will be offering contracts worth S$28 billion to S$35 billion this year. The BCA is looking forward to a great year in construction and has surpassed the previous year’s evaluation of S$26.1 billion.
Public sector driving improvement
The public sector is driving the improvement in BCA contract offerings. The demand for public sector construction remained at S$15.8 billion last year. However, this year, it can jump to S$20 billion with the most liberal estimated predicting S$24 billion in 2017. The total construction demand for the year will be largely managed by the public sector, handling about 70 percent of the total contracts in 2017 in dollar terms. The demand for most of building types is increasing and civil engineering projects are also gathering steam this year.
The private sector, on the other hand, will not see much action this year. The slowdown in the property market is hitting private sector construction. Economic uncertainties are making it even more difficult for this sector to perform well and keep older construction going. The private sector will be contributing only about S$8 billion to S$11 billion in 2017 to the construction market. Singapore is the 15th most expensive city in the world to build in. It ranks third in Asia and construction costs have risen steadily in the country.
Rescheduling of government projects has helped
Part of the 2017 growth story is attributable to a rescheduling of government projects from 2016. These projects, which could not be started last year, dampened the 2016 forecast but are showing great prospects for 2017. Most of these are very large-scale public sector projects which took longer prep times than usual. The BCA has reported that the total construction from the public sector was still higher in 2016 than preceding year and the government has achieved year on year increase in spending on construction. Earlier, the government had expected that 2016 contracts will fall in the S$27 billion S$34 billion range.
Even after being an expensive place to build in, the Singaporean construction industry should expect positive things as prospects in Asia look brighter this year. The private sector will still have to struggle a little but with a few corrections in place, they should be doing just fine with a few good public-private partnerships.
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