Construction sector sees strong growth in 2024, optimistic for 2025: analyst

The construction sector grew by 5.9% YoY in the fourth quarter of 2024, driven by an uptick in public sector construction activity.

Singapore's construction sector delivered impressive growth in 2024, with most companies reporting double-digit YoY increases due to robust demand and a healthy pipeline of projects, according to UOB Kay Hian.

The Ministry of Trade and Industry reported a 5.9% YoY growth in the sector for the fourth quarter of 2024, driven primarily by an uptick in public sector construction activity.

The Building and Construction Authority (BCA) revealed that construction demand for 2024 exceeded expectations, reaching $44.2b—surpassing the forecast of $35b to $41b, which was fuelled by the launch of new public institutional projects, an increase in private residential construction, and higher-than-expected contract costs.

Looking ahead, UOB’s outlook for 2025 remains highly optimistic. Major projects, such as the expansion of Changi Airport Terminal 5 and the Marina Bay Sands integrated resort, are set to drive growth.

Additionally, the government’s ramp-up of Build-To-Order (BTO) flats and an increase in private housing supply through the Government Land Sales (GLS) programme are expected to sustain construction demand.

UOB projects construction demand for 2025 to grow by 6.3% to 20%, reaching between $47b and $53b.

A key driver of this growth is the continued supply of public housing, with over 50,000 new BTO flats planned for delivery from 2025 to 2027, alongside a steady increase in private housing projects.

The sector is also benefitting from major infrastructure developments, including the Cross Island Line, Thomson-East Coast Line Extension, and large-scale industrial and healthcare projects. These projects will further fuel demand for construction services and materials.

Analysts recommend maintaining an "OVERWEIGHT" stance on the sector, with top picks including Hong Leong Asia, PUC, and Centurion, all well-positioned to benefit from the ongoing demand.

With a robust order book, companies like BRC Asia and Soilbuild Construction are poised for strong revenue growth. As the construction sector continues to thrive, it is set to remain a key pillar of Singapore’s economic growth in the coming years.

The outlook for the medium term (2026-2029) remains strong, with projected annual construction demand ranging from $39b to $46b.

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