Despite forecasts for Singapore’s economy to grow by 3% the prospects for the construction sector look gloomy.
Construction growth came in slightly stronger than expected with a revison of 1.7% YoY from the previous level of 1.4%.
Despite the revision however, the outlook for this sector remains cloudy. Margin compression, labour crunch and a cooling property market will continue to weigh down on growth performance for this sector, in spite of earlier efforts by The Government to pump up to S$335 million into the construction sector to raise productivity.
An international panel of experts formed to recommend productivity-enhancing measures has called for as much offsite work for projects to be done as soon as possible. It has also identified a need for further research and development in construction.
The panel noted that developers may be wary about incurring higher costs with new building methods. Dr John Keung, co-chairman of the panel and Chief Executive of the Building and Construction Authority (BCA), said: “At the initial stage, there could be some of these cost concerns. But once we build up that ecosystem, once we can generate enough demand, achieving the economies of scale, I am quite sure it will be cost-effective.”
The BCA is currently working on the second Construction Productivity Roadmap, which will be released in 2015.