Singapore market intelligence: Collaborative contracting could re-energise Singapore’s construction recovery
Singapore’s construction sector is showing signs of strength and stability into 2023, having risen 10 percent year on year in the fourth quarter of 2022, following an 8.1 percent growth in the third quarter.
By Khoo Sze Boon, Managing Director, Singapore and Vietnam, and Cheryl Lum, Director, Head of Data and Research.
We expect this growth to continue, forecasting total construction demand to be between S$27bn and S$32bn in 2023, despite the industry’s own challenges and uncertainties. This will likely outpace the wider economy this year.
Pent-up demand driving success
Pent-up demand for public and private construction is one of the factors driving the success in Singapore’s construction sector. The bulk of anticipated construction work in 2023 is for residential, commercial and infrastructure projects, with a robust pipeline of both public housing as well as private residential developments.
Commercial construction demand is also expected to ramp up in 2023.
Singapore's refreshed infrastructure priorities
Singapore’s government has also set out a refreshed infrastructure approach, with the 2023 budget laying out a plan for some key construction and infrastructure needs that point towards a more consensus-driven approach. There are several measures broadly aimed at increasing productivity, such as the top-up to the S$4bn National Productivity Fund, the new Enterprise Innovation Scheme, and the S$1bn boost to the Singapore Global Enterprises initiative.
The local construction sector has potential for further growth
The local construction sector has potential to grow, but remains vulnerable to the global challenges of high inflation and rising interest rates.
While the industry’s performance is steady, it has the potential for further growth when industry players take tangible steps to overcome challenges and as delayed projects resume.
More investment needed in collaborative contracting
Considered together, these factors call for more investment in collaborative contracting. This inclusive approach, advocated by ourselves and other industry players, creates value through closer consultation among stakeholders, and has the potential to reenergise Singapore’s built environment beyond its current rate of recovery.
Implementing collaborative contracting practices takes time and requires trust from all parties from the start. Singapore’s government is already encouraging this, with the Building and Construction Authority recently refreshing the Built Environment Industry Transformation Map (ITM) to combine the previous Construction and Real Estate (Facilities Management) ITMs into a single map focusing on a value-chain approach.
Khoo Sze Boon, Managing Director, Singapore and Vietnam at Turner & Townsend, said,
To prepare for the future and construction needs, better collaboration across the supply chain is critical in driving towards an advanced and integrated sector.
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