Singapore’s construction sector is experiencing a boom, fueled by major projects like the expansion of Changi Airport and an $8 billion development by Las Vegas Sands. However, this growth is occurring against a backdrop of consistently high construction costs and a tightening labor market, forcing firms to innovate and adopt new technologies to maintain efficiency.
Construction Demand and Mega Projects
Construction demand in Singapore is projected to reach up to 53 billion Singapore dollars (approximately $42 billion USD) in of this year, a 15% increase from previous estimates, according to the Building and Construction Authority (BCA). Several mega projects are driving this surge. Work began in on the Las Vegas Sands development, which includes a 570-suite hotel and a 15,000-seat arena. Simultaneously, construction is underway on a new terminal at Changi Airport, and the Tengah General &. Community Hospital, slated to add 4,000 patient beds by , is also progressing.
“Following the Covid-19 pandemic, the construction industry surged, and we haven’t looked back since,” said Alex Saez, partner and managing director for APAC at engineering consultancy Cundall.
Rising Costs and Supply Chain Disruptions
Despite the economic benefits of the construction boom, Singapore consistently ranks among the most expensive places in the world to build. Construction consultant Turner & Townsend estimates that costs will rise by as much as 5% this year. This increase is attributed to supply chain disruptions affecting materials like cement and ready-mixed concrete, as well as extended lead times for plumbing and electrical systems. Surging prices for the semiconductors needed within those systems are also contributing to the cost increases.
Labor Shortages and Skills Gaps
Alongside material costs, a shortage of skilled labor is presenting a significant challenge. The Singapore construction labor market is experiencing a shortfall, particularly in PMET roles – professionals, managers, executives, and technicians – which is described as “noticeably tight” by Khoo Sze Boon, managing director for Singapore at Turner & Townsend. Capability gaps, especially among specialist subcontractors on major projects, are also impacting timelines and quality.
The BCA plans to launch additional training programs for project managers later this year to address these skills gaps. A trend of “double hatting,” where workers are trained to take on multiple responsibilities, is also emerging as a strategy to mitigate the labor shortage.
The Rise of Technology and Automation
To combat both cost pressures and labor shortages, Singapore’s construction firms are increasingly turning to technology. Soilbuild, a Singapore-based contractor, is shifting towards “high-value, high-specification industrial buildings” and expects to see greater adoption of technologies like enterprise risk management systems to improve cost efficiency.
Companies are investing in robotics and automation. ISOTeam is developing drones capable of washing and painting building exteriors, reducing the need for scaffolding and improving worker safety. From of this year, the BCA will provide grants to small companies to invest in these types of technologies, with the potential for up to 50% manpower savings.
Start-ups like OpenSpace and PlanRadar are also gaining traction, offering computer vision technology for project tracking and software for scheduling and defect tracking, respectively. Both companies have reported increased business from the region.
Legend Robot manufactures machinery capable of automating tasks like painting and tiling. Their latex paint spraying robot can handle up to 1,500 square meters daily, more than seven times the productivity of a human worker, according to the company’s Marketing Director Jason Liang. These robots cost between $70,000 and $120,000.
A Digital Renaissance and Long-Term Outlook
Turner & Townsend’s Khoo emphasizes that simply adopting new digital tools isn’t enough. Firms need to rethink how technology supports their commercial goals, potentially undergoing a “digital renaissance” that reshapes their operating models.
Analysts at CGS International Securities Singapore forecast an “extended upcycle” in the construction industry, with contractors’ earnings expected to peak in the financial year. They anticipate earnings-per-share growth of 16% to 41% between and .
Singapore’s long-term master plan includes new parks, residential areas, and subway lines. However, with land being scarce, decisions about development are becoming increasingly complex. Despite rising costs, Singapore’s construction projects are generally delivered on time and within budget, due in part to a focus on long-term needs rather than political agendas.
Beyond addressing practical needs, Singapore aims to integrate green initiatives, such as rainwater harvesting, into its construction projects, transforming the city into a “greened” and habitable environment, according to Charu Kokate, a senior partner at Safdie Architects.
