21 Aug 2020
Posted in Construction
Singapore construction industry to post V-shaped recovery in 2021, says GlobalData
The Singaporean construction industry is expected to post a V-shaped recovery in 2021 with the industry rebounding to post a growth of 11.2%, measured at constant 2017 US dollar exchange rates, following the sharp contraction of 17.8% in 2020. Thereafter, the industry is expected to grow at an annual average rate of 2.7% over the remaining part of the forecast period (2022-2024) to grow to US$19.9bn in 2024, which is still below the 2019 level, says GlobalData, a leading data and analytics company.
The unprecedented contraction in 2020 has been driven by a complete halt of construction activities, except for work on some essential projects during the near two-month ‘circuit-breaker’ period of 7 April to 1 June 2020. Moreover, the unavailability of manpower coupled with supply chain disruptions caused lengthy delays in project implementation.
Dhananjay Sharma, Construction Analyst at GlobalData, comments: “The near two-month ‘circuit-breaker’ marks the nadir of the crisis, with the construction activities restarting from 2 June in a gradual process, contingent on approval from the Building and Construction Authority (BCA). The industry is expected to post a strong quarter on quarter growth rate in the remaining two quarters followed by a strong recovery in 2021 owing to pent up demand and lower base effect.”
The residential sector in Singapore has remained weak and concerns remain high over the growing stock of unsold buildings, which could further weigh on investors’ sentiments amid the economic downturn in the wake of the COVID-19 outbreak.
Following the mass outbreak of COVID-19 infections in dormitories, the Singapore government plans to reduce the density of people in dormitories, by the construction of additional housing for around 60,000 migrant workers by the end of 2020. This is likely to support the industry in general and residential construction in particular.
Sharma concludes: “The infrastructure sector is expected to post relatively healthy growth, driven by the government’s efforts to upgrade the country’s rail, road and other public transport infrastructure and investment in energy and utilities construction projects. The government had been planning to invest SG$28bn (US$20.9bn) on the expansion and upgrading of the transport system by 2022, and it is likely to accelerate such plans when the virus outbreak subsides.”