After its lacklustre performance in the past years, Singapore's construction sector is expected to see a recovery, thanks to the S$9 billion worth of public civil engineering contracts that could be awarded to the city-state in the next two to three years.
In a sectoral report, CIMB Research analyst Colin Tan said major public infrastructure projects will drive the pace of growth for the sector.
"The Building and Construction Authority (BCA) projects the value of public sector construction in Singapore to amount to between S$18 billion and S$23 billion per annum in 2018-2021F, of which 50% is expected to comprise civil engineering projects," Tan said, noting that the expected S$9 billion worth of civil engineering contracts exceed the value awarded to the city-state in 2017.
Amongst the upcoming contracts include the bulk of North-South Corridor (NSC) project, which was worth around S$13 billion. Tan said this would support the public sector construction demand.
Tan also stated that the private sector construction demand could begin to strengthen due to awarded en bloc sales. Such projects that could potentially be launched this year could yield around S$1 billion in construction value.
"Furthermore, the government has said it aims to keep the total supply of private residential units for 1H18F at a similar level to the supply of units in 2H17. This could lead to growth in construction demand from the private residential space," Tan said.
Additionally, major growth prospects are waiting for the sector this year, including the redevelopment of the Jurong Lake District that spans 360 hectares of land. Poised to be Singapore's second central business district, Jurong Lake District could likely produce S$3.6 billion worth of contracts with its redevelopment.
Other mega infrastructure projects in the pipeline include e Jurong Regional Line, Cross Island Line and various developments for Changi Airport Terminal 5.