Construction sector in SE Asia, HK expected to contract by 16% in 2009

Source : Channel NewsAsia - 19 Dec 2008

The construction sector in Southeast Asia and Hong Kong is expected to contract by 16 per cent next year, according to a report by regional construction information provider BCI Asia.

BCI Asia predicts that in a worst-case scenario, the contraction could be up to 32 per cent.

It released a preliminary four-year forecast for the construction markets of Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam on Friday.

According to the report, the value of projects under construction in Southeast Asia and Hong Kong jumped from US$107 billion in 2007 to US$140 billion this year.

It estimates that this value will decline to US$118 billion next year, according to an optimistic scenario that applies the November 2008 growth estimates of the International Monetary Fund.

BCI Asia says as local economic conditions deteriorate further, developers will postpone the construction of new offices, hotels, recreation facilities and downtown retail centres.

Applying a model for construction market behavior, it projects that the value of projects under construction could drop to US$96 billion in the most pessimistic recession scenario.

BCI Asia’s managing director, Thor Kerr, said: “The value of projects at design and documentation phases has contracted two per cent this year and we have seen major projects abandoned for lack of finance. There will be far fewer new industrial facilities and utilities being constructed from 2009.”