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RLB Q4

This document provides a quarterly update on the Singapore construction market in March 2010. It discusses key trends in the local economy and construction sector, including a 4% GDP growth in Q4 2009. Total construction demand in 2009 was S$21 billion, 41% lower than 2008. The private residential market saw strong sales of 14,688 new units for the year. Tender prices declined by an average of 1% in Q4 2009 and are expected to increase slightly in 2010. The report also briefly discusses recovering Asian construction markets and expected price trends.

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0% found this document useful (0 votes)
655 views12 pages

RLB Q4

This document provides a quarterly update on the Singapore construction market in March 2010. It discusses key trends in the local economy and construction sector, including a 4% GDP growth in Q4 2009. Total construction demand in 2009 was S$21 billion, 41% lower than 2008. The private residential market saw strong sales of 14,688 new units for the year. Tender prices declined by an average of 1% in Q4 2009 and are expected to increase slightly in 2010. The report also briefly discusses recovering Asian construction markets and expected price trends.

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kokuei
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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SINGAPORE CONSTRUCTION MARKET

QUARTERLY UPDATE
REPORT
ISSUE NO. 49 • MARCH 2010
MICA (P) 071/04/2010
SINGAPORE MARCH 2010
REPORT

PROJECT FEATURE BELLE VUE RESIDENCES


SINGAPORE
Designed by renowned concept architect
Toyo Ito and project architect P & T
Consultants Pte Ltd, Belle Vue Residences
comprises 176 units with unique
organically-shaped unit layouts. Its
prime location at the Oxley-Orchard
area set in a tranquil landscape provides
a comfortable destination for homes.

Rider Levett Bucknall Singapore are


the Quantity Surveyors for this luxury
condominium development.

1
SINGAPORE MARCH 2010
REPORT

MARKET SUMMARY SINGAPORE


The global economic recovery has Authority’s estimates, total construction
gathered pace in the final quarter of demand in 2009 reached S$21 billion, 41%
2009, as shown by encouraging GDP data lower than the 2008 peak of S$35.7 billion.
from the US, Japan, China and key Public sector demand accounted for 64%
Asian economies. The Singapore economy of 2009 total demand, mainly supported
expanded by 4% on a year-on-year basis by residential, institutional and civil
in 4Q2009, after growing by 0.6% engineering work. Construction demand
in 3Q2009. Notably, Singapore’s GDP gained momentum in the private sector,
contracted by 2.8% quarter-on-quarter having awarded close to S$3 billion worth
in 4Q2009. Overall economic growth in of contracts in 4Q2009, 44% higher than
2009 is -2%, compared with 1.4% in the previous quarter.
2008. In light of a potential increase
in near term growth momentum, the Building tender prices have declined
MTI has projected Singapore’s GDP throughout 2009, due to lower basic
growth for the year 2010 at 4.5% to 6.5%. material prices, preliminaries’ cost and
tendering margins amidst increasing
Year 2009 concluded with a strong competition among contractors for limited
performance for the Singapore private available tenders. Rider Levett Bucknall’s
residential market, registering a total of quarterly Tender Price Index showed an
14,688 new units sold for the full year – average -1% decline for 4Q2009 compared
more than three times the 4,264 units with 3Q2009. The BCA All Buildings TPI
sold in 2008. Prices of private residential registered a -0.8% drop for the same
property continued to increase, by 7.4% period. The BCA Residential (Public) TPI
q-o-q and 1.8% y-o-y in 4Q2009, declined marginally by -0.3%; whilst the
compared with 15.8% quarterly gain in BCA Residential (Private) TPI and BCA
3Q2009. The government initiated Commercial Office TPI showed quarterly
additional measures to curb speculation, declines of -2.3% and -2.7% respectively.
by introducing a seller’s stamp duty
on all residential land and property RLB has estimated a full year tender price
bought after 19 February 2010 and decline for 2009 of -19% from 2008, in line
sold within a year. The loan-to-value limit with its earlier projection of -18% to -20%.
for all private housing loans was cut to RLB’s preliminary projection for 1Q2010 TPI
80%, from 90%. indicates a marginal movement of around
-1% from 4Q2009. In view of an uneven
Brisk home sales has triggered higher global economic recovery and slow local
demand for land sites, as developers construction demand, construction activity
engage in competitive bidding for recent is likely to remain subdued in the near
state land tenders. To balance land term. The current decline in tender prices is
demand with additional supply, five expected to ease over the first half of 2010.
private residential sites are released Full year tender price change for 2010 is
via the Confirmed List from February to likely to register an increase of 2% to 3%.
April under the 1st Half 2010 Government
Land Sales Programme. Office, shop Building tender prices are expected
and industrial property markets showed not to be materially affected by the
modest improvements, with the URA price government’s proposed increase in
indices posting quarterly increases of 1%, Foreign Worker Levy due to the current
0.6% and 1.8% respectively for 4Q2009. competitiveness of tenders. It is anticipated
that any direct impact arising from the levy
The Singapore construction industry was increase will be more fully felt towards
the best performing sector in the economy, the last quarter of 2010 as construction
with a consistent growth of 11.2% y-o-y in demand volume picks up. The direct impact
4Q2009 compared with 11.5% in 3Q2009, on construction costs from the changes in
and an overall 16% expansion for 2009. Man-Year Entitlement and Foreign Worker
According to the Building and Construction Levy is expected to be 1% to 2% by 2012.

2
SINGAPORE MARCH 2010
REPORT

MARKET FEATURE ASIAN CONSTRUCTION


MARKETS AND PRICE TRENDS
The global economy, fraught with almost As market sentiment and credit conditions
two years of financial crisis and recession, improve since 3Q2009, interest in property
is recovering faster than previously is renewing in Asia, particularly in China,
anticipated. However, the recovery has Hong Kong and Singapore. Barring any
been uneven around the world, with the unforeseen change in global market
advanced economies remaining sluggish conditions for the year 2010, Asian
and dependent on government stimulus construction demand is expected to
measures; whilst emerging markets led rebound in tandem with a revival of property
by Asia are actively growing, buoyed by development. Coupled with an expected
excess liquidity and the return of rise in commodity prices, construction
consumer and business confidence. tender prices are anticipated to register
The implementation of economic moderate increases for key Asian cities
stimulus packages by the various Asian in 2010 compared with the previous year.
governments in 2009 and the gradual
stabilization of private sector capital
spending have contributed to the quicker-
than-expected economic recovery in Asia.

CONSTRUCTION PRICE MOVEMENTS FOR SELECTED ASIAN CITIES

30%

25%

20%

15%
Average Yearly Tender Price Change (%)

10%

5%

0%
SINGAPORE HO CHI MINH BANGKOK MANILA KUALA LUMPUR HONG KONG MACAU BEIJING SHANGHAI SHENZHEN
CITY

-5%

-10%

-15%

-20%

Year 2006 Year 2007 Year 2008 Year 2009 Year 2010 (forecast)

Source: RLB (as at March 2010)

3
SINGAPORE MARCH 2010
REPORT

MARKET FEATURE CHINA SOUTHEAST ASIA


Following the Chinese government’s Construction growth in this region has
launch of RMB 4 trillion economic been relatively subdued by slower property
stimulus packages at the start of 2009, activities last year, albeit with modest
China’s real GDP growth has accelerated recovery occurring towards the end of 2009.
to 10.7% y-o-y in 4Q2009, with a full- Tender prices have generally declined in
year growth of 8.7%. Property markets in 2009 for most Southeast Asian cities due
first-tier cities have been exceptionally to the lacklustre construction demand and
buoyant since the second half of 2009, lower material and commodity costs.
resulting in recent fears of asset bubbles
developing. Construction activities in most In Bangkok, building tender prices
major cities have been robust, contributing have been competitive since 4Q2008
to modest increases in construction costs. due to the limited projects available for
The government is concerned about the tender. The unstable political situation
risks of an overheated economy, and has has been a concern amongst investors;
announced some administrative policies however steady growth is projected for
and measures to cool the property market. 2010 with a slight increase in building costs
It is unlikely that such measures will anticipated. Developments in Bangkok
have an immediate effect on construction will be principally driven by local demand
costs. The completion of the World Expo with preference on sites along the mass
by April 2010 will ease the demand transit systems.
on construction resources in Shanghai.
Tender prices for 2010 are expected to Over at Manila, economic conditions have
continue their mild upward trend in Beijing, improved modestly since the second half
Shanghai and Shenzhen. of 2009 with a national GDP growth of 1.8%
y-o-y in 4Q2009, compared with 0.4%
In Hong Kong, tender prices have stabilized gain in 3Q2009. Lower construction demand
in the second half of 2009 after declining is expected for the first half of 2010,
for a year since 3Q2008. There has been as developers are holding back project
more tendering activity since mid-2009 developments due to the upcoming general
and the commencement of major railway elections in May 2010. Current major
projects in 2009 and 2010 will give strong projects include Eton City at south of
support to the construction industry over Metro Manila and Macapagal International
the next 2 to 3 years. It is expected that Airport in Clark.
tender prices in Hong Kong will reverse
their downward trend and begin rising in In Kuala Lumpur, the property market
1Q2010 but more significantly towards the rebounded gradually from late 2009
middle of 2010. as the Malaysian economy recovers.
Construction volume mainly comprises
Over at Macau, construction activity has public infrastructure work, such as the
remained weak with competitive extension of LRT lines at Kelana Jaya and
construction costs. However, there are Ampang, and the new low-cost carrier
strong signs that some of the previously airport terminal in Sepang. Growing
suspended casino projects could resume interest from foreign and domestic
this year, which will revive the local investors for commercial, hotel and
construction industry. Construction costs residential developments would drive
in Macau are expected to stabilise or construction growth this year.
even increase from the beginning of 2010.
In Ho Chi Minh City, hotel and residential
property developments are reviving as
local and foreign enterprises show
renewed interest. Inflationary pressures
continue to persist amid the rising price
trend of key commodities including petrol,
cement, steel and transport services.
Construction prices are expected to move

4
upwards in 2010 following a potential
increase of new infrastructure work and
building projects.
SINGAPORE MARCH 2010
REPORT

TENDER
PRICE TRENDS
BUILDING TENDER PRICE INDICES

160

150

140

130

120

110

100

90

80
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*

RLB 104 110 120 123 105 96 100 91 91 95 97 100 103 130 151 123

BCA 101 105 108 107 100 89 88 88 90 96 99 100 103 123 137 116

Data Source: BCA and RLB

Average yearly TPI Movement for 2009: BCA All Buildings TPI: -15.6%; RLB TPI: -18.7%

BCA TENDER PRICE INDICES

160

145

130

115

100

85

70
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*

PUBLIC: HDB FLATS 97 105 109 103 92 77 76 78 83 96 99 100 104 123 148 128

PRIVATE: NON-LANDED 103 108 111 109 104 95 95 94 94 96 99 100 103 121 131 111

COMMERCIAL OFFICE 99 101 103 105 102 95 95 94 94 96 99 100 103 120 128 111

Data Source: BCA

Notes: Variances between the RLB and the BCA Tender Price Index arise from differences in the index derivation methodology, the basket of items and weightages used for
each index and the variety of building projects utilised. The index basket here excludes piling works and Mechanical & Electrical services.

Starting from the publication of 2009 indices, the BCA and RLB Tender Price Index are adjusted with a new base year of 2005 (i.e. 2005 index = 100).

* Average indices as of 4th Quarter 2009.

5
SINGAPORE MARCH 2010
REPORT

COMMODITY
PRICE TRENDS
METAL PRICES

8,000

6,000
US$/Tonne

COPPER
4,000

ALUMINIUM
2,000
STEEL

0
AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10

COPPER 7633 6988 4924 3716 3071 3220 3313 3748 4405 4568 5012 5214 6164 6195 6287 6674 6980 7385 6847
Data Source: London Metal Exchange
ALUMINUM 2764 2525 2120 1852 1490 1412 1329 1335 1420 1460 1573 1667 1933 1833 1878 1949 2179 2235 2048

STEEL 741 545 386 315 309 311 306 305 325 345 363 398 443 471 484 491 487 417 419
(FAR EAST)

Data Source: London Metal Exchange

STEEL REINFORCEMENT (16 - 32MM HIGH TENSILE) SUPPLY PRICES

1800

1600

1400
S$/Tonne

1200

1000

800

600
AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10p

STEEL REINF 1703 1464 1292 1067 913 862 836 766 729 727 719 742 790 792 768 737 723 742 769

Data Source: BCA p: preliminary

CRUDE OIL PRICES

120

100

80
US$/Barrel

60

40

20

0
AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10

CRUDE OIL 115 99 73 54 42 44 42 47 50 58 69 65 72 68 74 78 75 77 75

Data Source: IMF

Note: Crude Oil Prices above are expressed as monthly average prices of UK Brent, Dubai and WTI oil classifications.

6
SINGAPORE MARCH 2010
REPORT

MATERIAL
PRICE TRENDS
BASIC CONSTRUCTION MATERIALS

S$/Tonne S$/m3
140.0 150.0

CEMENT (LHS)
120.0

100.0
READY MIXED
CONCRETE (RHS)
80.0

100.0

60.0

CONCRETING SAND (LHS)


40.0

20.0

GRANITE (LHS)
0.0 50.0
AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
08 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 09 10 10p

CONCRETING SAND 36.7 36.7 36.8 36.1 34.3 34.3 33.6 31.6 30.9 29.1 28.8 29.3 29.9 29.1 28.3 27.8 26.7 27.8 28.0

GRANITE (20MM) 26.3 26.5 26.9 26.1 23.9 23.4 23.0 22.2 21.4 21.0 18.9 18.7 18.0 17.6 17.4 17.4 17.1 18.0 18.0

CEMENT 126.0 126.3 125.6 123.4 120.4 117.5 111.9 109.4 106.4 105.2 103.3 101.2 99.4 99.3 96.6 95.1 93.4 90.4 90.0

READY MIXED
126.6 126.3 124.5 122.7 121.9 121.1 114.5 110.6 108.6 107.6 104.4 102.9 102.4 98.7 97.4 95.3 93.3 89.9 90.0
CONCRETE

Data Source: BCA LHS: Left Hand Side y-axis


RHS: Right Hand Side y-axis
Note: The market prices of ready mixed concrete were based on non-fixed price contracts for Grade 35 Pump. p: preliminary
From Jan 2010 onwards, the market prices of ready mixed concrete are based on new contracts with
non-fixed price, fixed price and market retail price for Grade 40 Pump.

CURRENCY
EXCHANGE RATES
UNITS PER USD
CURRENCY
UNIT SEP 09 OCT 09 NOV 09 DEC 09 JAN 10 FEB 10

Singapore Dollar $ SGD 1 1.42 1.40 1.39 1.40 1.40 1.41

Euro € EUR 1 0.69 0.67 0.67 0.68 0.70 0.73

U.K. Pound Sterling £ GBP 1 0.61 0.62 0.60 0.62 0.62 0.64

Australian Dollar $ AUD 1 1.16 1.10 1.09 1.11 1.09 1.13

Chinese Yuan ¥ YUAN 1 6.83 6.83 6.83 6.83 6.83 6.83

Japanese Yen ¥ YEN 100 0.91 0.90 0.89 0.89 0.91 0.90

Malaysian Ringgit RM MYR 1 3.50 3.40 3.39 3.41 3.38 3.42

Indonesian Rupiah Rp IDR 1000 9.90 9.48 9.47 9.46 9.28 9.35

Vietnamese Dong ₫ VND 1000 18.10 18.08 18.14 18.70 18.71 18.86
Data Source: IMF

Note: Exchange rates above are expressed in terms of currency units per US Dollar, averaged monthly from daily unit rates.

7
SINGAPORE MARCH 2010
REPORT

CONSTRUCTION
PRICES
COST PER CFA COST PER GFA COST PER CFA
DEVELOPMENT TYPE DEVELOPMENT TYPE
S$/m 2
S$/m 2
S$/m2

OFFICE WITHIN CBD LANDED RESIDENTIAL

< 10 Storeys 1,800 – 2,250 2,550 – 2,900 Terrace House 1,950 – 2,350

11 – 25 Storeys 2,100 – 2,550 2,650 – 3,300 Semi-detached House 2,150 – 2,850

26 – 40 Storeys 2,250 – 2,900 3,000 – 3,800 Detached House 2,950 – 4,850

41 – 55 Storeys 2,700 – 3,400 3,650 – 4,600 INSTITUTIONAL

> 55 Storeys 3,150 – 3,650 4,150 – 4,750 Primary School 1,000 – 1,300

OFFICE OUTSIDE CBD Secondary School 1,100 – 1,650

< 10 Storeys 1,700 – 2,150 2,150 – 2,700 Junior College 1,300 – 2,050

11 – 25 Storeys 1,850 – 2,350 2,450 – 3,150 Institutions of Higher Learning 1,850 – 2,650

26 – 40 Storeys 2,250 – 2,700 2,750 – 3,500 INDUSTRIAL

HOTEL (INCLUDING FF&E) Single Storey Warehouse 900 – 1,250

Three Star 2,900 – 3,250 3,600 – 4,150 Light Industrial Building 1,000 – 1,400

Four Star 3,100 – 3,800 4,000 – 5,000 Heavy Industrial Building 1,200 – 1,700

Five Star 3,700 – 4,950 4,750 – 6,350 Hi Tech Factory 1,300 – 1,950

RETAIL CAR PARK

Medium Quality 1,900 – 2,400 2,550 – 3,050 Above Grade Car Park 600 – 1,150

Good Quality 2,450 – 2,900 3,100 – 3,750 Basement Car Park 1,250 – 1,900

CONDOMINIUM

Medium Quality Condominium 1,700 – 2,250 2,250 – 2,850

Good Quality Condominium 2,100 – 2,750 2,850 – 3,650

Luxury Quality Condominium 2,650 – 3,650 3,600 – 5,000

Notes
CFA – Construction Floor Area is the area of all building enclosed covered spaces measured to the outside face of the external walls including covered
basement and above ground car park areas.

GFA – Gross Floor Area is the area of building enclosed covered spaces excluding car park and driveway areas calculated for purposes of
planning submission.

All Singapore construction prices stated herein are as at 4th Quarter 2009, and include a general allowance for foundation and external works.

The price ranges herein are indicative and due consideration should be given to the different specification, size, location and nature of each project when
utilising this information. The prices here may not fully reflect the extent of current market forces and tendering conditions.

Exclusions
• Land cost • Legal and professional fees • Development charges • Authority fees • Finance costs • Loose furniture, fittings and works of art
• Tenancy work • Site infrastructure work • Diversion of existing services • Green Mark Cost Premiums • Resident site staff cost • Models and
prototypes • Future cost escalation • Goods and Services Tax

8
PROFESSIONAL SERVICES

The extensive range of professional consultancy provided by Rider Levett Bucknall covers the following core services:

COST PROJECT ADVISORY


CONSULTANCY MANAGEMENT SERVICES

• Cost Planning • Project Management Services • Asset Advisory


• Cost Management • Contract Administration • Transaction Review
• Value Management • Client Representation • Technical Due Diligence
• Contract Procurement • Development Management • Replacement Cost
• Tender & Contract • Construction Management • Capital Cost Allowances
Documentation • Facilities Management
• Progress Valuations Consulting
• Financial Reporting • Life Cycle Costing
• Auditing Services • RElifing
• Post-Contract Services • Litigation Support
• Final Accounts

A Quarterly Publication from:

Rider Levett Bucknall LLP


150 Beach Road #09-01 Gateway West Singapore 189720
Tel: +65 6339 1500 Fax: +65 6339 1521
Web: www.rlb.com E-mail: rlb@sg.rlb.com

Rider Levett Bucknall LLP (Reg. No. T09LL0492J) is a limited liability partnership registered in Singapore under the Limited Liability Partnerships Act, Cap. 163A and it
was converted from the firm of Rider Levett Bucknall (Reg. No. 08787000B) on 1 April 2009.

Printer: Interprint Communications Pte Ltd

Disclaimer: While Rider Levett Bucknall LLP (“RLB”) has endeavoured to ensure the accuracy of the information and materials herein (the “Materials”),
it does not warrant its accuracy, adequacy, completeness or reasonableness and expressly disclaims liability for any errors in, or omissions therefrom.
RLB shall not be liable for any damage, loss or expense whatsoever arising out of or in connection with the use or reliance on the Materials. The Materials
are provided for general information only. Professional advice should be obtained for your particular factual situation before making any decision.
The Materials may not, in any medium, be reproduced, published, adapted, altered or otherwise used in whole or in part in any manner without the prior
written consent of RLB.
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Contact: Stephen Lai
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