Deep state pockets set to drive construction recovery
After a predicted slump of 36.5% in demand for construction in Singapore last year owing to the coronavirus pandemic, public sector orders are projected to drive a recovery this year to between S$23bn and S$28bn (US$17-21bn), Singapore’s Building and Construction Authority (BCA) said today.
That would be an improvement from the S$21.3bn in demand – a preliminary estimate – seen in 2020.
The projected increase in public sector construction demand for this year and beyond excludes any potential awards of construction contracts for the development of Changi Airport Terminal 5 or the expansion of Integrated Resorts because their construction timelines are still under review due to the impact of the pandemic.
BCA projects the bulk of private sector construction demand in 2021 to comprise development of the remaining en-bloc residential sites, major retrofitting of commercial developments as well as construction of high-specification industrial buildings to meet business needs.
Forecast for 2022 to 2025
BCA expects a steady improvement in construction demand over the medium term. It is projected to reach between S$25bn and S$32bn per year from 2022 to 2025.
Besides public residential developments, public sector construction demand over the medium term will continue to be supported by large infrastructure and institutional projects such as the Cross Island MRT Line (Phases 2 and 3), the Downtown Line Extension to Sungei Kadut, the cycling path networks, the relocation of Singapore Science Centre, the Toa Payoh Integrated Development, the Alexandra Hospital redevelopment and a new integrated hospital at Bedok.
Based on the contracts awarded in the past few years and considering the construction demand forecast for 2021, the total nominal construction output in 2021 is projected to increase to between S$24bn and S$27bn, from the estimated S$19.5bn in 2020.
The Alliance for Action (“AfA”) on Digitalising Built Environment, an industry-led and government-supported coalition, has identified digitalisation as an important enabler to help the industry build smarter.
Vietnam seeks billions for airport expansions over
Vietnam is looking to raise $15.8bn to build and expand airports over the next 10 years, according to the Civil Aviation Authority of Vietnam (CAAV), with a further $37bn to be spent between 2030 and 2050. Â
The new build projects include the first phase of the Long Thanh International Airport to serve Ho Chi Minh City, the Sa Pa Airport in the northern province of Lao Cai and Quang Tri Airport in the centre of the country.
The largest schemes are Long Thanh (see further reading) and the expansion of Noi Bai, which are set to cost around $5bn each.
The expansion of Tan Son Nhat, Da Nang and Cam Ranh airports is set to cost over $5bn in total.
The VnExpress news site quoted Tran Quang Chau, deputy chairman of the Vietnam Association on Aviation Science and Technology, as saying private investment will be essential in fulfilling the projects’ funding requirements.
Hoang Van Cuong, a member of the National Assembly’s Financial and Budget Committee, said state coffers should only be used for essential elements of projects, such as construction of runways and land clearance.
Infrastructure will turn green in 2021
The coronavirus has put the global infrastructure market through its paces this year, and 2021 is likely to see some stark changes, says analyst Fitch Solutions.
Published 7 December, its look ahead to next year predicts that infrastructure operators like Vinci, Ferrovial and ACS will spend much less after Covid decimated revenues from airports and to a lesser extent toll roads and public transport systems.
And if the conflict between China and the US continues, it will push many developing countries into choosing between the two for infrastructure support as the US and its allies push back against the Belt and Road Initiative.
Passenger traffic plunged by between 60% and 75% this year at airports operated by Vinci and Ferrovial, which Fitch believes will push back scheduled investments.
Some airport projects were halted without even a notional restart date, such as the $1bn San Francisco International Airport project, and the $3bn Terminal F project at Dallas Fort Worth International.
Major packages of the $13bn modernisation of John F. Kennedy (JFK) International in New York City have also been pushed back, among numerous others, Fitch notes.
In the US, construction industry bodies in the US have hailed the election victory of Joe Biden, who campaigned on a $2trn green infrastructure plan that includes a “second great railroad revolution”, building 1.5 million affordable homes, upgrading four million buildings and “weatherising” two million existing homes.Â
Emerging markets slow to emerge
The picture in emerging markets remains cloudy, in Fitch’s view.
Despite the steady growth in popularity of public-private partnerships (PPPs) for infrastructure, Fitch says private investors remain wary of getting involved because of the uncertain course and duration of the pandemic.
US or China?
A lack of willing private investors is likely to pressure cash-strapped developing countries to look for help from rich countries with an appetite to lend.
Fitch lays out the possibility of poorer countries having to choose between China, whose lending largesse has transformed infrastructure in Africa and Southeast Asia, and the US, whose appetite for infrastructure lending has been minuscule.
Fitch predicts that Biden will maintain a tough stance against China but in a different way to his predecessor, with a return to a more multilateral approach to pushing back against Beijing’s infrastructure-lending diplomacy.