Regional Analysis 2021

Asia Pacific 2021

Singapore economic and construction review

Economic performance 

Singapore’s economy posted a record contraction of 5.8% overall in 2020, which is its worst full-year performance since independence in 1965. A breakdown of the year is as follows: 

  • Q1 0.2% 
  • Q2 –13.4% 
  • Q3 – 5.6% 
  • Q4 – 3.8% 

Inflation stood at 0.34% for 2020, which was below the previously forecasted 0.9%. 

Construction performance 

The Singaporean construction industry recorded a sharp decline of 17.8% in 2020. While the Building and Construction Authority (BCA) had predicted the construction demand forecast of 2020 to be around S$28 billion to S$33 billion for the year in January, it revised its forecast to S$18 billion to S$23 billion in the mid-year review, in light of the pandemic. The construction industry in Singapore accounts for 11.2% of total employment in the country. 

The construction industry is divided in two – the public and the private sectors. The expectancy for 2020’s public sector contracts is S$11 billion to S$14 billion, while the private sector is S$7 billion to S$9 billion. This is a significant drop compared to 2019’s contract value of S$19 billion in the public sector and S$14 billion in the private sector.  

The unprecedented contraction in 2020 had been driven by a complete halt of construction activities, except for work on some essential projects during the near two-month ‘circuit-breaker’ period of 7 April to 1 June 2020. As expected, some sectors are impacted to a greater extent than others, as outlined below: 


Despite the numerous government bailouts to the local economy, public spend on rail has remained strong. The LTA (Land Transport Authority) awarded four Jurong Region Line (JRL) contracts worth S$682m on the 17th July 2020 and it was anticipated that the agreements on the (RTS) Link project (S$1.2bn) would be finalised in 2020. Construction has started on the RTS link, albeit slower than expected due to labour shortages and the disruptions with regards to materials being shipped into Singapore.  

Although the High Speed Rail (HSR) Project linking Singapore and Kuala Lumpur had been deferred again until 31 December 2020, it has recently been cancelled. Recent estimates for the capital already invested in the project by the Singapore Government range from S$240 to S$280 million. This project was halted due to the insurmountable differences between the Singapore and Malaysian Governments on the terms of the contract, and not as a consequence of COVID-19. 

Data centres 

COVID has resulted in a significant increase in those working from home. That combined with the fact that public gatherings have been restricted or in some cases called off, has resulted in internet traffic increasing across all internet providers in Singapore, with reported volume increases ranging between 30-60%. Video conferencing and online entertainment (e.g. streaming, downloads etc.) represent the majority increase in online traffic.  

There has been enhanced investment in data centres in recent years, which is now being accelerated by the ongoing coronavirus pandemic. Asia Pacific is set to be the fastest-growing region for data centres, with the projection that the region will house 47% of global data servers by the end of 2020. 

Private residential units 

As a result of COVID, the Government has reduced the supply of private residential units on the confirmed list by 23% (equivalent to 1,370 units). Supply was calibrated to take into account the situation with the global pandemic. This, therefore, means that the housing supply proposed for the confirmed list is the lowest since the first half of 2016. 


Given the uncertainties about the future of the aviation and travel industry as a result of COVID, Singapore will pause the construction of Changi Airport Terminal 5 (S$10 billion) for at least two years.  


Working from home for 2021 has become the norm, with a significant number of large corporates stating that they do not expect their employees to return to the office until Q3 or Q4 2021.This has resulted in a shift in space requirements. It is expected that offices only recently completed will need some form of design changes to meet the demands of today’s social distancing requirements. The Singapore office rental market fell by 9.5% in 2020, and is expected to continue to fall, but at a slower rate. 

Tourism and hotels  

Given that tourism has all but stopped thanks to quarantine requirements, it is likely that investment in this sector will be postponed. The large number of redundancies in the hospitality sector is a strong indication that hoteliers anticipate a bleak year. 

Sectors aside, from a design point of view, BCA have released some guidance on operating building AC/ventilation, and some of main points are as follows: 

  • Purge the indoor air before and after occupancy 
  • Maintain longer operating hours for toilet exhaust fans
  • Increase outdoor air intake 
  • Reduce indoor air recirculation 
  • Use window openings 
  • Stop rotatory heat exchangers or heat recovery wheels 
  • Use high efficiency filters for AHUs 

These changes will allow for a higher proportion of fresh air in a building, but can be at the detriment of the building energy efficiency. 

The impact of COVID on exisitng projects 

Following the outbreak of the COVID-19 pandemic, a Circuit Breaker (CB) was subsequently announced, meaning that all building works as defined by the Building Control Act were required to cease with effect from 7th April 2020. All stakeholders of the construction industry, including developers, builders, qualified persons, site supervisors and construction material suppliers had to comply with this suspension.  

The Singaporean parliament recognised that the impact of the CB would negatively affect businesses, and therefore passed the COVID (Temporary Measures) Act on 7th April 2020. The Bill offered temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of the impact of COVID. 

The SG Government recognises that putting in place tighter measures to prevent the spread of COVID means extra costs for the construction industry specifically and bears some of this cost using the Fortitude Budget. To assist with the balance of additional costs the BCA has introduced the following support measures: 

  • Co-sharing of prolongation costs (government agencies shall co-share, 50% of the prolongation costs for project delays due to CB, capped at 1.8% of the awarded sum). There is no requirement for private projects. 
  • Wage subsidies e.g. April 2020 - Government will pay 75% on the first S$4,600 of monthly salary for every local employee  
  • Foreign worker levy waiver / rebate (SS$90 monthly rebate for each work permit holder up to SS$920 million until the end of 2022). Additional costs come in the form of safe accommodation, more lorries to transport workers and PPE. 

In the longer term, companies are encouraged to push for automation in order to reduce reliance on migrant workers. The public sector, for example HDB, will continue to take the lead in adopting DfMA (Design for Manufacture and Assembly) in their building projects where 75% of all its units launched in 2020 will adopt DfMA methods such as Prefabricated Pre-finished Volumetric Construction (PPVC) or Advanced Precast Concrete System (APCS). The transformation efforts have also led to the redesign or creation of new and better jobs, such as digital lead and DfMA production manager within the sector. 

The BCA is currently nominating specialist local DfMA factories to produce mechanical and electrical skids and risers. The construction industry is being driven to use these specialist factories to produce the MEP services to help with the reduction of reliance on foreign workers in the sector.  

There are four significant challenges ahead in for the construction industry: 

  1. Insufficient manpower (new workers are not allowed into SG; some old workers have left). Of those that remain a small portion will be assigned to work on the construction of the new quick build dorms as oppose to the projects already started. 
  2. Delays to the project. With the number of workers available to work restricted and strict safe working conditions imposed both the production and productivity rate will reduce by circa 25%. 
  3. Ventilation/building regulation from the BCA. This will have an overall effect on the energy efficiency of buildings and major design changes will impact building designs. 
  4. Supply chain disruptions. The aftereffects of COVID are being felt through the supply chain ranging from raw materials, import/export restrictions and even down to the lack of shipping containers making their way back to the source of raw materials. This is currently delaying shipments bound for Singapore for a minimum of 2-4 weeks depending on the country of origin. 

The impact of COVID was expected to be six to nine months (three months circuit breaker; three to six months loss of production), but with subsequent waves appearing around the world, the impact through shipping and material production is much greater and has been felt worldwide. 

Looking forward 

As the COVID-19 situation unfolds, the long-term effects of the pandemic are still being analysed and will continue to change over the coming years. 

The general outlook for the economy is for a recovery in key regional trading partners that should benefit the export sector, although the ongoing pandemic will impact the pace of recovery. It is projected that the economy will expand 5.6% in 2021, which is up 0.2 percentage points from the last round of predictions, and to grow 3.3% in 2022. Forecasts beyond that in the current situation predict that it will stay constant around the 3% mark.  

The recovery is expected to be gradual, and some sectors will stay stagnant – namely the travel-related sectors. Lower global trade, ongoing trade policy uncertainty, less demand from China and the ICT downcycle have an immediate impact on Singapore’s export-driven economy. 

The industries that will lead the economic recovery this year are going to be some services, as well as the construction industry. Subdued GDP growth in 2019 and 2020 had impacted private construction activity.  

In the medium-term the construction sector is facing a protracted slowdown in growth. Output growth, in real terms, decreased to 2.7% in 2020 and expected to decrease 0.5% in 2021. Previous forecasts have stated that construction demand is expected to hold steady over the medium term, with demand projected to reach between SS$27 billion and SS$34 billion per year for 2021 and 2022, and between SS$28 billion and SS$35 billion per year for 2023 and 2024. 

The public sector was due to continue to lead demand and was expected to contribute SS$16 billion to SS$20 billion per year from 2021 to 2024, with building projects and civil engineering works each taking up about half of the demand. Besides public residential developments, public sector construction demand over the medium term was set to continue to be supported by various infrastructure megaprojects. BCA previously expected private sector construction demand to stay at a moderate level in view of the likely continued global economic uncertainties and the current overhang in the supply of private residential housing units.  

Contributor: Stephen McArdle


Singapore - value of construction output


Singapore - employment in construction


Singapore - tender price index


Linesight average Singaporean construction costs

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