The government's move to defer another S$1 billion worth of construction projects beyond 2009 is being welcomed by industry players.
They said it will help to ease pressures on the supply side, allowing for critical private sector projects to go ahead. Still, they expect construction costs to hold up - and even jump by 10 to 15 per cent in 2008.
Work is already underway at the two integrated resorts at Marina Bay and Sentosa - but there are other contracts waiting to be awarded.
And amid the tight labour supply, market-watchers believe the latest deferment will help such massive projects to go ahead.
Christopher Wong, Investment Manager of Aberdeen Asset Management Asia, said: "That would actually have a positive impact in terms of competition for scarce resources will actually reduce competition of some of these raw materials and skilled resources to be re-allocated to the private sector."
Lawrence Lye, Vice-President of CIMB-GK Research, said: “The deferment may not impact cost pressures all that much for the time being because demand is still very strong.
“But, I think what will help is that when there's a constraint in resources and where there are tight timelines required for some of these big projects, the pulling back of some of these big public sector projects, will actually help the private sector meet their own deadlines."
During last week's budget speech, Finance Minister Tharman Shanmugaratnam announced that S$1 billion worth of construction projects will be deferred beyond 2009.
This includes construction of several institutional projects such as student hostels and schools upgrading.
According to some analysts, it will also affect some water-related infrastructure as well as drainage projects.
While the move may ease manpower pressures, overall, experts said will not push costs downwards.
Desmond Hill, President of the Singapore Contractors Association, said: "We don't think that construction prices will be coming down any day soon because our construction market is actually a fully imported market in terms of materials, plants and equipment."
"So of course, while the demand will be somewhat reduced, we think the construction prices will remain just as volatile because material prices is subject to the world market," he continued.
Some market-watchers expect construction costs to rise by between 10 and 15 per cent in 2008 - down from the 30 per cent jump in 2007.
Meanwhile market watchers said despite the deferment, the construction industry will remain robust.
The Building and Construction Authority is forecasting projects to be awarded in 2008 to come up to between S$23 and S$27 billion.
And the private sector is expected to account for nearly 70 per cent of the works. -CNA/vm
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