S’pore construction boom may cool this year: analysts
By Thomas Cho |
Posted: 10 January 2013 2120 hrs
SINGAPORE: Singapore’s construction boom may cool in 2013, after underpinning the country’s economic growth in recent years.
The sector grew 8.8 per cent in 2012, while the national economy expanded just 1.2 per cent.
Economists say the likely slowdown this year will be marked by lower private sector spending.
Total construction projects in 2012 are estimated to be valued at around S$26 billion – a drop from a high of S$35 billion in 2010.
After several years of strong growth, construction growth started to moderate in the fourth quarter of 2012 to 5.9 per cent on-year from 7.7 per cent growth in the previous quarter.
Ludwig Reichhold, managing director at Dragages Singapore said: “The construction sector in Singapore has been very active over the past years. In the last year, there has been a lot of government projects, which have increased the boom. But, on the other hand, there has been less private sector projects, so I think the situation is pretty stable at the moment.”
Government spending on infrastructure and upgrading has driven much of the big-ticket activity, which has simultaneously caused a crunch on labour and other physical resources.
Song Seng Wun, regional economist at CIMB Research said: “Nonetheless with the total value awarded running around S$26 billion which is slower than the previous years, it looks given there is a lag between progressive payments, awards and the headline growth for the construction sector itself, we may see growth tapering off into perhaps low single digit growth in 2013 especially in second half of 2013 itself after couple of years of double digit growth.”
The prosperous growth has attracted many new players and some construction companies claim not all local companies stand to benefit.
Ric Grosvenor, president and CEO of Sembawang Engineers and Constructors said: “There are new entrants in the market, particularly, South Korean companies. So, Sembawang is actually declining its share of the Singapore market. We are actually in high demand in places like Hong Kong. So, we are actually exporting our executives to other locations because of the displacement caused by South Koreans.”
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