{"id":115580,"date":"2020-04-13T18:09:49","date_gmt":"2020-04-13T11:09:49","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/property-news\/construction-sector-to-register-double-digit-decline-in-q2\/"},"modified":"2020-04-13T19:08:30","modified_gmt":"2020-04-13T12:08:30","slug":"construction-sector-to-register-double-digit-decline-in-q2","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/construction-sector-to-register-double-digit-decline-in-q2\/","title":{"rendered":"Construction sector to register double-digit decline in Q2"},"content":{"rendered":"


\nEconomists expect the construction industry to suffer a big hit in the second quarter of 2020 from the Covid-19 pandemic.
\nOCBC Bank Chief Economist Selena Ling believe it will come from various factors such as the government\u2019s one-month circuit breaker measures, the increasing infections\/quarantines at foreign workers dormitories and the demand shock from weak consumer and business confidence amid recessionary fears that could affect private sector demand for real estate.
\nIn Q1 2020, the construction industry shrank 22.9% quarter-on-quarter and 4.3% year-on-year, reported The Business Times.
\n\u201cA double-digit on-year contraction is expected in Q2, 2020 and may extend for the full year should the one-month circuit breaker be extended,\u201d said Ling.
\nBased on empirical evidence, private construction activity \u2013 which made up about 40% of the total contracts awarded last year \u2013 has been the main drag to the overall construction sector, said Barnabas Gan, Economist at UOB.
\nHe attributes it to delay in the return of foreign labour on the back of travel restrictions globally.
\n\u201cAs the construction sector has been classified as a non-essential cluster, the government\u2019s circuit- breaker measures are expected to be another negative blow to the sector,\u201d said Gan.
\n\u201cWith most of the construction activities being put on hold for the most part of April, construction growth in Q2 2020 will likely contract by 15% year on year with downside risks.\u201d
\nHe noted that the economic environment also remains uncertain beyond the first half of this year. \u201cPotential scenarios include the extension of the circuit-breaker measures beyond the current stipulated period, which would further weigh on the construction sector.\u201d
\nThe extent of Covid-19 infection within foreign labour dormitories may also aggravate the manpower shortage, especially for the construction sector.
\nWith this, Gan expects the sector to grow by just 0.7% year-on-year in 2020.
\n\u201cThere may be pent-up construction momentum after the lull in H1 due to contractual deadlines,\u201d he said.
\nIrvin Seah, Senior Economist at DBS, on the other hand, expects the sector to contract by almost 2% this year.
\nIn early January, the Building and Construction Authority forecasted total nominal construction output for this year to increase to between $30 billion and $32 billion.
\nThe anticipated pick-up in total construction output came on the back of improved construction demand since 2018, after witnessing a slowdown from 2015 to 2017.
\nOne consultant expects tender prices to decline once construction activity pick up again.
\nHo Kong Mo, Managing Director at Surbana Jurong\u2019s Threesixty Cost Management, said the global pandemic has impacted ongoing construction works, resulting in the suspension of works, manpower shortage and disruption of materials supply, particularly pre-cast concrete components that are primarily from Johor Baru.
\n\u201cAs for projects slated for the year which have yet to commence, developers are likely to take a more prudent wait-and-see approach to maintain financial liquidity amid the current uncertainty in both the global and local economy,\u201d he said.
\nAs of 8 April, the World Trade Organization has anticipated global trade growth to drop by up to a third this year.
\n\u201cConstruction demand in the private sector will inevitably be adversely affected and completions are likely to be pushed back by another six to nine months,\u201d said Ho.
\nIn its industry outlook report, Threesixty Cost Management expects contractors to adopt prudent cost control measures to conserve cash flow in the next two years as well as earnest cost-cutting measures to lower overheads, cost and margin.
\nTenderers are also expected to adopt a more cautious and conservative stance in bidding for new projects this year to mitigate the risks.
\nLooking for a property in Singapore? Visit\u00a0PropertyGuru\u2019s\u00a0Listings,\u00a0Project Reviews\u00a0and\u00a0Guides.
\n\u00a0
\nVictor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email\u00a0victorkang@propertyguru.com.sg
\n
\nSource : proppertyguru.com.sg\/Property Market
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