From the latest media release from Building and Construction Authority (BCA), total construction demand is projected to increase between $28 billion to $35 billion. This includes $700 million worth of public sector infrastructure projects mentioned in the Singapore Budget 2017 which aims to support the ailing construction sector. Furthermore, a new $150 million Public Sector Construction Productivity Fund is also introduced for government agencies to procure new innovative technologies or equipment for use by construction firms.
2017 Construction Demand Forecast
Figure 1: Annual Construction Demand (2012 to 2017)
Figure 2: Breakdown of 2017 Construction Demand Forecast
The projected stronger construction demand is due to an anticipated increase in public sector construction demand from about $15.8 billion last year to between $20.0 billion and $24.0 billion this year. The public sector is expected to contribute about 70% of the total construction demand, boosted by an increase in demand for most building types and civil engineering works.
In view of the current slowdown in the property market and continued economic uncertainties, the private sector construction demand is likely to remain subdued and is projected to stay between $8.0 billion and $11.0 billion this year.
2018 to 2021 Construction Demand Forecast
Figure 3: Construction Demand Forecast (2018 to 2021)
The average construction demand is projected to be between $26.0 billion and $35.0 billion per annum in 2018 and 2019 and between $26.0 billion and $37.0 billion per annum in 2020 and 2021.
The public sector construction demand is estimated to be between $18.0 billion to $23.0 billion per annum from 2018 to 2021, with similar proportions of demand coming from building projects and civil engineering works. Besides public housing developments and more healthcare and educational facilities, public sector demand will be supported by various upcoming mega infrastructure projects such as the Jurong Regional Line, Cross Island Line, and developments for Changi Airport Terminal 5.
Top 8 Companies in terms of Market Capitalization
Below is a summary of the order book backlog value for the top 8 companies ranked according to their market capitalization. Kindly take note that United Engineers Limited is not included in the list because it is currently undergoing a takeover bid.
Figure 4: Order Book Value
Source: SGX, POEMS
Figure 5: Projects awarded as of 2016
Overall, the order books for the 8 companies remain healthy (except Low Keng Huat (Singapore)) with some having a mix of projects in both local and overseas markets. Hock Lian Seng Holdings and Lian Beng Group outshined the rest with a high order book value of $980 million and $644 million respectively.
The government has given support by introducing more public sector projects and funding to the construction industry. Main chunk of revenue will be from Civil Engineering projects such as the Deep Tunnel Sewage System, North-South Corridor and Circle Line 6, amounting to a total of $11.3 billion to $14.6 billion. With strong support from the government, the construction sector looks likely to pick itself up in 2017 after consecutive declines for the past 2 years.
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