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Plan to defer public works will have little impact: report

Delaying $3b worth of projects won’t help relieve building demand, says RLB

CONSTRUCTION industry experts are seeking to play down the significance of the government’s moves to ease the pressure on the industry’s costs.

The government is intending to defer an additional $1 billion worth of public-sector projects to help the industry – a move that follows the decision last November to postpone $2 billion worth of projects.

A report by construction cost consultancy Rider Levett Bucknall (RLB) said that the deferring of public-sector projects ‘is expected to have a limited impact on relieving construction demand as it will represent around 10 per cent of annual demand’.

Latest estimates by the Building and Construction Authority value construction contracts awarded this year at up to $27 billion.

RLB’s latest figures for its tender price index shows that it also increased by 23 per cent as at the end of the third quarter last year. It said that rising construction costs are attributed to increased costs of foreign construction labour and professional expertise, materials and equipment costs, as well as on- and off-site overheads.

Indicative construction costs of an office building in the CBD of up to 41-55 storeys is between $353- $438.5 psf of gross floor area (GFA).

The construction costs of a luxury condominium is between $325.2 and $441.3 psf of GFA, while a five-star hotel will cost between $464.5 and $627 psf of GFA to build.

Good quality retail space costs $311-$367 psf of GFA to build.

In terms of key construction materials, concreting sand has shown the highest year on-year increase, jumping 160.3 per cent as at November 2007. The price of granite aggregate increased by 32.1 per cent in the same period while the price of ready mix concrete increased by 71.4 per cent.

However, RLB noted that prices did generally ‘moderate to a downward trend’ for the second half of 2007, the period that coincides with the start of the US sub-prime loans crisis and the global credit crunch.

Indeed, RLB added: ‘Whilst the Singapore construction market will be somewhat buffered in the short term by existing development commitments within the domestic market, it will be difficult to predict the impact of the global financial crisis in the medium run.’

RLB does believe that on the back of rising crude oil prices and growing building activity particularly in the Middle East, China and India, price gains are anticipated for the first half of 2008.

Citing other industry sources, RLB said that world steel demand is forecast to reach over 1.45 million tonnes in 2011, which represents an 88 per cent growth in the ten years from 2001.

‘However, a slowdown in the rate of demand growth is anticipated towards the end of the current decade,’ it added.

 

Source:

Plan to defer public works will have little

impact: report

Delaying $3b worth of projects won’t help relieve building demand, says RLB

By ARTHUR SIM

CONSTRUCTION industry experts are seeking to play down the significance of the

government’s moves to ease the pressure on the industry’s costs.

The government is intending to defer an additional $1 billion worth of public-sector

projects to help the industry – a move that follows the decision last November to

postpone $2 billion worth of projects.

A report by construction cost consultancy Rider Levett Bucknall (RLB) said that the

deferring of public-sector projects ‘is expected to have a limited impact on relieving

construction demand as it will represent around 10 per cent of annual demand’.

Latest estimates by the Building and Construction Authority value construction

contracts awarded this year at up to $27 billion.

RLB’s latest figures for its tender price index shows that it also increased by 23 per

cent as at the end of the third quarter last year. It said that rising construction costs

are attributed to increased costs of foreign construction labour and professional

expertise, materials and equipment costs, as well as on- and off-site overheads.

Indicative construction costs of an office building in the CBD of up to 41-55 storeys is

between $353- $438.5 psf of gross floor area (GFA).

The construction costs of a luxury condominium is between $325.2 and $441.3 psf of

GFA, while a five-star hotel will cost between $464.5 and $627 psf of GFA to build.

Good quality retail space costs $311-$367 psf of GFA to build.

In terms of key construction materials, concreting sand has shown the highest yearon-

year increase, jumping 160.3 per cent as at November 2007. The price of granite

aggregate increased by 32.1 per cent in the same period while the price of ready mix

concrete increased by 71.4 per cent.

However, RLB noted that prices did generally ‘moderate to a downward trend’ for the

second half of 2007, the period that coincides with the start of the US sub-prime

loans crisis and the global credit crunch.

Indeed, RLB added: ‘Whilst the Singapore construction market will be somewhat

buffered in the short term by existing development commitments within the domestic

market, it will be difficult to predict the impact of the global financial crisis in the

medium run.’

Story Print Friendly Page Page 1 of 2

http://www.businesstimes.com.sg/sub/storyprintfriendly/0,4582,268492,00.html? 21/2/2008

RLB does believe that on the back of rising crude oil prices and growing building

activity particularly in the Middle East, China and India, price gains are anticipated

for the first half of 2008.

Citing other industry sources, RLB said that world steel demand is forecast to reach

over 1.45 million tonnes in 2011, which represents an 88 per cent growth in the ten

years from 2001.

‘However, a slowdown in the rate of demand growth is anticipated towards the end of

the current decade,’ it added.

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