$9b worth of engineering contracts to lift construction sector

The North-South Corridor could be a key project.

Singapore’s construction sector can expect a recovery within 2018 to 2021 as around $9b worth of public civil engineering contracts could be awarded, CIMB Research said.

According to an analysis, the Building and Construction Authority (BCA) projects the value of the public construction sector to hit $18b to $23b, which translates to 50% of civil engineering contracts.

Upcoming tenders in 2018 include the bulk of North-South Corridor (NSC) project, which is worth $13b, which would support public sector construction demand.

Moreover, en bloc sales could also support a good portion of the demand and could yield $1b of construction value. The government also said it aims to maintain the total supply of private homes for 1H2018 at a similar level to the supply in 2H2017.

“This could lead to growth in construction demand from the private residential space.,” said CIMB analyst Colin Tan.

Here’s more from CIMB Research:

The tender price index seems to have found a floor at 96.0-97.0 in 9M17, which we think indicates that competitive pressure for construction project bids is starting to abate. BCA revealed a slight improvement in overall business confidence for 2H17 among contractors and consultants, although there is still bearish sentiment on project profitability amid keen competition.

We project future redevelopment of the Jurong Lake District could lead to over $3.6b worth of construction demand, based on comparison to the construction boom in 2007 fueled by developments in the Marina Bay area.

Mega infrastructure projects in the pipeline include Jurong Regional Line, Cross Island Line and various developments for Changi Airport Terminal 5. We estimate about 1,800ha of land will be freed up for redevelopment post-relocation of existing port terminals and Paya Lebar Airbase in 2030F onwards.