Opening Address by Minister Desmond Lee at the BCA-REDAS Built Environment and Property Prospects Seminar on 12 Jan

Thursday, 12 January 2023

Professor Tan Thiam Soon, Deputy Chairman, BCA
Mr Tan Swee Yiow, President, REDAS
Colleagues from the Built Environment and Real Estate sectors

1               Good morning, and a warm welcome to the BCA-REDAS Built Environment and Property Prospects Seminar 2023.

2               Over the past few years, the Government has worked with you, our partners and stakeholders to focus on overcoming the impact of COVID-19 on the Built Environment (BE) sector. Just remember what happened in the last two years and I think you will agree that the constructions sector was one of the worst-hit sectors. We have successfully managed infection outbreaks, we brought in migrant workers in a safe and controlled manner to support the projects, and ensured that no single part of the value chain was made to bear the burden disproportionately. Our combined efforts have resulted in encouraging signs of recovery.

Construction Demand Forecast

3               Looking ahead, we expect construction demand to be relatively stable. Similar to the projections for 2022, BCA estimates that the total construction demand will be between $27 billion and $32 billion this year. Public sector demand is expected to contribute about 60% of the total construction demand this year, at between $16 billion and $19 billion. This will be driven by a robust project pipeline, including the construction of more BTO flats by HDB, and public infrastructure like MRT works and water treatment plants. Private sector demand is expected to contribute between $11 billion and $13 billion, similar to the 2022 projections.

4               For the medium-term outlook from 2024 to 2027, the projected annual construction demand is expected to remain steady, at between $25 billion and $32 billion per year. The public sector will continue to be the main demand driver, in light of upcoming projects such as the Cross Island MRT Line and several hospital developments, among others.

Refreshing Our Transformation Strategies

5               Even though construction demand appears to be steady, we must remain vigilant. Challenges ahead include the growing risk of recession in major economies around the world, supply chain pressures as countries continue to adjust their COVID-19 management policies, and the existential threat of climate change.

6               Given these challenges, it is important that we take in what we have learnt over the past few years during the pandemic to enhance our BE sector’s resilience. This includes reducing our reliance on foreign manpower for labour-intensive tasks, and doing more to fulfil our net zero climate goals.

7               To this end, we have worked with you to launch the refreshed BE Industry Transformation Map (ITM) last year to decisively change the way we design, build, and maintain, in the following areas.

8               The first is in Integrated Planning and Design, where various project parties collaborate digitally at the design and planning stage to optimise downstream construction as well as maintenance.

9               Second, Advanced Manufacturing and Assembly, which focuses on raising the adoption of robotics and automation at the construction stage to enhance productivity and reduce manpower reliance.

10            Third, Sustainable Urban Systems, which involves ramping up efforts to reduce building emissions under the Singapore Green Building Masterplan, particularly at the operations and maintenance stages.

11            We have introduced various initiatives to support the BE ITM. One example is the BE Transformation Bonus Gross Floor Area (GFA) Scheme, where private developments outside of the Government Land Sales (GLS) programme can enjoy up to 3% bonus GFA if they achieve enhanced standards in productivity, digitalisation, sustainability, and quality.

12            Through this scheme, we hope to incentivise developers to take the lead to rally your project stakeholders to pursue these enhanced standards. This includes developing capabilities in more prefabrication technologies like prefab MEP, adopting IDD use cases enabled by digital platforms for collaboration across project stakeholders, and achieving the Green Mark Platinum Super Low Energy (SLE) Standard with Maintainability badge, which demonstrates the best practices in sustainability.

13            I am glad that eight development projects totalling close to 450,000 sqm have been awarded bonus GFA under the scheme thus far.  I invite developers to approach my colleagues at BCA for more information on how you can benefit from this scheme, and in turn benefit the sector, and benefit Singapore.

Driving Value Chain Transformation

14            While we have made good progress, we should step up our efforts. In our BE ITM discussions, many of you have affirmed the importance of collaborating across the value chain in maximising synergies and delivering more impactful outcomes. Because the construction value chain is extremely long, many partners all need to work closely together. For instance, designs put together by architects and engineers upstream will have downstream implications for contractors as well as facilities managers who build and maintain buildings. If coordination is not optimal, unnecessary re-works will need to be carried out for the building to be constructed or maintained effectively.

15            Such interdependencies between various stakeholders require us to take a value chain approach towards transformation. This is why we had introduced the Growth and Transformation Scheme (GTS). The GTS seeks to support groups of firms as they collaborate across multiple projects, build stronger relationships, and develop capabilities together for the long term.

16            I shared about the ambitious qualifying criteria for the GTS at last year’s International Built Environment Week.  Today, I am pleased to note and update that some of our progressive developers have stepped forward to spearhead this value chain approach. Four developers – CapitaLand, GuocoLand, CDL, and UOL – have signed MOUs with partners in their respective value chains. These MOUs signify their commitment to pursue strategic relationships over a sustained project pipeline, and their intent to apply for the GTS.

17            I understand that these groups of firms intend to develop new capabilities through upcoming projects. For instance, CapitaLand and its partners, including Woh Hup and Threesixty, will explore adopting collaborative contracting in upcoming projects. This includes provisions to facilitate the early warning of issues that may arise, dispute resolution, and more equitable sharing of risks such as material price fluctuations among project partners.

18            GuocoLand and its partners, including Woh Hup and Kimly, are standardising requirements across various digital platforms and creating a Common Data Environment (CDE). This will facilitate a seamless collaboration across the value chain for building design, construction, and maintenance.

19            CDL and its partners will pursue a similar CDE initiative. In addition, CDL will work with partners such as ADDP Architects to adopt new sustainable technologies in pipeline projects, having signed the World Green Building Council's Net Zero Carbon Buildings Commitment to achieve net zero emissions for the maintenance and operations of its buildings by 2030.

20            And UOL will support its partners including United Tec to develop new prefabrication capabilities. For instance, UOL will work with United Tec to adopt advanced Prefab MEP technologies within its pipeline projects, which are designed and produced in United Tec’s new in-house production facility.

21            I would like to commend all four developers and their respective partners for taking the lead in piloting this new approach, and pushing the boundaries of what is possible. For those of us interested to find out more about the value chain approach to transformation and about the GTS, please approach my BCA colleagues for more information.

Public Sector Efforts

22            On our part, the Government is committed to lead by example as the main driver of construction demand.

23            At present, public sector projects already need to meet higher productivity and sustainability standards. Under the Productivity Gateway Framework, public sector agencies will need to meet a minimum 30% site productivity improvement over their respective 2010 levels, as compared to the 25% target for the wider industry. And under GreenGov.SG, all new buildings and existing buildings undergoing major retrofitting works are required to obtain the Green Mark Platinum Super Low Energy (SLE) standard.

24            Over the years, we have made changes to promote a sustainable operating environment, including for our consultants. For example, we enhanced the Quality Fee Method (QFM) for public sector consultancy tenders back in 2018 and 2020, which will minimise fee diving and encourage fair remuneration for our consultants. Over the past few years, we have observed that more than 60% of public sector consultancy tenders are not awarded to the lowest fee bids.

25            Our public sector agencies are also doing more as key developers and buyers of services, in order to drive industry transformation. For instance, my colleagues at HDB have launched their Construction Transformation Project (CTP) initiative, where innovations such as advanced concrete printing and Artificial Intelligence in tower crane operations will be piloted in selected projects. HDB targets to achieve at least 25% site productivity improvement under the CTP over current projects, and raise the bar for construction productivity.

26            BCA is also working with public sector agencies to review and pilot various approaches to encourage sustainable consultancy fees. This includes reviewing the Standard Consultancy Agreement for public sector tenders to encourage a more balanced allocation of risks between contracting parties. And our public agencies are trying out collaborative contracting practices in their projects, including the adoption of the Public Sector Standard Conditions of Contract Option Module on Collaborative Contracting.

27            I encourage our private sector developers to explore similar innovations and sustainable practices where possible.

Property Market Outlook

28            Let me take this opportunity to say a few words about the property market. The property market has remained buoyant despite COVID. Amongst other things, we see this as primarily attributed to firm owner-occupier demand from Singaporeans, supported by resident wage growth. But if left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to the sharp rise in interest rates.

29            To moderate demand in the private residential and HDB resale markets, and ensure prudent borrowing, we had introduced property market measures in December 2021 and September 2022. To meet strong, broad-based demand, we launched more than 23,000 flats in 2022, and will launch up to 23,000 flats in 2023. We also significantly ramped up the supply of private housing on the Confirmed List of the Government Land Sales (GLS) Programme to 6,300 units in 2022, with a further supply of 4,100 units in the first half of 2023.  We will closely monitor the situation and ramp up supply for future GLS programmes if necessary.

30            The pace of price increases has moderated in 4Q2022, on the back of much lower transaction volumes following the implementation of the property market measures. We can expect tightness to further ease, as the additional public and private housing supply is made available for sale.

31            However, we should remain vigilant as there are uncertainties ahead. The international outlook remains troubled with geopolitical tensions heightening and economic downturns in the US and EU. These could weigh on the Singapore economy in 2023, where we are expecting slower growth. We are already seeing significant slowdowns in housing markets like Australia, the US, the UK, and Hong Kong, among others. That said, given our track record, investors may also remain bullish on our property market as economies re-open.

32            I encourage Singaporeans to continue to exercise financial prudence in our property purchase decisions. Let us all be mindful not to overextend ourselves. While we have tightened maximum loan quantum limits, housing loans remain the largest component of household debt in general. If global interest rates continue to rise in response to inflationary pressures, we can expect further increases in domestic mortgage rates. This will make it more difficult for existing and new borrowers to service their loans.  

33            We will continue to help Singaporeans thrive amidst the challenges ahead. In our housing policy, we will ensure that housing remains affordable and accessible while being cautious to avoid destabilising corrections.


34            To conclude the Government remains firmly committed to the stability of our property market, and supporting all BE stakeholders in our transformation journey.

35            Even though uncertainties lie ahead of us, what is important is that we continue to work closely together to deliver on our vision of a more resilient BE sector.

36            Events such as this seminar are not just important for the seminar itself, but for the networking opportunities amongst different partners. It is important for us to focus our minds on the next steps, and on the opportunities and challenges ahead of us. On this note, I would like to thank REDAS for collaborating with BCA to organise this annual event. I also wish to take this opportunity to wish everyone an early happy Lunar New Year, and a good and rewarding year ahead. Thank you.

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