Singapore remains the third most expensive Asian city to build in, after Hong Kong and Macau, according to the International Construction Costs Index published today by Arcadis, the leading global Design & Consultancy firm for natural and built assets. However, Singapore moved down 5 positions on the global ranking from last year, making it the fifteenth-most expensive city in the world to build in.
The annual Arcadis index, which analyzes the relative cost of construction across 44 major cities, finds that world cities, including New York and Hong Kong, continue to be some of the most expensive locations in the world in which to build, but a slowdown in the global economy led by China and in resource economies, such as Brazil and Saudi Arabia, points to wider changes affecting the world’s construction markets.
Singapore’s construction market has seen continuous correction since 2014, caused by over-supply and a slowing economy. This year’s output forecast is currently estimated to be between US$ 27bn and US$32bn, representing a stable market after a steep correction. Sustained workload in the public sector, such as public housing and civil engineering, has supported the industry during the correction. As a result, prices have remained broadly stable.
Tim Risbridger, Country Head for Singapore commented: “With Singapore government’s continued investment in infrastructure through projects such as Changi East Development, PUB’s Deep Tunnel Sewerage System (DTSS) and Singapore to Kuala Lumpur High Speed Rail, the construction industry in Singapore will remain positive with a forecast output of 2% increment per year. However, it is not without challenges. Among them, a shortage in both labor and expertise could potentially hinder productivity if not being addressed effectively. We believe investment in technology and initiatives which will increase industry productivity, are essential in order to meet the challenges in the coming years.”
The Asian cities ranking in Arcadis’ International Construction Costs Index are below:
|Asia Ranking||World Ranking||City|
|11||41||Ho Chi Minh|
Whilst economic growth levels in emerging Asian economies such as Malaysia, Indonesia and Philippines are way in excess of the developed world, growth rates in established hubs such as Hong Kong and Singapore are similar to those in North America and European cities. Growth rates in many Asian construction markets have eased significantly over the past 18 months mainly due to the peak in commercial and residential development rates. Looking forward, expansion at around 5%-7% per year is the best prospect for many construction markets in Asia.
Alan Hearn, Head of Buildings Solutions, Asia commented: “The future of the construction industry in Asia is looking optimistic. However, we believe that the construction industry drivers for the future will change. Four out of 10 highest value construction projects in 2017 are located in Asia. Among them are One Belt One Road (OBOR) initiatives and the Delhi Mumbai Industrial Corridor. Mega projects like these are mainly funded by public-private partnership (PPP) and will continue to fuel the development of the construction industry in Asia.”