Singapore Property – Construction cost crisis means delays in public building projects

Rapidly rising construction costs in Singapore are causing the building industry major issues – especially on those off-plan developments still under construction. Construction costs shot up by 20 to 30% last year, pushed up by higher material cost and strong demand.

The Singapore government announced deferments this week – more than 1.26 billion US worth of public building projects are to be delayed in an effort to ease cost pressures on the construction trade.

This will bring the overall value of public projects being delayed to 4.7 billion dollars, Minister for National Development Mah Bow Tan said in a statement on Tuesday.

In the first quarter, building costs rose by 3-5%. Singapore, like other fast growing countries in the world, is facing rising construction costs. This month, public agencies have identified another 1.7 billion (dollars) worth of projects for deferment.

We will continue to monitor the situation closely and work with the key industry stakeholders such as developers, builders and quantity surveyors to mitigate the cost increase as much as possible.

Projects vital to Singapore’s economic and social needs will continue as planned, the minister said.

Singapore is in the midst of an ongoing construction boom, sparked by the revival in the property sector, but perhaps more importantly, the ongoing construction of two enormous casino complexes, the Marina Bay Sands and the Resorts world at Sentosa. These two projects between then are largely responsible for the massive increase in construction costs.

Back in May, the Marina Bay Sands reported that they were ready to start importing 12,000 tonnes of structural steel when the pilings were completed.

At the same time, Resorts World at Sentosa Cove reported that the foundations were beginning to take shape for the Hard Rock Hotel – plans for which include one of Asia’s largest column-free ballrooms which will eventually seat over 7,000 people.

Singapore relaxed a 40-year ban on casino facilities in 2005 in the hope of grabbing a slice of Asia’s gaming pie which is far larger than Las Vegas’. So, if you are scratching your head at the increase in building costs for your condo in Singapore – thank the blackjack tables.

Besides deferring public projects, the government has also implemented other measures to help ease cost pressures and these include the relaxation of policies on employment of foreign labor. If all else fails, ship in some cheap labor from outside the country.

Photo Credit

Resorts World Sentosa Cove

Marina Bay Sands