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The BCA-REDAS Built Environment and Property Prospects Seminar 2024 kicked off with an insightful opening address by Minister Desmond Lee on the Construction Demand Forecast. The address covered crucial aspects of the property landscape, construction sector outlook, and the government’s efforts to transform the Built Environment (BE) sector. Let’s delve into the key highlights.
Date: January 15, 2024
| Construction Demand Forecast (2024) | Key Points |
|---|---|
| Total Construction Demand (2024) | – Estimated between $32 billion and $38 billion in nominal terms. |
| Public Sector Contribution (2024) | – Expected to contribute about 55% of total demand, ranging between $18 billion and $21 billion. |
| Private Sector Contribution (2024) | – Expected to contribute between $14 billion and $17 billion. |
| Medium-Term Outlook (2025-2028) | – Projected annual construction demand between $31 billion and $38 billion. |
| Key Public Sector Projects (Medium-Term Outlook) | – Includes developments like Changi Airport Terminal 5, Cross Island MRT Line, Alexandra Hospital redevelopment, and various school projects. |
| Government Vision | – Investments in physical infrastructure to realize Singapore’s vision as a vibrant global city and an endearing home for all. |
Property Outlook for 2024
Minister Lee began by shedding light on the property outlook for 2024. The backdrop of the COVID-19 pandemic has brought about unprecedented disruptions, leading to a tightening of supply in the housing market. Strong demand, fueled by various factors such as pandemic-related concerns, demographic shifts, and changes in living preferences, led to rising HDB resale and private housing prices.
To address the supply-demand imbalance, the government implemented measures on both the demand and supply sides. Notably, completion of around 43,000 housing units in 2023 marked a significant achievement for the Built Environment sector, considering the challenges posed by the pandemic.
The efforts are bearing fruit, with signs of stabilization in both private and public residential markets. Transaction volumes have decreased, and the rate of property price increases has moderated. Minister Lee emphasized the need for prudence in property purchases as external economic challenges and high domestic mortgage rates may impact existing and prospective homeowners.
Construction Demand Forecast
Switching gears, Minister Lee provided insights into the Construction sector’s demand forecast for 2024. The strong pipeline of residential projects is expected to translate into steady demand, with an estimated total construction demand between $32 billion and $38 billion in nominal terms. The public sector is anticipated to contribute about 55% of this demand, with various projects, including BTO flats, upgrading initiatives, and public infrastructure works.
Looking ahead to the medium-term outlook from 2025 to 2028, the annual construction demand is projected to be between $31 billion and $38 billion. Key public sector projects like
- Changi Airport Terminal 5,
- Cross Island MRT Line,
- Alexandra Hospital redevelopment, and
- school developments will continue to drive demand, aligning with Singapore’s vision as a vibrant global city.
Public Sector Efforts to Transform the BE Sector
Minister Lee then delved into the government’s commitment to transforming the Built Environment sector. Despite positive strides, challenges persist, necessitating efforts to enhance resilience in a potentially more challenging operating environment.
The government is already setting high standards for productivity and sustainability in public sector projects. Initiatives like the Productivity Gateway Framework and GreenGov.SG exemplify the commitment to elevating industry practices. Minister Lee highlighted the adoption of collaborative contracting, with ten public sector projects either piloting or planning to pilot these provisions. Additionally, the introduction of the NEC4 contract form by agencies like HDB, JTC, and LTA aims to encourage proactive issue resolution and exploration of innovation.
The Minister announced the successful review of the Standard Consultancy Agreement (SCA), with enhancements focusing on a clearer definition of services, fair remuneration, and a balanced allocation of risks. The proposed amendments are expected to roll out later this year, promoting healthier practices between public sector developers and consultants.
In parallel, enhancements to the Quality Fee Method (QFM) framework aim to place greater emphasis on quality, addressing concerns related to aggressive bidding behavior. The government plans to explore suspending poor-performing consultants from tendering for public sector projects and pilot a revised fee-score approach for selected projects, encouraging sustainable bidding behavior.
Call to Action – Private Developers
Minister Lee concluded his address with a call to private developers to play a more significant role in the BE sector transformation. Acknowledging the challenges and adjustments involved, he encouraged developers to consider incorporating collaborative contracting practices into their projects, emphasizing the long-term benefits of a resilient, dynamic, and innovative sector.
Conclusion
As the BCA-REDAS Seminar unfolds, Minister Desmond Lee’s opening address sets the tone for a comprehensive exploration of the challenges and opportunities within the Built Environment and Property sector. The government’s commitment to stability, transformation, and collaboration underscores its dedication to supporting stakeholders in navigating an evolving landscape.