NDR infrastructure plans to drive construction demand over next decade

Slower workforce growth will increase pressure to automate and improve productivity.

Singapore’s measures announced in the National Day Rally are expected to support construction and housing demand, analysts said.

CGS International expects the government’s infrastructure plans to support demand for building materials. The projects include the Long Island reclamation project, a new western island formed by merging several islands south of Jurong Island, the integration of Pulau Brani and Sentosa, and further reclamation at Pulau Tekong. A feasibility study will also examine an undersea tunnel linking Pulau Tekong to the mainland.

CGS identified building-material companies exposed to ready-mix concrete, steel bars, precast concrete and heavy-lift and haulage services as potential beneficiaries.

“Singapore will be building more infrastructure to support its next phase of growth, and we see the construction sector as the key beneficiary of the nation’s plans,” it said.

UOB expects the infrastructure pipeline to create new economic and physical capacity over the next five to 10 years.

Construction, engineering, project management and environmental services could benefit from land reclamation, coastal protection, roads, transport systems and potential undersea tunnels, it said.

UOB said much of the activity will take time to materialise because the largest projects have long gestation periods. Feasibility studies, environmental assessments, engineering design and enabling works could provide economic support within the next five to 10 years.

The bank also expects slower population and labour-force growth to make labour scarcity a structural feature of Singapore’s operating environment.

“This will increase pressure on companies to automate, redesign jobs, retain workers and tap seniors and persons with disabilities more effectively,” it said. “Smaller service companies may face high upfront investment and implementation costs, whilst businesses unable to improve productivity could come under greater pressure.”

Artificial intelligence (AI) is also expected to become increasingly important in this adjustment. Small businesses could use AI agents for functions such as marketing and operations, reducing the manpower needed as business volumes expand.

Broader AI adoption should support demand for enterprise software, cloud infrastructure, data management and cybersecurity. Demand could also rise for AI training, system monitoring, permission controls, audit trails and human-oversight tools.

“The main constraint will be uneven adoption,” UOB noted. “Large companies may scale quickly, whilst smaller firms could struggle with implementation costs, data quality and workflow redesign.”

The bank also expects AI applications to expand into preventive healthcare, medical imaging and genomics, supporting medical technology, laboratory services, bioinformatics, personalised treatment, and secure health-data infrastructure.

UOB expects autonomous transport to create opportunities in sensors, mapping, communications, fleet management, remote supervision, testing and insurance.

Public-transport operators could eventually improve service frequency and reduce exposure to driver shortages, whilst traditional taxi and private-hire driving services face longer-term disruption.

Housing is another area where both analysts see potential support for demand.

CGS said raising the monthly income ceiling for families buying new HDB flats to $16,000 and for executive condominiums (EC) to $18,000 could increase demand for new EC projects. It said developers could benefit from a larger pool of eligible buyers.

However, CGS noted that the impact could be tempered by the government’s May measures extending the EC Minimum Occupancy Period from five to 10 years and prohibiting the Deferred Payment Scheme.

UOB said higher build-to-order and EC income ceilings, together with greater priority for families with children, should support housing demand. It also expects household formation to benefit residential contractors, renovation companies, furnishing suppliers, and household-service providers.

Overall, UOB does not expect the announcements alone to materially change near-term growth. Instead, it sees their significance in the composition and potential quality of Singapore’s growth over the next five to 10 years.

Technology, healthcare, care services, advanced manufacturing, tourism, infrastructure-related activities, and financial and professional services are expected to benefit, whilst labour-intensive businesses face greater pressure to adjust.