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Growth in APAC’s Construction Industry but Inflationary Pressures May Rise in 2025

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Reading Time: 3 minutes

 

 

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Global construction consultant Linesight has published its latest Construction Market Insights report for Asia Pacific (APAC) & GCC. The report reveals that construction growth in APAC has proven to be resilient to the volatility of the wider global economy and construction output continues to gain momentum across the region.

 

Activity in APAC’s construction industry remains robust, fuelled by significant investments in the critical sectors of infrastructure, data centres, semiconductors and renewable energy. Key Southeast Asian construction markets such as Singapore and Malaysia, are expected to perform strongly over the next three years.

 

On a macro level, APAC is set to account for 60 percent of global gross domestic product (GDP) growth this year. This positive trajectory is expected to continue in 2025 amidst favourable monetary conditions. GDP growth has also been revised up to 4.4 percent from 4.3 percent. While inflation has started to ease after a period of turbulence, construction inflationary pressures may increase next year. This is largely driven by persistent labour shortages,  increased construction activity and geopolitical uncertainties in the Middle East.

 

Labour remains a significant cost factor due to the shortage of skilled workers, a challenge that is more pronounced in developed countries. Coupled with continued strong demand for projects, contractors are experiencing capacity constraints and there remains high levels of pressure on all fronts to deliver on pipeline projects.

 

Following spikes in the first half of 2024, commodity prices have broadly stabilised, but the fluctuating prices of metals remains a concern. Prices of copper and aluminium are higher than they were in 2023 due to supply chain challenges and rising import costs. Strong demand from renewable energy, power and infrastructure sectors is expected to keep upward pressure on prices.

 

The report also highlighted the following Singapore findings:

Industry outlook

  • Singapore’s construction industry growth is expected to slow, due to soft external demand and a decline in construction contracts issued in the first quarter of 2024.
  • However, between 2025 to 2027, industry is forecast to grow, driven by investments in transport, renewable energy, and manufacturing, including the S$21.9 billion high-speed railway project linking Kuala Lumpur to Singapore.

 

Key commodity prices

  • Copper demand is heavily driven by the renewable energy transition across multiple markets including Singapore. Investments in semiconductors and energy storage will also further boost demand and copper prices in Singapore are anticipated to increase ≥ 1 percent – < 5 percent between Q1 2025 and Q2 2025.
  • Steel rebar and steel flat prices are expected to inch downwards in Q4 2024 due to weaker iron ore prices and soft global demand. While prices are anticipated to level off between Q1 2025 to Q2 2025, infrastructure and mega projects are expected to drive long-term price increases.
  • Cement and concrete prices exhibit similar trends and remain elevated. Rising project demand and costs associated with labour, energy and transport have caused prices to inch upwards but a slight easing in prices is expected between the first two quarters of 2025.

 

John Butler, Managing Director, Asia Pacific at Linesight, said: “2024 has been a strong year of growth for the APAC construction industry driven by significant capital injections by both private and public sectors. Despite labour shortages and some volatility in metal prices, the outlook for the industry in 2025 continues to be vibrant as APAC paves the way in the global construction arena, amid high levels of demand and activity in mission-critical sectors.

 

The report can be read in full here.

 

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Linesight Promotes Scott Halyday to Regional Director for Southeast Asia

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Reading Time: 2 minutes

 

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Global construction consultancy Linesight has announced the appointment of Scott Halyday to Regional Director – Southeast Asia, to drive the next phase of growth for the region. Scott has a distinguished track record spanning over 19 years, managing large-scale projects globally across Data centre, Aviation, Life Sciences, High Tech Industrial, Commercial and mixed-use sectors. Prior to this role, Scott was leading operations in Singapore.

 

Southeast Asia remains a strategic growth region for Linesight as global businesses seek opportunities to establish and expand their operations. The region’s construction market is expected to grow consistently over the next four years. Notably, Malaysia, which has attracted substantial investments, is emerging as a prime destination for companies in mission-critical sectors.

 

As a member of the regional leadership team, Scott will help lead the firm’s growth ambitions across the key sectors of data centres, life sciences and semiconductors.  This includes expanding the team across the region, particularly in project management, scheduling and project controls.

 

“Linesight is already well established in Southeast Asia and the firm continues to expand in key sectors of the future,” said Halyday. “I’m honoured to be appointed as Regional Director for Southeast Asia to drive innovation and excellence in our service offerings”.

 

Halyday will report to John Butler, Managing Director, Asia Pacific. “Looking ahead, Southeast Asia will be a high-potential growth region for Linesight. Scott’s extensive global experience and his dedication in delivering superior and value-added solutions will be an asset to our operations and clients,” said Butler.

 

 

Linesight’s Commodity Report Sees Material Prices for Singapore’s Construction Sector to Stay at Record High Levels

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Reading Time: 2 minutes

Linesight’s global quarterly commodities report revealead outlook and trends for material pricing, supply, and labour in Singapore’s construction industry

Linesight, a global construction consultancy firm, sees construction commodity prices in Singapore to remain at record high levels in 2022, as the construction sector deals with inflation, high material costs, and shortage of skilled labour. By the end of this year, Linesight expects that real construction output will surpass its pre-pandemic level. The findings are part of Linesight’s 2021 fourth-quarter Commodity Report and price forecast.

Metal prices, which include copper, steel rebar, and flat steel are expected to ease slightly quarter-to-quarter between Q4 2021 and Q1 2022. Owing to higher prices in 2021, construction companies working on Housing and Development Board (HDB) projects have been given more support in the form of protected prices for steel, but an improvement in the global supply-demand balance will support a steady easing of prices in 2022.

Copper prices spiked at a 50.1% year-on-year increase between 2020 and 2021 and will remain relatively high moving into 2022 albeit is expected to ease somewhat at a 2.2% reduction from Q4 2021 to Q1 2022, assuming a recovery in production levels and a normalisation of the supply chain. On the other hand, prices of cement concrete, lumber, bricks, and plasterboard are expected to increase marginally from Q4 2021 to Q1 2022 due to increasing raw material and conveyance costs. Lumber prices in Singapore continued to rise over Q4 2021, and although upward pressures will ease, the ongoing recovery in residential construction will keep prices relatively high in the coming quarters.

Michael Murphy, Director at Linesight Singapore, said: “Building material prices have soared in 2021 and it will stay at high levels in 2022. It will take at least another year, which is in early 2023, before we see prices of building materials stabilises to pre-COVID levels. This means that new construction and renovation projects – be they commercial or residential – will remain higher than those experienced pre-2020. A big reason building materials cost more these days is that supply chains were disrupted during the pandemic. Those supply chains now need to catch up with demand and we are seeing a concerted effort by stakeholders – material producers, port operators, transporters, and government agencies – to clear the backlog of supplies. Once that happens, the cost of building material could start to decline.”

Real construction output is expected to reach US$18.4 billion in 2022, and US$19.4 billion in 2023, a year-on-year increase of 15.4% and 5.6% respectively. Meanwhile, Singapore was ranked 14th globally in terms of ease of doing business, demonstrating a conducive regulatory environment for business operations. The price for metal, lumber and other building materials rose sharply in 2021, affecting most international cities across Asia Pacific, and the record high costs will stay for the rest of 2022.

Click here to download the full report