Big drop in building activity

Source : Today - 20 Dec 2008

THE value of projects under construction in Singapore is expected to be slashed next year, with the biggest impact to be felt in the central business district.

The value of construction activity in Singapore is likely to fall 32 per cent to US$17 billion ($24.6 billion) next year from US$25 billion this year, said BCI Asia Construction Information, a construction industry research company that undertook a study of the region’s building sector.

“The greatest impact in 2009 and 2010 will be felt in the CBD, in Singapore and Hong Kong,” said Mr Thor Kerr, managing director of BCI Asia.

As funding becomes scarce and rents start to soften, the high-end commercial and residential sector is likely to see more deferred construction activity next year, compared to projects in infrastructure and in the industrial space.

BCI Asia’s prediction is in line with forecasts from the Building and Construction Authority, which expects construction demand here to reach $30 billion this year, and slow down in the next two years.

“But in past crises, we see in these urban areas, at least Singapore and Hong Kong tend to bounce back very quickly. They bounce back slower in Indonesia and in other places,” said Mr Kerr. He added that Government spending on housing and other projects will help mitigate the slowdown.

Mr Kerr said that the decline in construction activity next year should not be taken as grim news because the value of these projects are not slipping to the levels seen during the Asian financial crisis.

“You’ve got to put it in context; US$17 billion gets you back to where you were in 2006. We’re getting back to a more reasonable level,” said Mr Kerr.