Construction activities have restarted in Singapore, but severe damage has been done

26 June 2020 (Last Updated June 26th, 2020 10:22)
Construction activities have restarted in Singapore, but severe damage has been done

Singapore is moving ahead with efforts to restart the economy, with the government having imposed a range of restrictions from 27 March in a bid to contain the spread of Covid-19, with lockdown ‘circuit breaker’ in place until 1 June.

For the construction industry, works had largely been prohibited since early April, but activities were restarted from 2 June in a gradual process, according to the Building and Construction Authority (BCA). Approval from the BCA must be obtained before projects can restart. Only 5% of the construction workforce continued to work on a few critical infrastructure projects until 1 June. From 2 June, the BCA has allowed construction works to gradually resume in phases, with a priority given to critical and time-sensitive projects such as the MRT, Deep Tunnel Sewerage System tunnelling project, and residential renovation works. The BCA approved over 5,400 home renovation projects to resume work from 2 June, in two stages, with projects already in the execution stage allowed to resume before the new projects.

On 13 June, the BCA announced that it had approved 19,000 suspended home renovation projects to resume work and would also allow resumption of work on all other types of renovation projects from 15 June. Moreover, the BCA approved more than 300 construction projects to resume work and is working with construction firms to resume another 250 construction projects.

On 24 June, the Urban Redevelopment Authority (URA), the country’s urban planning authority, announced the Government Land Sales (GLS) Programme for the second half of 2020. The GLS Programme comprises 12 sites, of which three are on the Confirmed List sites and nine are on the Reserve List sites. Accordingly, around 101,500m² of commercial space, 6,670 private residential units and 1,070 hotel rooms will be developed on the land supply under the second half of 2020 GLS Programme. On 28 May, the URA launched public tender for a residential with commercial project at Tanah Merah Kechil Link under the first half of 2020 GLS Programme. The plan is to develop 265 residential units.

According to the URA Q1 2020 report, 1,528 private residential units were completed in the first quarter of 2020 and, 4,506 private residential units and 628 executive condominiums are expected to be completed during Q2–Q4 2020. According to the UAR Q4 2019 projection, 6,294 private residential units were expected to be completed in 2020. This slowdown in private residential units can be attributed to the Covid-19 outbreak. Moreover, the URA expects that 10,816 and 16,160 private residential units would be added in 2021 and 2022 respectively.

Despite the disruptions on sites, progress has been made with respect to the development of projects in pre-execution stages. In April, the Land Transport Authority (LTA) awarded a SGD639.5m ($450m) contract to South Korea’s GS Engineering and Construction for the design and construction of an Integrated Train Testing Centre. The centre is scheduled to be fully operational by end 2024, with the first phase due to commence by the end of 2022. In March, the LTA awarded a SGD265.4m ($186.1m) contract to McConnell Dowell and John Holland to construct three stations on the Jurong Region Line (JRL) by 2026. In early March, the government announced plans to invest over SGD60bn ($43.8bn) on the expansion and renewal of the country’s rail network over the next decade.

GlobalData expects the construction industry to benefit from the government’s initiatives, as it is expected that work on construction sites will be ramped up quickly in the coming months, recovering some of the lost output since early April.

According to the Singapore Department of Statistics, the construction industry’s value-add at 2015 chained prices fell by 4.0% year on year in the first quarter of 2020, this was preceded by an annual decline of 3.5% in 2018 and an annual growth of 2.8% in 2019. The industry is expected to contract further in the next quarter, as construction activities were affected by the circuit breaker measures in response to the pandemic.

Moreover, total payment issued for construction declined by 5.1% in the first four months of 2020, compared to the same period of 2019, going from SGD9.2bn ($6.7bn) in January–April 2019 to 8.7bn ($6.3bn) in January–April 2020. The total payment issued for commercial construction declined by 27.1% in the first four months of 2020, whereas that for residential construction declined by 16.1% and for civil engineering declined by 3.3% during the same period. Reflecting the disruptions caused in April, the total payment issued for construction declined by 14.6% year on year, going from SGD2.1bn ($1.5bn) in 2019 to SGD1.8bn ($1.3bn) in 2020.