Singapore remains fourth most expensive city in Asia to build in and both government and industry are embracing digital transformation to reach its full potential.
(May 8, 2019)–Singapore remains the fourth most expensive city in Asia to build in, according to the International Construction Costs 2019 report published by Arcadis, the leading global Design & Consultancy for natural and built assets. The report details and ranks the relative cost of construction in 100 of the world’s major cities.
Singapore follows Hong Kong, Macau, and Tokyo in Asia as the most expensive Asian cities to build in and ranks 48th in the world. Last year, Singapore was 27th but the change in its ranking is largely due to an increase in the size of the index from 50 cities in 2018 to 100 in 2019.
The Asian cities ranking in Arcadis’ International Construction Costs 2019 are below:
Singapore’s construction market is experiencing growing trade conflicts, nervous financial markets and signs of its GDP growth reducing. The Singapore government has indicated that the economy could cool even further in 2019, with a forecast of 1.5 per cent to 3.5 per cent GDP growth. The construction sector shrank by 3.4 per cent for the whole of 2018, primarily due to a slowdown in public sector construction activities. However, it is likely to see an improvement in 2019 as successful en-bloc transactions awarded from 2017 to the first half of 2018 are likely to translate into construction activities in the next few quarters. Prices for key construction materials remained stable over 2018, and prices are expected to rise in 2019. Labor costs remain relatively high in Singapore.
Digital transformation can help solve productivity challenges, and in Asia acknowledgment of its importance is now more widely accepted, with adoption becoming a higher priority. The Singapore government is pushing for a transformation roadmap for its construction industry. One of the key focusses is on Integrated Digital Delivery (IDD) to connect stakeholders in building and construction projects through digital information. This involves mandatory adoption of Building Information Modelling (BIM), the establishment of Singapore Virtual Design and Construction Guide, and the development of IDD standards and allowing smaller firms to testbed IDD solutions.
Khoo Sze Boon, Head of Cost Management & Quantity Surveying at Arcadis Singapore, commented: “The International Construction Costs 2019 report provides important insights into construction markets around the world. Singapore remains the fourth most expensive city in Asia to build in and it’s clear that many developers are keenly aware of the pressing need to improve productivity. By investing in technology and digitalization, it can help create better quality development, strengthen their competitive advantages and, ultimately, light a path towards long-term value creation.”
The Singapore government’s push to transform the construction industry will stimulate greater technology adoption and digitalisation. This will then help transform the built environment industry to be more efficient and sustainable, equipping citizens with new capabilities and skillsets. Arcadis expects construction demand in Singapore to grow by 5 per cent in 2019, and the tender price index to increase by 1per cent to 3 per cent.
The full report can be downloaded here.
The comparative cost assessment of 100 cities is based on a survey of constructions costs undertaken by Arcadis covering 20 building types. Costs are representative of the local specification used to meet market needs. The building solutions adopted in each location are broadly similar and, as a result, the cost differential reported represents differences in specification as well as the cost of labor and materials.
Arcadis is the leading global Design & Consultancy for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We are 27,000 people active in over 70 countries that generate €3.3 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. www.arcadis.com
Copyright © 2019 Singapore Institute of Management