Slowdown in residential and commercial construction in first half of 2009

SINGAPORE: Analysts said residential and commercial construction projects in Asia have taken the brunt of this economic slowdown.

And with banks and developers still hesitant in committing to such projects without market momentum, experts said these sectors will continue to drag down the Asian construction market.

Government spending has kept the regional construction industry going with public sector projects while private construction projects have been hard hit.

According to construction data firm BCI Asia, residential construction spending across Asia declined by eight per cent on-year, to an average of US$4.8 billion.

Spending on retail and exhibition projects fell by 10 per cent in the same period to US$1.3 billion.

In contrast, spending for infrastructure construction jumped 80 per cent to US$4.8 billion.

Experts said construction for residential and commercial projects will remain slow for the rest of 2009 as developers take their time to re-enter the market.

Philipp Rode, general manager, BCI Asia, said: “Developers actually go through a phase of re-tendering, starting to slowing do the projects again, maybe on a different scale. Maybe they are asking for a different design. That also means they may have smaller units rather than bigger units.”

But it won’t be a completely quiet time for the sector.

With a lack of new projects, observers say new work can be found in upgrading existing buildings.

Louis Lee, director, BCI Asia, said: “What are they going to do about the existing buildings that they have? How are they going to compete? I guess this is where retrofitting will come in handy and this is where they come in to compete.”

Analysts said the quiet commercial and retail construction scene is likely to affect the strong private sectors in developed economies like Hong Kong and Singapore the most.

But experts said that Hong Kong will take the bigger hit. Lacking mega projects like Singapore’s Integrated Resorts, Hong Kong’s construction sector will have little to keep it busy beyond the end of the year.

Source: Channel News Asia, 10 Aug 2009

Green homes are catching on

More home buyers now recognise the benefits of an eco-friendly home and are willing to pay a premium

When the Government launched Singapore’s first green building rating system – the Green Mark – five years ago, sustainability and climate change were unfamiliar terms to the public.

Today, on the back of growing awareness of environmental issues, property developers are recognising the rising demand for eco-friendly spaces and are constructing ‘greener’ buildings.

The Green Mark scheme took some time to get off the ground, with only 17 buildings securing the stamp of approval in the first year it was established.

But now, the number of green offices, factories and homes has hit 300 and counting – and the authorities are aiming higher.

The Inter-Ministerial Committee on Sustainable Development has set ambitious targets such as the greening of 80 per cent of all buildings in Singapore by 2030.

Although green home is a term that trips easily off the tongue, what gives a home its green credentials?

The Building and Construction Authority’s (BCA’s) website www.greenmark.sg offers this definition:
The term green home refers to a home that is built-in with technologies and sustainable practices that improve the energy efficiency, water efficiency and indoor environment quality.

BCA says that the building process is another important consideration: A green construction practice would consider resource management, durability and general environmental appropriateness of a structure.

A green home is typically designed with better ventilation systems, built with low-toxic materials and recycled components and designed to have a long and efficient life-cycle.

International surveys have found that home buyers are willing to pay a premium for green homes – firstly, because they save money on lower energy bills, and secondly, because of the intangible benefits such as a healthier, cleaner environment and higher indoor air quality.

So how does one go about getting a green home?

An easy way to go about it would be to buy into homes that have been certified Green Mark.

Property developers such as City Developments and CapitaLand have built some residential projects that have achieved such a rating.

These projects typically use some form of renewable energy such as solar power, have energy-efficient fittings and utilise innovative solutions such as recycling rainwater.

New HDB flats are also now mandated to achieve the basic Green Mark rating, and some projects such as TreeLodge@Punggol have higher environmental standards and performance.

But even if your current home is not Green Mark certified, there are many things you can do to raise your green quotient.

Tips on the BCA’s website include:

Home orientation. Having a well-positioned home improves comfort and also reduces energy bills. Avoid homes with a full height glazing facing west. Heat gained from solar radiation by east/west facades is much higher than that gained from north/south facades.

Natural ventilation. Having good natural ventilation is the least expensive way to cool a home. The layout of one’s home should be designed to take advantage of Singapore’s prevailing north-south wind conditions, achieving adequate cross-ventilation within the home.

Sun-shading. Having proper sun-shading improves comfort. Sun-shading should be provided for facades facing east and west to shield the home from direct sunlight, minimising solar heat gain. Balconies, planters and bay windows may act as sun-shades.

Energy. Having electrical appliances, such as air-conditioners and refrigerators, bearing the ‘Energy Label’ can help to save electricity. For example, you can expect $960 in annual savings if your air-conditioner has four ticks instead of a conventional one.

Choose energy-saving lamps that convert energy into usable light and emit less heat.

Water-efficient fittings. Having water fittings, such as flushing cisterns, showers and taps, bearing the ‘Water Efficiency Label’ can help to cut costs and save water.

Maximise daylight. Having ceilings and walls with highly reflective white surfaces helps to diffuse daylight into the space within the home.

Source: Sunday Times, 12 July 2009

Building tender prices to ease 10-15% this year: consultant

S’pore’s fall steepest among key markets forecast; HK’s slide expected to be 6%

(SINGAPORE) Given the slowdown in construction demand and the decline in both material and commodity prices, building tender prices in Singapore are expected to ease by an average of 10-15 per cent in 2009.

Construction cost consultant Rider Levett Bucknall (RLB), which tracks tender prices in key markets worldwide, expects Singapore to register the steepest drop in the tender price index (TPI).

Against the 10-15 per cent drop in Singapore, the TPI – which reflects tender price movements in specific sub-sectors of the construction industry – is forecast to fall by a smaller 6 per cent in Hong Kong and 4 per cent in London.

It will rise 2 per cent in New York, 3 per cent in Sydney and 7 per cent in Dubai, staying unchanged in Beijing.

RLB says construction demand in Singapore has been badly hit by the global financial crisis and credit squeeze. ‘This is evident in the International Tender Price Index Relativity Matrix, where the Singapore index has fallen from a high of 122 in July 2008 to 112 in January 2009 (-8.2 per cent), registering a greater decline than Hong Kong (-7.0 per cent), Macau (-5.5 per cent) and the other regional cities,’ the firm said in its report.

There is, however, one bright spot. While Singapore’s private sector work is expected to fall from $20 billion in 2008 to $9 billion this year, public sector work comprising largely infrastructural and civil engineering works estimated at $18 billion to $20 billion will shore up overall construction demand for 2009.

Kim Eng Research analyst Wilson Liew says RLB’s projection of a 10 per cent TPI fall is not unexpected.

He notes that developers in Singapore have held back new project launches due to relatively high tender prices and poor sentiment in a soft market. ‘As long as raw material prices fall, I believe construction companies will lower their tender prices to keep their order books filled,’ he says.

‘Even if the government ramps up its construction spending, it will just offset some of the decreased private demand.’

In Q4 2008, private demand fell to $1.93 billion, down 60 per cent from $5.03 billion in the preceding quarter.

In the same comparative period, government spending increased by 80 per cent to $5.94 billion in the final quarter of 2008.

Government spending also increased from $5.7 billion in 2007 to $14.5 billion in 2008.

Some industry watchers say, however, that because the bulk of the government’s spending is for specialised infrastructure projects such as the MRT and roadworks, construction demand in general may not be significantly boosted.

At a recent Building and Construction Authority seminar it was estimated that $4.2 billion of public housing construction contracts were awarded in 2008, compared with $7.2 billion for civil engineering work. For 2009, BCA believes civil engineering demand could hit $10-$11 billion.

Public housing construction demand could be in the range of $3.5 billion to $3.8 billion, while institutional and other building construction demand could add up to $3.5 billion to $5.7 billion.

Singapore Contractors Association Ltd executive director Simon Lee said the increase in infrastructure projects is not an issue for members at the moment. Instead, most are waiting for the smaller public sector building projects that have been promised. ‘I believe the government will try to help smaller contractors,’ Mr Lee said.

A check with some of Singapore’s larger construction firms and specialist sub-contractors reveals that they, too, are dependent on government spending.

Koh Brothers recently reported that it has more than $690 million of contracts in hand. Managing director and CEO Francis Koh said that of these, only one is a private sector project worth $10 million. About 90 per cent are infrastructure projects.

Mr Koh reckons government projects in the pipeline will be infrastructural and says Koh Brothers will tender for them.

Koh Brothers, which recently reported a 30 per cent decline in 2008 net profit, is one of only about 10 A1 grade contractors allowed to tender for public sector construction projects of unlimited value.
Yongnam Holdings is a specialist sub-contractor in infrastructure, and CEO Seow Soon Yong says competition comes mostly from foreign companies.

This year Yongnam was awarded two coveted contracts to build parts of the Marina Coastal Expressway. The group has a sizeable order book of $504 million, about half of which comes from overseas – up from some 40 per cent a year ago.

How construction demand will be boosted by government spending here will be closely watched. United Engineers remains optimistic.

A spokesman said: ‘We feel the projects to prime the economy will be a mixture of big and small jobs that will likely benefit most players in the construction industry.’

Source: Business Times, 9 Mar 2009