No two satellite images of Singapore taken over time are alike.
By the 2030s, the city-state will have undergone yet another striking transformation. Changi Airport will unveil its new Terminal 5, a $10 billion development designed to bring its total passenger capacity to 50 million a year.
In the city centre, Marina Bay Sands will expand with its fourth tower and a 15,000-seat entertainment arena, both set for completion by 2029.
At Resorts World Sentosa, more waterfront-facing properties will be added to the integrated resort. Across the island, new housing — both private and public — will continue to rise, alongside a growing network of roads and MRT lines.
Construction activity has picked up pace following the contraction during the pandemic years. The Building and Construction Authority (BCA) has projected the total construction demand for 2025 to range between $47 billion and $53 billion.
In comparison, the total demand in 2023 was between $27 billion and $32 billion. In 2020, at the height of the pandemic when all but the most essential ac- tivities stalled, demand was just $21.3 billion.
See also: CSE Global reports lower ending order book for FY2024 of $672.6 mil, down 7.9% y-o-y
Over the medium term, this figure is expected to remain significantly above the pre-pandemic level of around $30 billion per year, with projections ranging from $39 billion to $46 billion annually from 2026 to 2029.
With the government announcing feasibility studies for two new MRT lines on March 5, the construction sector can reasonably expect years of sustained activity.
The public sector accounts for a substantial portion of the spending. The total construction demand from the public sector is between $18 billion and $21 billion, largely driven by public housing and infrastructure projects.
The private sector, on the other hand, is expected to generate demand between $14 billion and $17 billion.
In addition to major infrastructure projects like Tuas Megaport and Terminal 5, the government is aggressively ramping up the con- struction of new flats to meet growing demand.
Numerous lower-profile projects such as pavement expansions and park connectors are either being built or planned.
As some economists would argue, construction is a classic method of pump-priming to stimulate the economy. Unlike the broader economy, the construction sector is relatively insulated from the global uncertainties of the escalating trade war.
Given the uncertain outlook, both private sector economists and the government have predicted a slower economy this year of between 1% and 3%.
In contrast, Maybank economists Chua Hak Bin and Lee Shun Rong estimate that the construction sector will grow 6.5% this year versus 4% in 2024.
By the end of 2024, Chua and Lee note that construction contracts awarded had surged by 55.1% compared to the previous year in 3Q2024, driven by a 65.1% rise in public sector work and a 42.7% increase in private sector projects.
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According to the Maybank economists, the HDB's ramping up of Built-to-Order (BTO) public housing flats to meet strong demand will be a contributing factor to the infrastructure-intense 2025.
Some 150 BTO projects will be built concurrently in 2025, up from 100 in 2023, they estimate.
“A rebound in home sales will support construction as borrowing costs ease. In a revival after months of soft sales, new private home sales volume surged 262% from a year ago in October, due to a higher number of developer launches,” add Chua and Lee.
Nailing the profits
The growth trend is clear from the recent earnings reports and order book updates from various listed construction and building materials companies.
OKP Holdings, which specialises in roadworks, has identified a new growth area in the construc- tion and enhancement of park connectors and pavements.
In recent years, the company has secured a series of such contracts, extending its revenue visibility through to FY2027.
As of the end of its FY2024 ended Dec 31, 2024, its order book has reached $600.7 million, up 15.8% y-o-y. For its FY2024, revenue increased by 13.3% y-o-y, while earnings dropped 24.5% y-o-y to $33.7 million.
Earnings from the preceding FY2023 were distorted by a one-off gain of $43.8 million from winning an arbitration.
The company is paying total dividends of 2.5 cents for the year, up from 1.5 cents paid for FY2023.
“The company will continue to focus on its core expertise to tender for more projects, leveraging on robust construction demand from both the public and private sectors,” says group managing director Or Toh Wat.
Civil engineering company Hock Lian Seng, which helped build the Maxwell MRT Station on the Thomson-East Coast Line, has reported FY2024 earnings of $32 million, up 20.4% y-o-y. As of Dec 31, 2024, its order book has dropped to $553 million from $708 million in FY2023 due to the completion of contracts such as the Changi Airport joint venture project in the 1HFY2024.
In its earnings commentary, Hock Lian Seng lists projects ranging from the Thomson-East Coast Line Extension, Cross Island Line, Woodlands Checkpoint extension and the Tuas Port as upcoming developments it is keen on.
“The group will explore and evaluate the above upcoming projects where appropriate.” Wee Hur Holdings , which diversified into the dormitory business in Australia a decade ago after its founding as a construction firm in 1980, has recently announced the sale of a majority stake in its student accommodation portfolio Down Under.
The deal is set to net the company a gain of around $320 million.
“Beyond being a financial milestone, this divestment lays the foundation for Wee Hur’s next chapter, enabling us to strengthen our core businesses and capitalise new growth opportunities,” says executive chair- man and managing director Goh Yeow Lian.
Other contractors, even if not profiting significantly, have managed to reduce their losses.
For its 1HFY2025 ended Sept 30, 2024, KSH Holdings reported a net loss of $6.5 million, down from a red ink of $12.6 million the previous year.
Revenue was down 64.3% in the same period as the company had already recognised and completed projects awarded just before or during the pandemic.
Nonetheless, with an order book of $331 million, KSH expects a more posittive FY2025. Besides the construction firms, building material suppliers are another way for investors to play this theme.
Pan-United Corp reported earnings of $40.9 million for its FY2024 ended Dec 31, 2024, up 15% y-o-y.
Revenue was up by 5% y-o-y to $812.3 million. It plans to pay a higher total dividend of 3 cents per share for FY2024, up from the 2.3 cents paid for FY2023.
Pan-United, citing BCA, says that demand for ready-mix concrete will reach between 13 million and 14.5 million cubic metres, up from 13.4 million cubic metres last year. Centurion Corp, which operates workers' and student dormitories, is also a direct beneficiary of the construction boom.
On Feb 26, the company, which plans to spin off a REIT, reported FY2024 earnings of $344.8 million, marking a 125% y-o-y surge.
Excluding revaluation gains, Centurion's core earnings still rose by 43% to $99.3 million.
Closing more deals
The thriving construction sector has sparked several corporate actions.
Last December, property firm OKH Global revealed plans to acquire Chip Eng Seng Construction for $118.5 million from Acrophyte, the new name of Chip Eng Seng Corp after it was privatised in April 2023 by Gordon and Celine Tang, who also control OKH Global.
"We see robust demand in the building and construction sector, and the acquisition will allow OKH to gain access to (Chip Eng Seng Construction's) suite of credentials and certifications, participate in a wider range of tenders, and be well-positioned to capitalise in the strong momentum of the sector,” says OKH CEO Lock Wai Han.
As of June 30, 2024, Chip Eng Seng Construction has an order book of more than $2 billion, an increase from $1.33 billion as of June 30, 2022, when it was still part of a listed entity.
On Jan 5, another steel supplier, Asia Enterprises, announced the acquisition of a 28.64% stake worth $8.86 million in privately held GKE Metal Logistics.
This acquisition will create additional earnings sources through complementary business activity.
Meanwhile, larger steel supplier BRC Asia unveiled its growth strategy on Feb 28 with a plan to acquire a majority stake in Southern Steel, a Malaysian producer of steel wire mesh, concrete wires, rebars and other products so as to diversify and complement BRC Asia's existing businesses.
The stake is being sold by Southern Steel, a Bursa-listed entity, that shares the same controlling shareholder with BRC Asia in the form of Green Esteel.
BRC Asia’s CEO, Seah Kiin Peng, also sits on the board of Southern Steel as a non-independent, non-executive director.
Further details of the deal will be announced by the parties involved.
For its FY2024 ended Sept 30, BRC Asia reported earnings of $93.5 million, up 23% y-o-y, thanks to a steady stream of domestic projects launched for tender in FY2024.
Seah says: “Looking ahead to 2025, our robust sales order book of approximately $1.4 billion, coupled with an uptick in domestic construction activities and a potential recovery in the global steel market, are promising signs for our long-term growth prospects.”
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