R. Hirschmann
Research expert covering Singapore, Indonesia and Malaysia
Construction industry in Singapore - statistics & facts
The construction sector accounted for 2.9 percent of Singapore's nominal gross domestic product in 2021. While this sector was severely hit by the COVID-19 pandemic in 2020, the construction sector grew by 20 percent in 2021, on the back of a strong post-COVID-19 economic recovery in Singapore. Although the industry has yet to bounce back to pre-pandemic levels, several major public sector projects are expected to spur growth and recovery in the years to come.
Despite the growth of the construction sector in Singapore in 2021, there are still significant challenges to overcome in the industry. Although travel restrictions have been lifted, there is still a shortage of manpower, exacerbated by the increase in costs of hiring foreign labor. To mitigate this, the Singapore government has taken steps to reduce the reliance on foreign labor, such as reducing the migrant worker dependency ratio ceiling. However, how realistic that is, remains to be seen, as the number of residents in construction is far lower than that of foreigners. Furthermore, the construction sector faces rising building material costs, with the market price of steel in Singapore reaching a ten-year high in 2021. This would further increase costs incurred by construction projects.
Singapore's construction sector - recovering from COVID-19
Singapore's construction sector was among its worst-hit industries during the COVID-19 pandemic, with many developers placing their projects on hold or scaling back on developments. The pandemic restrictions on travel also resulted in a labor shortage for the construction sector, which is heavily reliant on foreign labor from neighboring countries such as Bangladesh, India, and China. This sector also faced a shortage of building supplies such as steel and concrete, as the pandemic disrupted the global supply chain.Despite the growth of the construction sector in Singapore in 2021, there are still significant challenges to overcome in the industry. Although travel restrictions have been lifted, there is still a shortage of manpower, exacerbated by the increase in costs of hiring foreign labor. To mitigate this, the Singapore government has taken steps to reduce the reliance on foreign labor, such as reducing the migrant worker dependency ratio ceiling. However, how realistic that is, remains to be seen, as the number of residents in construction is far lower than that of foreigners. Furthermore, the construction sector faces rising building material costs, with the market price of steel in Singapore reaching a ten-year high in 2021. This would further increase costs incurred by construction projects.
Major infrastructure projects spur Singapore's construction sector recovery
The construction industry is, however, expected to improve, spurred by public sector construction demand. Singapore's largest road project, the North-South Corridor, is already in the works and is set to be completed by 2026. Further boosting construction demand are its ambitious civil engineering projects, such as the expansion of the Mass Rapid Transit (MRT) system with the 29 kilometers, 12 stations Cross Island Line Phase 1; the building of the 62km-long Coast-to-Coast (C2C) Southern Trail, a cross-island cycling and walking path; and the construction of the Integrated Transport Hub at Jurong East. With all these developments in the works, the BCA has projected the construction demand in Singapore to be between 27 to 32 billion Singapore dollars in 2022.
