By Mindy Tan
Business Times
SINGAPORE is the third most expensive market for construction in Asia, behind Hong Kong and Macau.
Globally, the Republic is in 14th place, down five places on a list topped by Switzerland, Denmark and Hong Kong, in that order.
These rankings were included in the annual International Construction Cost Report, which benchmarks building costs in 43 markets across the globe.
Alan Hearn of global built-asset and consultancy firm Arcadis, which compiled the report, said there was strong growth in construction in Singapore through 2014, driven by a combination of robust housing markets and high levels of spending on infrastructure; this year, the growth rate for construction cost is estimated to be between 2 and 4 per cent.
The report, released on Thursday, said construction costs in Singapore grew by 3 to 5 per cent last year.
Another finding was that the relative cost of building in Asian markets fell significantly, relative to markets in other regions. This trend was the result of currency fluctuations, commodity prices and increasing demand for development in some recovering economies.
For instance, currency devaluations in emerging markets such as India, Indonesia, Malaysia, Thailand and Vietnam sent the relative cost of construction down considerably.
In China, construction investments should continue to diversify across project types as well as geographies, the report said.
Mr Hearn, who is Arcadis' head of buildings solutions in Asia, said: "Meanwhile, Malaysia has seen strong growth of late and this looks set to continue.
"As for emerging markets such as the Philippines, Indonesia, Vietnam and India, fluctuations in commodity and currency markets, along with wider economic trends, may also affect the ability of these markets to fund projects or attract PPP (public-private partnership) investment."
Separately, commodity prices generally remained in check last year. That said, increasing tensions in the Middle East and Ukraine could potentially reverse this trend.
With the price of crude oil falling - Brent Crude was trading at around S$50 a barrel last month, with no sign of bottoming out - it is clear that the impact of oil-price movements, both on the spending patterns of consumers and investment plans of producers, will be significant, said Arcadis.
One finding was that the relative cost of building in Asian markets fell significantly, relative to markets in other regions. This trend was the result of currency fluctuations, commodity prices and increasing demand for development in some recovering economies.