En bloc sales could drive construction costs higher

Singapore is now the fourth most expensive city in Asia to build in.

Singapore is now the fourth most expensive city in Asia to build in, design and consultancy firm Arcadis revealed. However, it has dropped from third to fourth in 2017’s Asia rankings, as Tokyo moves up one place this year.

Tender prices for 2017 have declined approximately 2.5% year-on-year in Q4. "The decline was mainly driven by the continued lack of demand for construction and competitive contractor tender bids," Arcadis told Singapore Business Review.

When asked about the effect of Singapore en bloc sale hype on construction costs, it anticipates a moderate increase in construction cost in the second half of 2018.

"With more private projects coming online from both Government Land Sales and increased en bloc sales in the second half of 2018 and thereafter, contractors will be more selective in tendering for projects," it added. With an anticipated stronger construction demand, key construction materials will be on an upward trend.

"However, it is still early days and we are keeping a close watch on market sentiment with the movement of contractor’s tender price," Arcadis added.

As previously reported, the firm forecasts construction cost movement for 2018 to hit between -1% and +2%. "Public sector demand remains the key contributor with approximately 60% of the total forecasted construction demand," Arcadis added.

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