The value of construction contracts this year will likely exceed official projections of between $47 and $53 billion, according to a team of economists from Maybank.
According to estimates by Maybank published in its Sept 24 report, contracts awarded in the first six months of the year has already reached $27.7 billion, up 41% y-o-y.
The full year tally will reach almost $60 billion, with both public and private sector contracts accounting for half each.
For context, in the whole of 2024, total demand was $44.2 billion - double that of the pandemic years' trough of just over $20 billion.
"The construction boom will be sustained by a post-pandemic backlog of HDB housing, mega-infrastructure projects (Changi Terminal 5, Tuas Mega port), expansion of both integrated resorts, MRT lines (Cross Island Line), North-South Corridor viaduct and the Deep Tunnel Sewerage System," states Maybank in its Sept 25 report.
"These mega projects alone could cost more than $100 billion and last until 2030 or beyond."
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Besides these huge infrastructural projects, lower interest rates is making is more palatable for private developers to go after more residential land sales, further adding to the demand.
In addition, the expansion of the Woodlands Checkpoint by five times, partly in anticipation to the Johor-Singapore special economic zone will add to medium to longer term demand.
Meanwhile, commercial land sales have been more lukewarm but may be on the cusp of an upturn given falling interest rates, says Maybank.
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The team of economists expect Singapore's construction sector to grow at a real annual rate of above 5% for 2025-30, outpacing overall GDP growth. As a share of GDP, construction is set to increase from 3.5% in 2024 to 4.2% this year.
In anticipation of this upcycle, numerous construction stocks have already made significant gains.
Capital markets aside, the construction industry generates significant spillovers to other industries, and often cited as a typical pump-priming tool in economics textbooks.
Maybank, citing official statistics, notes that every additional $1 of construction demand generate about $1.89 in total economic output.
