Market Monitor Construction Singapore 2020

市場監測

  • 新加坡
  • 建築

2020年03月10日

Lower global trade, ongoing trade policy uncertainty, less demand from China and the ICT downcycle have an immediate impact on Singapore's export-driven economy.

Subdued GDP growth in 2019 and 2020 is impacting private construction activity in the city state.

In the medium-term the construction sector is facing a protracted slowdown in growth. Output growth, in real terms, is expected to decrease to 2.7% in 2020 and 0.5% in 2021. Mainly affected are the residential and commercial construction subsectors. There is a slowdown in private projects, while businesses face fierce competition, tighter margins and slow payments.

That said, the outlook for the public construction sector segment remains benign. Government investment in infrastructure and civil engineering works remains high. Annually, it is expected to be between SGD 27 billion and SGD 34 billion in 2020 and 2021. This will mainly benefit multinational building companies. Several megaprojects are currently underway or in the pipeline, including the Thomson-East Coast MRT Line, the new Tuas Mega Port and Changi Airport Terminal 5. Public sector projects are expected to account for 60% of overall construction demand in 2020.

The profitability of many construction businesses remains low and profit margins are expected to deteriorate further in 2020. Small and medium-sized contractors in particular continue to suffer from tight cash flow and deteriorating margins. This is due to a lack of projects, increasing competition, and higher labour and rental costs. 

Singapore´s construction businesses are heavily reliant on banks for loans and project funding. Government measures to cool down the property market include tighter lending criteria (such as higher deposit requirements, lower loan-to-value limits, additional stamp duty and higher interest rates) for both private consumers and developers. 

On average payment duration in the industry is 60-120 days. Payment behaviour has slowly deteriorated since 2017. Slow payments in the construction industry increased to 49% in Q4 of 2019 from 47% in Q3 of 2019, mainly due to payment delays by special trade contractors. Payment delays are expected to rise further in 2020, especially in the residential and commercial construction segments. Overall, the protracted default rate in the industry remains high. 

Construction insolvencies increased by about 5% in 2019 year-on-year, and another 5% increase is expected in 2020. Construction businesses can now choose adjudication under the recently updated Building and Construction Industry Security Payment Act (with an emphasis on debtor protection and corporate rescue), rather than resorting to litigation or arbitration. While this offers valuable breathing space and a chance of survival for struggling SMEs, slow payments continue to trouble businesses. 

Due to sluggish demand, tough competition, tight margins, slow payments and increased insolvencies our underwriting stance remains restrictive for the residential construction, commercial construction and construction materials segments, especially for smaller contractors. That said, we remain generally open for businesses active in the public construction segment.

Market Monitor Construction Singapore 2020 sector growth

Market Monitor Construction Singapore 2020 sector growth

Market Monitor Construction Singapore 2020 performance forecast

Market Monitor Construction Singapore 2020 performance forecast

相關資料

免責聲明

Each publication available on or from our websites, such as, but not limited to webpages, reports, articles, publications, tips and helpful content, trading briefs, infographics, videos (each a “Publication”) is provided for information purposes only and is not intended as a recommendation or advice as to particular transactions, investments or strategies in any way to any reader. Readers must make their own independent decisions, commercial or otherwise, regarding the information provided. While we have made every attempt to ensure that the information contained in any Publication has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in any Publication is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from its use, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof, be liable to you or anyone else for any decision made or action taken in reliance on the information in any Publication, or for any loss of opportunity, loss of profit, loss of production, loss of business or indirect losses, special or similar damages of any kind, even if advised of the possibility of such losses or damages.