With construction demand “bursting out of our ears”, maximising resources to meet this demand will be the real differentiator among firms, says Song Seng Wun, economic advisor at CGS International Securities Singapore (CGS SG).
In January, the Building and Construction Authority (BCA) projected that total construction demand in 2025 would range between $47 billion and $53 billion in nominal terms, 46.88% or 39.47% higher than 2024’s range of $32 billion and $38 billion.
Normalised to real values, the demand in 2025 is estimated to range between $35 billion and $39 billion, which is between 0.3% to 11.7% higher than pre-Covid levels in 2019. There were no equivalent estimates released in 2024, BCA added.
Song, who was speaking at CGS SG’s second Makan & Market Talk dinner on Aug 21, also pointed to two supportive factors. First, global conditions are influenced by the US economy, which are still showing signs of growth, albeit at a slower rate. Next, the predictability of the Singapore government and its long-term planning in terms of labour and infrastructure will keep the industry’s pipeline in the years ahead.
CGS SG research analyst Natalie Ong noted that construction stocks have surged by 112% over the past year, outpacing the Straits Times Index (STI). Even so, valuations remain compelling. With historical P/Es at around 12 times, Ong said there is still “room for valuation growth and upside” within the sector.
She adds that while construction demand is likely to peak in 2025, activity will remain elevated through to 2029, supported by housing, transport and landmark projects like Changi Airport’s Terminal 5, Tuas port and MRT expansions.
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From the corporate perspective, industry players remain upbeat. Goh Wee Ping, CEO of Wee Hur Capital and chief investment officer (CIO) of Wee Hur Holdings, as well as Lum Chang Creations’ managing director, Lim Thiam Hooi, see construction order books remaining “robust” with visibility going into the next five to seven years.
To them, the execution of projects as well as labour remain critical factors. Long-serving teams, in particular, which enable consistency in delivery, are key.
While material and labour cost pressures remain a challenge, Goh and Lim note that quality and sustainability will put certain firms ahead of the rest.
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To this end, both parties believe the adoption of technology such as drones, robotics and artificial intelligence (AI)-driven design is becoming central in improving productivity within the industry and addressing labour shortages.
Sustainability will be another key theme in the years ahead, says Tan Yoong Heng, APAC portfolio leader at global consultancy firm Arup, and board member of BCA. He noted that Singapore’s green plan, biodiversity integration, carbon pricing and climate resilience are increasingly shaping building design and the choice of materials used by contractors.
Tan also pointed to major developments that embody these priorities, including Changi Airport’s Terminal 5, the Changi East Urban District, the Toa Payoh Integrated Development and coastal resilience projects such as the Long Island reclamation off East Coast.
