The Singapore Institute of Surveyors and Valuers (‘SISV’) had on 15 November 2017 released its compilation of the tender price indices (‘TPI’) of Q3 2017 for building projects in Singapore, and on 25 February 2018 released its compilation of the TPI for 2017, which included Q4 of 2017.
Apart from the TPIs from the BCA and HDB, the TPIs for the building projects in all quarters in 2017 have either dipped or remained the same. According to the data released by the Ministry of Trade and Industry Singapore (‘MTI’), there was a surge in the public sector construction demand in the last quarter of 2017, which could have lent support to the construction industry from registering an even weaker demand in 2017. On a year on year basis, the overall TPI of 2017 is between 1.3% to 3.6% lower than that in 2016, and is also the lowest in the last 10 years.
Moving forward, the total construction demand in 2018 is projected to be between $26 billion and S$31 billion, which is higher than the actual S$24.8 billion registered in 2017. Specifically, the S$1.4 billion worth of public sector projects that have been brought forward and the roll over demand of major infrastructure projects from 2017 has contributed to the forecasted increase. Further, a strengthened overall economic outlook, an upturn in property market sentiment and the redevelopment of collectivesale sites in 2018 is forecasted to lead the increase in demand of private sector projects in 2018. Amid this increase, government agencies have been encouraged to package large infrastructure projects into smaller ones, which would accelerate the trickling down effect thus benefitting more stakeholders in the construction industry. All these are positive signs that the overall construction industry in 2018 is likely to perform better than in 2017.
Although it will take some time before the increase of the construction demand translates into the actual work done value, the increase in forecasted demand in 2018 and the subsequent years has set the stage for an improvement in industry sentiment. Whilst the pressure from weak construction demand could be lessened in the next few years, the demand for private sector projects (estimated at 40% of the total projected construction demand) can change because it is largely driven by economic conditions and real estate sentiments. Regardless, riding on the healthy public sector projects demand in the coming years, stakeholders should use this opportunity to build up their capability so that they are able to compete productively in the future.
*Read the Construction Tender Price Index Compilation (Nov 2017) HERE.
*Read the Construction Tender Price Index Compilation (Feb 2018) HERE.
*Quarterly compilations reproduced with the kind permission of Singapore Institute of Surveyors and Valuers.
Contributed by: CHNG Eng Hui - CTBH