Construction sector to grow above 5% annually through 2030

This expected expansion is higher than the projected real GDP growth.

The construction sector is projected to grow at +6%, driven by the post-pandemic housing backlog and $100b worth of major infrastructure projects.

According to Maybank’s latest analysis, Singapore’s projected construction boom will be above the real gross domestic product (GDP) growth forecast of +3.2%. Furthermore, construction as a share of GDP is projected to rise to 4.2% by 2030 from 3.5% in 2024, just slightly higher than the pre-pandemic period share of 4% in 2019.

“The construction boom will be sustained by a post-pandemic backlog of HDB housing, mega-infrastructure projects (Changi Terminal 5, Tuas Mega port), expansion of both integrated resorts, MRT lines (Cross Island Line), North-South Corridor viaduct and the Deep Tunnel Sewerage System,” the report read.

Falling interest rates are also reviving private residential land sales, which could add to the construction boom.

The bank expects the 2025 value of construction contracts to exceed estimates by the Building and Construction Authority (BCA) at $47b to $53b, reaching almost $60b.

Contracts awarded in the first half of 2025 have hit $27.7b, about 41% higher than the same period in 2024. Public and private sectors were roughly evenly split in terms of the contracts awarded in the period.

“The sizeable jump in awarded contracts in 2025 will fuel a flurry of construction activity in 2026-2027, with construction GDP growth accelerating to +7% in 2026 and +5% in 2027,” Maybank said.

In the medium-term, Maybank said construction demand will likely exceed the BCA’s estimates of $39b to $46b per annum from 2026 to 2029.

Amidst this growth, Maybank also warned about challenges that the construction industry should address.

“Labour shortages and higher material costs may dampen the pace of construction. Many projects also compete for the same pool of labour, building materials and machinery, and may bid up costs,” the report read.

Nonetheless, construction unit labour cost growth remains moderate at +1.8% in the first half of 2025, given the uptick in building activity. Supply of work permit workers in the construction, marine shipyard & process sector has also risen to 457,000 as of end-2024, exceeding the pre-pandemic level of 370,000.

“Building material costs have been falling due to soft global demand and excess capacity in some markets, and may remain contained in the near term as Trump’s tariffs divert supply to non-US markets,” Maybank said.