Singapore: Construction Outlook, March 2024

What you will learn:

• We forecast total construction work done to increase 6.2% in 2024, an acceleration from last year’s 3.9% expansion. Falling core inflation is likely to see the Monetary Authority of Singapore begin lowering interest rates in either April or July, providing a boost to construction activity. However, this will be partly offset by sluggish business investment, which is being restrained by uncertainty around external demand.
• We forecast residential building work done will rise 12.6% throughout 2024 as falling interest rates drive housing demand, mortgage rates fall and affordability improves. Solid commencements though 2023, particularly in Q4, strengthens the pipeline of residential projects, while a supportive policy stance toward homebuilding will drive the sector over the next two years, before growth slows over the medium term.
• We forecast non-residential building to be the only major subsector to suffer a contraction this year as it falls a significant 17.2% in 2024. Recent retail data has been weak, and the delayed impact of higher interest rates and the softening of the labour market are set to weigh on consumer spending and business investment plans. This will be more than enough to offset rising tourist arrivals.