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Construction sector set to see 12% growth in 2024, dwarfing GDP expansion

Construction sector set to see 12% growth in 2024, dwarfing GDP expansion

SINGAPORE: Singapore’s construction sector is poised for a remarkable surge in productivity, with a projected 12% increase in 2024.

This growth rate significantly outpaces the expected GDP growth of 2% to 3%, showcasing the sector’s robust performance and its pivotal role in the nation’s economy.

According to a report by Turner & Townsend published by the Singapore Business Review, this surge is attributed to a combination of factors, including substantial government-backed initiatives and the commencement of major state projects like Changi Airport Terminal 5 and Tuas Port.

Initiatives bolstering productivity

The construction volume for the year is anticipated to range between S$32 billion and S$38 billion, underscoring the sector’s vitality. This momentum is further fueled by recent incentives in the built environment, such as the enhanced Contractors Registration System (CRS), the Productivity Innovation Project (PIP), the Future Energy Fund, and the Energy Efficient Grant. These initiatives aim to bolster productivity, innovation, and sustainability within the industry.

The Singapore government’s contribution to domestic construction projects is expected to be substantial, accounting for 55% of the total, while the private sector will contribute the remaining 45%. This collaborative effort between the public and private sectors underscores the commitment to driving the construction industry forward.

Moreover, the construction market is reaping the benefits of investments in digital infrastructure. The introduction of the NEC4 contract by the Building Construction Authority (BCA) signifies a shift towards more efficient and collaborative contracting practices.

Construction sector continues to thrive despite uncertainties

Despite global economic uncertainties and geopolitical tensions, Singapore’s construction industry continues to thrive, adapting to challenges with innovative solutions.

However, the industry is not without its hurdles. The departure of construction workers during the pandemic has exacerbated the labor squeeze, leading to increased costs for talent acquisition. Despite these challenges, industry leaders remain optimistic.

From the graph above, it can be seen that in 2023, the construction sector in Singapore employed approximately 94,300 residents, reflecting a decline from the preceding year. The number of resident employees in the construction industry has been on the decline for the past four years.

Collaboration and digitization

Khoo Sze Boon, Managing Director of Turner & Townsend in Singapore, emphasized the importance of embracing collaborative contracting and digitization to offset rising costs and transform the construction sector.

As the industry navigates through challenges, the focus on collaborative contracting and digital advancements positions it for long-term resilience and growth.

Credit to The Independent Singapore