9 May 2019
The construction sector shrank by 3.4% in 2018 due to a slowdown in public sector construction activities.
Construction costs in Singapore are still cheaper than Hong Kong as the city-state remained the fourth most expensive city in Asia to build in, according to the International Construction Costs 2019 report published by global design and consultancy firm Arcadis.
Hong Kong took the top spot as the most expensive city to build in due to its relatively low technology adoption rate and pressing need to improve productivity levels amongst its aging workforce. Trailing behind it was Macau and Tokyo.
The report, which assessed 100 cities based on construction costs undertaken across 10 building types, found that Singapore’s construction market is experiencing growing trade conflicts, nervous financial markets and signs of its gross domestic product (GDP) growth reducing.
“The Singapore government has indicated that the economy could cool even further in 2019, with a forecast of 1.5% to 3.5% GDP growth,” Arcadis noted, adding that the city-state’s construction sector shrank by 3.4% for the whole of 2018, primarily due to a slowdown in public sector construction activities.
However, it is likely to see an improvement in 2019 as successful en-bloc transactions awarded from 2017 to the first half of 2018 are likely to translate into construction activities in the next few quarters.
“Prices for key construction materials remained stable over 2018, and prices are expected to rise in 2019. Labor costs remained relatively high in Singapore,” the firm noted.
Arcadis expects construction demand in Singapore to grow by 5% in 2019, and the tender price index to increase by 1% to 3%.
Alongside the government’s push for a transformation roadmap for its construction industry is a key focus on Integrated Digital Delivery (IDD) to connect stakeholders in building and construction projects through digital information. This will involve the mandatory adoption of Building Information Modelling (BIM), the establishment of the Singapore virtual design and construction guide, and the development of IDD standards and allowing smaller firms to testbed IDD solutions.
“It’s clear that many developers are keenly aware of the pressing need to improve productivity. By investing in technology and digitalization, it can help create better quality development, strengthen their competitive advantage and, ultimately, light a path towards long-term value creation,” Khoo Sze Boon, head of cost management & quantity surveying at Arcadis Singapore, commented.
Rounding up the top 10 priciest cities to build in were Seoul, Manila, Beijing, Bangkok, Shanghai, and Jakarta.