BCA forecasts pick-up in construction sector
Public building projects are set to give the lacklustre construction sector a much-needed boost this year, even as industry players continue to voice concerns about the state of the market.
Preliminary estimates from the Building and Construction Authority (BCA) yesterday painted a mixed picture for the sector. On the one hand, it is projecting the total value of contracts awarded this year at between $26 billion and $31 billion - a marked improvement from the $24.5 billion awarded last year.
On the other hand, the final 2017 total of $24.5 billion indicated how dire the situation in the sector has been - falling $3.5 billion short of forecasts.
At the end of last year, the sector had shrunk for five consecutive quarters.
The BCA said part of the reason for the missed forecast was the postponement of major projects, such as the North-South Corridor, to this year. Such projects could provide the turnaround this year.
Public projects are set to be worth between $16 billion and $19 billion this year, more than last year's $15.5 billion, and are expected to make up some 60 per cent of all contracts.
Private sector demand is expected to reach between $10 billion and $12 billion, up from last year's $9 billion.
The Government has already brought forward $1.4 billion in public projects, Second Minister for National Development Desmond Lee said at the BCA-Redas Built Environment and Property Prospects Seminar yesterday.
He said: "We have also been encouraging government agencies to parcel out large infrastructure projects into smaller chunks where possible. This helps agencies diversify risk and creates more opportunities for our local firms."
Led by the public sector, demand is expected to continue increasing in the next five years. A technological shift laid out in the Construction Industry Transformation Map launched last October is also expected to help.
Industry players were cautiously optimistic about the latest forecasts, concerned that while the value of awarded contracts will go up this year, the value of the work done will remain at last year's levels.
Said Mr Kenneth Loo, president of the Singapore Contractors' Association: "Based on the BCA forecast, the construction market would continue to be weak this year. It would take some time for the positive economic outlook to translate to job volume and construction contracts.
"This year will still be challenging for firms as the construction volume might be status quo or slightly better."