The island’s economy grew at a slower pace in the second quarter than initially projected as construction plunged. Singapore increased stamp duties for developers in July, and also tightened borrowing limits for individuals taking up their first housing loan, after property prices jumped this year.

Any slowdown in demand for homes is likely to hurt the construction sector, which accounted for 12.3 per cent of Singapore’s employment in 2017. Small domestic construction firms are especially vulnerable because they face issues including thin margins, according to EY.

Many of the firms are probably affected by rising interest rates on their borrowings, while delays in collections from customers “would result in tight liquidity and potentially difficulties in repaying their loans,” according to Angela Ee, a partner at EY.

Cracks were already emerging prior to the curbs. Singapore-listed Ryobi Kiso Holdings Ltd., which specialises in piling, said in June that its subsidiary was unable to meet repayment obligations.

Property developers are likely to squeeze construction firms in an attempt to maintain margins, resulting in “headwinds,” according to Simon Jong, head of fixed income research DBS Group Holdings Ltd. Bigger developers often contract out projects to smaller construction companies in Singapore.

The property curbs have already hurt the bonds of smaller Singapore developers. Oxley Holdings Ltd.’s notes due in 2021 have slumped 9.4 cents on the dollar this year to 90.5 cents, according to Bloomberg-compiled prices.

Bonds sold by Singapore-listed Chip Eng Seng Corp., which built the tallest public housing project in Singapore, The Pinnacle @ Duxton, have also declined. Its debt due in 2022 has fallen 6.4 cents this year to 96 cents on the Singapore dollar.

An executive at Chip Eng Seng declined to comment.

An external spokesman for Oxley Group wasn’t immediately able to comment.

“Singapore developers with higher leverage may have less room to maneuver, in case they cannot sell their units,” said Wong Hong Wei, credit research analyst at Oversea-Chinese Banking Corp., speaking generally. “I think the Singapore bond market looks shut out for a number of high-yield property companies unless they pay up significantly.”

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Advance estimates from the Ministry of Trade and Industry (MTI) on Friday (Jul 13) showed the industry shrunk by 4.4 per cent year-on-year in the second quarter, as weakness in private sector construction activities persisted.

While this marked the sector’s eighth straight quarter of contraction, the decline eased from the previous quarter’s negative 5.2 per cent.

Government officials also said in May that a pick-up in activities may be around the corner.

“Construction demand has started to pick up since the second half of last year. In the first quarter, demand increased primarily due to public sector demand (and) some pick-up in private sector construction,” an official said at a briefing to announce first-quarter GDP figures.

“Taken together, we think the construction sector will start to bottom up and we should see a pick-up in activities towards the latter half of this year or 2019.”

This could, however, change with the surprise property curbs announced on Jul 5.

“There are signs that it is bottoming out because of the rebound in the property market but now, the cooling measures will likely have a dampening effect on the sector,” Nomura economist Brian Tan said.

“I’d remain very cautious on construction as a source of growth.”

Aimed at cooling the market and keeping “price increases in line with economic fundamentals”, the Government hiked the Additional Buyer’s Stamp Duty (ABSD) rates and tightened loan-to-value (LTV) limits on residential property purchases.

Developers were also slapped with a non-remissible five per cent ABSD when they purchase en bloc properties for redevelopment, alongside a 10-percentage-point increase in the waivable ABSD to 25 per cent.

Described by some analysts as “heavy-handed”, the cooling measures are seen having the largest impact on the en bloc market and the private residential market. The resurgence in the former was supposed to be a boost to the construction sector when new condominium projects get underway.

“We had initially expected the construction sector to potentially bottom by end of 2018 but given that the recent cooling measures in the form of a hike to the ABSD and LTV tightening is likely to dampen the private residential market sentiments and activity in the near term, there may not be light at the end of the tunnel this year for the construction sector’s growth,” said OCBC Bank’s head of treasury research and strategy Selena Ling.

But observers are less certain about when the impact could kick in, citing projects that may be coming on stream soon.

“Don’t forget there were already deals done from all the en bloc activities. These construction projects are not the kind of things that you start and stop at a whim so it may take some time before it filters in,” said Mr Tan.

“But it might still put the brakes on the en bloc hopefuls.”

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye wrote in a note that “severe” property measures are “hurting the construction outlook” though the sector is still likely to get some reprieve from the strong en bloc sales to date and rising value of contracts awarded.

To be sure, there is one economist with a contrarian view.

Mr Vishnu Varathan, head of economics and strategy for Mizuho Bank, thinks the latest cooling measures will not cause a dramatic slowdown in construction activity.

“Whatever that’s underway, developers will go ahead to finish it,” he said. “What the measures might do is cause a reconsideration among developers when it comes to pricing for land bids, but what it does not do is give cause for those who have already bought the land to hold back on construction.”

As for the impact on new projects, he reckoned: “The en bloc activity may not be as frantic but you may want to bear in mind that a lot of the impact would be around pricing potential. Developers and owners looking to encash will be calibrating their expectations and a deal may still go through.

“My proposition is that the cooling measures may not translate into an impact because some of that could be adjusted from a price perspective.”

The Government keeping residential land supply in the second half of 2018 on par with that in the first half also means that “public projects can be adjusted to pick up some of the buffer”.

Lastly, with the significant declines seen last year, it “must take something jarring” to worsen the year-on-year figures for the sector, added Mr Varathan.

Looking ahead, the economist expects contraction in the construction sector to continue easing to negative three to four per cent, from its current four to five per cent declines.

“This kind of gradual recovery is not outlandish to expect,” he said.

Source: Channel NewsAsia – 13 Jul 2018

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The highest accolade – Platinum – went to residential development 76 Shenton and office building CapitaGreen, BCA said in a media release.

The other seven award winners will be given Gold awards. They are: Galaxis, Aperia, JTC’s industrial building at 73 Ayer Rajah Crescent, Nanyang Primary School as well as HDB projects Acacia Breeze @ Yishun, Waterway Woodcress at Punggol and Yishun Riverwalk.

BCA said CapitaGreen was given the top award for its use of precast elements and a structural steel system, which allowed for faster installation on site, better quality control, as well as less noise and dust pollution as most work was done off-site.

CapitaGreen also adopted several construction technologies that were used in Singapore for the first time, including the use of 3.5-metre bored piles for the office tower’s foundation, reducing the number of piles needed and increasing the efficiency of installation work, the authority added.

BCA said the other Platinum Award winner, 76 Shenton, utilised a high degree of standardisation which allowed building components to be produced in mass quantities to achieve economies of scale.

“The conversion of several cast on-site components to precast elements also significantly reduced construction time,” BCA said, adding that the project adopted other productive technologies that made it easier to assemble various components and resulted in better quality finishes.

BCA said building projects were assessed based on a buildable design score, constructability score, the simplicity of construction, integration of design and construction, as well as aesthetics. Civil engineering projects were, on the other hand, assessed based on design for ease of construction, the use of construction technology, site management, integration of design and construction, and the adoption of innovative designs and products.

The winners will receive their awards during the BCA Awards ceremony on Thursday.

Source : Channel NewsAsia – 25 May 2016

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This will allow builders with “good productivity records” in their past projects and their investment in technology adoption and workforce development to have an advantage when tendering for Government construction projects, said BCA in a release on Tuesday (Oct 13).

Previously, the productivity weightage was set at a range of 3 to 6 per cent, and it was parked under the quality component. Depending on the type of procurement project, contractors could be involved in the design process in different degrees, which affected the weightage given to the productivity and price components to different degrees.

The new revision separates the productivity and quality components, with productivity given a weightage of 10 per cent, and quality and price weighing the remaining 90 per cent.

The authority also announced that it has launched a S$2.6 million fund for research programmes on construction productivity. The fund is part of its aim to raise the productivity of the built environment sector by an average of 2 to 3 per cent annually by 2020, as laid out in its second Construction Productivity Roadmap launched earlier this year.

The BCA will also provide funding for projects that adopt Virtual Design and Construction (VDC), to promote collaboration in the built environment sector. The VDC process aids in the integration of the different phases of a project.

The BCA Academy also launched a new Masters programme for International Construction Management with a major in Construction Productivity, in conjunction with the University of Florida. Applications are open and the first intake will start around March next year.

Source : Channel NewsAsia – 13 Oct 2015

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Homeowners seem to have a smaller appetite for lavish renovation works as well, with industry players saying homeowners in Singapore are now more selective about the kind of renovation works to undertake.

Affordability is the key issue, with property cooling measures like the Additional Buyer’s Stamp Duty and loan restrictions taking a heavier toll on finances. Such measures have already softened the property market considerably.

Slower home sales naturally mean there is a shrinking pool of homeowners who want to customise a unit to their own unique tastes. It also means renovators have to fight harder to win the attention of customers.

Some contractors who have been struggling against the competition have had to close down. “With this consolidation of marketplace, there are companies who have folded up, because they find that their income is not able to match their ongoing expenses, despite how modest their expenses can be,” said Edward Tan, executive director of RADAC.

Making conditions even tougher – especially for small, family-run renovation contractors – is the tight labour market in Singapore. “With the problem of getting labour and increased costs, contractors may think that their service level may not be good enough,” added Mr Tan. “And because they have been around for so long, they may want to retire.”

ADAPTING TO MARKET CHANGES

For those battling on, adapting to changes has been key. Renovation matchmaking website Kluje, which is linked to around 500 industry players, said refurbishment outfits are responding to changing tastes.

Kluje’s co-founder and chief operations officer, Andrew Esmonde-White, noted that homeowners are taking up smaller renovation packages costing below S$10,000, and keeping away from lavish refurbishment projects costing S$100,000 and above. “So they will actually look at cheaper options on the tiling and maybe not even replace the tiles if they are actually really good. Then it is just general painting, they won’t go for any structural changes to save money,” he added.

Kluje expects this trend to continue, with contractors who are able to modify their operations more likely to thrive if the slowdown in the renovation sector persists.

Source : Channel NewsAsia – 29 Oct 2014

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New rules will soon take effect, pushing for greater use of productive technologies such as prefabricated components.

From the second half of 2014, developers will be required to use prefabricated bathroom units (PBUs) for all residential projects on government land sales sites.

Singapore Contractors Association said this is a significant step in getting upstream players like developers onboard productivity initiatives.

PBUs are like huge Lego blocks that are hoisted up by a crane and then stacked, one on top of another.

On average, prefab components already make up one third of each construction project by City Developments (CDL) which has been using prefab construction methods for over a decade.

That is the highest level of prefab adoption among private developers in Singapore, compared to about 50 per cent for public housing projects.

CDL said that with the new rules, more projects could have a prefab component in them in the near future.

Another developer, Frasers Centrepoint, said it has been using a mix of productive technologies in all their developments since 2007.

Cheang Kok Kheong, chief executive officer of Frasers Centrepoint Homes, said: “These include prefabricated railings, precast refuse chutes and dry construction options such as the use of drywall for some of the internal walls.”

Mr Cheang added that the improvement in site productivity more than offsets the incremental cost of using productive technologies.

Channel NewsAsia understands that currently, private developers in general have very few projects with prefab, and any prefab component is usually limited to the rubbish chute and staircases.

The push towards greater adoption of prefab will also help mitigate the rising cost of foreign labour.

Allen Ang, head of green building at CDL, said: “In countries like Australia, their labour cost is almost four times that of Singapore. In Hong Kong, it’s about three times more than ours. In these countries, developers have no choice but to adopt extensive prefabrication to address the high worker salaries.

“In Singapore, with the recent stringent controls on foreign labour, and with prefab bathrooms being mandated, we foresee that our country is trending towards Hong Kong, Australia, and Japan.”

Senior Minister of State for National Development Lee Yi Shyan said: “While the adoption of precast and prefabricated components in HDB projects is high, the same cannot be said of projects in the private residential sector.”

He added that in order to break the inertia and to adopt unfamiliar but productive construction methods proven overseas, the government will also require selected Government Land Sale (GLS) sites to adopt new productive technologies such as Prefabricated Prefinished Volumetric Construction (PPVC) and Cross Laminated Timber (CLT).

Mr Lee was speaking at his ministry’s Committee of Supply debates in Parliament on Monday.

Despite more prefab work coming along, contractors said it will be easy for them and their sub-contractors to adapt because productivity initiatives will be built in right from the upstream, or design phase.

Ho Nyok Yong, president of Singapore Contractors Association, said: “The main contractor might just tender the project, and then he’ll sub-contract to the medium-sized, and then he might have sub-sub (contractors) also.

“The bigger guy will (be) teaching the smaller guy to learn their part. The smaller guy may not necessarily run out of jobs because there’s a need (for)… specialised things like installation. If you use precast, they (will be) doing (the) installation.”

The contractors association estimated that costs for construction projects could increase by 10 per cent in the short term due to the cost of transporting prefab blocks.

However, as the building industry adopts higher levels of prefab construction in the near future, CDL said, more precast supply could enter the market, thereby lowering costs.

Mr Lee also said in Parliament that the Building and Construction Authority will roll out more land tenders to have about 10 integrated construction and precast hubs by 2020.

He said that this, together with the Singapore construction firms’ precast yards in Malaysia, are sufficient to meet the rising demand of precast components of the industry in the years ahead.

Source : Channel NewsAsia – 11 Mar 2014

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The Building and Construction Authority (BCA) is projecting a construction demand of between S$26 billion and S$32 billion for 2013.

This comes after the industry reported S$28 billion worth of contracts awarded in 2012.

BCA said the public sector will contribute to 53 per cent of the industry demand this year, due to the ramp up of public housing and rail construction project such as the Thomson MRT Line.

Other than public housing projects, other major public sector projects likely to be awarded this year include the Energy Market Authority’s fourth storage tank for liquefied natural gas (LNG) terminal at Jurong Island and the Land Transport Authority’s expansion of the Kallang Paya Lebar Expressway (KPE)/Tampines Expressway (TPE) Interchange.

Meanwhile, private sector construction demand is expected to moderate to between S$12 billion and S$15 billion in 2013, in light of slower domestic economic growth.

In particular, private residential construction demand is projected to continue to soften, coupled with the significant supply of completed housing units over the next few years.

For 2014 and 2015, BCA is projecting contracts worth between S$20 billion and S$28 billion to be awarded annually.

The construction industry has highlighted a manpower crunch as a key concern, but the government has urged the sector to look into improving productivity and building up the local talent pipeline.

Lee Yi Shyan, Senior Minister of State for Trade and Industry & National Development, said: “The reality is that we cannot continue to rely on an infinite supply of foreign workers. On the demand side, infrastructural capacity and social constraints would require us to moderate foreign workforce intake.

“On the supply side, we will face increasing manpower supply constraints as the economies of our source countries such as China and India develop. ”

Mr Lee was speaking at the Built Environment and Property Prospects 2013 seminar organised by BCA and the Real Estate Developers Association of Singapore (REDAS).

To build up the local talent pool, BCA is launching new manpower development programmes. These include scholarships for ITE students and sponsorship for full-time local undergraduates taking relevant degree courses.

Source : Channel NewsAsia – 16 Jan 2013

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But they said this has driven them to be more productive.

The Housing and Development Board (HDB) said it is also working closely with contractors to ensure that they deliver their projects on time, if not earlier.

More than 27,000 Build-To-Order flats were launched this year – a record for the HDB and also a record number for contractors to build.

And there are some challenges involved.

Mr Derick Pay, Director of Tiong Seng Contractors, said: “With the man-year entitlement cut, especially the shortage of labour and subcontractors, in a way we are being driven to improve our productivity. You don’t have enough workers to work to construct the project as per normal construction methods. With that we have to use a system that does not rely on skilled workers, and more so that does not rely on so many workers at all.”

For construction to be carried out in this way, mechanisation is being promoted.

For example, only two workers are now needed to operate lifts, making it easier to work at high levels compared to the manpower needed to set up scaffolds or gondolas.

HDB has also encouraged the use of such equipment in its projects tendered since May this year.

A partition wall system to build internal walls is also being used. It makes construction about five times faster than using bricks.

Improving productivity also means making good use of resources. For example, a driveway can be made by using pre-fabricated concrete and each concrete slab can be easily transported to project sites.

This is also part of HDB’s effort to get more contractors to adopt more green construction practices.

An automated washing system using recycled water also cuts cleaning time from 20 minutes to just five.

But it’s not just about ramping up quantity. HDB said quality can also be assured.

Mr Lim Chuen Huei, Deputy Director of Development and Construction Productivity at HDB, said: “We implemented a stringent quality management system, and working together with the contractors, and we have adopted CONQUAS scoring system that is administrated by BCA. CONQUAS is a measurement of quality for both private and public projects. And we’ll continue to ensure a high CONQUAS score.”

And HDB hopes to increase productivity by 20 per cent by 2020.

Source : Channel NewsAsia – 14 Dec 2012

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Many contractors are already taking measures to raise productivity but this is seen as just the first step forward.

For example, Sam Woh uses a $200,000 tracking system to pinpoint the exact location of its over 200 delivery trucks.

With this, the company can provide more accurate delivery times for building materials to its clients.

And it’s been able to raise productivity by 20 percent.

However, contractors hope that more can be done to help them retain higher skilled foreign workers.

Dr Ho Nyok Yong, President, Singapore Contractors Association, said: “Formerly they allow the workers to stay 18 years when they are skilled, but now they come up with 2 parts – basic skilled and higher skilled. For higher skilled, you need to take exams and pass exams in the Core Trade to extend your stay, if not by six years, you are going home.”

The Building and Construction Authority (BCA) is working with relevant ministries to review the length of stay for higher skilled workers.

Dr John Keung, CEO, Building and Construction Authority, said: “I do agree with them that it is important to give a longer period for these workers to gain experience so that they can be more productive, so a shorter period may not be the best way to go.”

Another way to go is to relook at how things are done, like what Lian Beng Group plans to do.

Lian Beng Group currently hires about 400 foreign workers at 9 construction sites in Singapore.

Since 2009, the company has invested some S$8 million on technology to cut its reliance on foreign manpower.

About 10 percent of the investment is funded through various government schemes.

Right now, two foreign workers are situated at the washing bay at the entrance of each construction site.

Their role is to remove earth from the wheels of trucks moving in and out of the work site.

Lian Beng says it intends to invest in automated wheel washing machines in the next few months to do this job.

Going forward, Lian Beng says it’s likely look into pre-casting technology to enable it to fabricate building components off-site.

Much like what the Housing and Development Board is doing.

HDB currently pre-fabricates about 70 percent of components of the flats, such as walls, floor slabs, staircases and refuse chute.

Jeffrey Teo, Construction Director, Lian Beng Construction, said: “The private sector, not many are doing pre-casting, so if HDB can more activity share this information especially with developers, the cost benefits and quality they will have.”

Responding to MediaCorp, HDB says its level of prefabrication is much higher than that of private sector developments which is at about 30 percent.

HDB adds that it has achieved construction labour productivity of 2.28 man-day per square metre – more productive than the private sector’s 3.13 man-day per squre metre for residential projects.

As part of efforts to promote the adoption of the prefabrication method, HDB says it regularly shares its experience with its consultants.

Last year, the construction sector booked S$32 billion in contracts and BCA expects demand to remain strong for the next 3 to 4 years.

Dr Keung says there will be some pain for the construction industry in the short term as they make the transition.

“All these years because of the availability of cheap foreign workers, our industry is not moving in a pace that is fast enough to catch up with the changes in the external environment, although some have moved forward”, Dr Keung said.

BCA says industry players can tap on the S$250 million Construction Productivity and Capability Fund which was launched in June 2010 to drive productivity growth.

Apart from investing in better technology, Dr Keung says there’s also a need to do better construction planning and execution in order to minimise the number of changes on-site.

Source : Channel NewsAsia – 1 Mar 2012

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BCA has tied up with software modelling company Tekla and the Institute of Technical Education (ITE) to promote the use of building information modelling (BIM) among industry practitioners.

BIM is a three dimensional (3D) technology that can change the way buildings are designed and constructed and transform the construction industry.

This involves Tekla handing out a total of 46 BIM software licenses worth S$2.2 million to ITE.

Tekla has also agreed to support ITE by sending teachers to train both students and industry practitioners on the use of BIM.

BCA says such initiative could help improve productivity in the industry.

With electronic submissions of building plans for regulatory approvals becoming compulsory by 2015, the use of such BIM software could help ease the process.

BCA said more than S$6 million is available through its Construction Productivity and Capability Fund to help over 200 firms defray the cost of BIM adoption.

ITE College Central principal Ang Kiam Wee said: “BCA wants to upgrade the industry as a whole, so that is from a regulatory point of view.

“From Tekla, they have the capability, they have the software that allows us, as training institutions, we should be a part of this preparation of the next generation of workers in the industry, getting ready – I think this is a great partnership.”

Source : Channel NewsAsia – 8 Feb 2012

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