SINGAPORE REPORTCONTRUCTION MARKET QUARTERLY UPDATE

ISSUE NO. 74 | JUNE 2016

YISHUN COMMUNITY HOSPITAL PROJECT FEATURE

|SINGAPORE REPORT

JUNE 2016

1 |

Yishun Community Hospital (YCH) is one of Singapore’s largest community hospitals to provide rehabilitation services. It is connected by sky-link bridges to the acute-care Khoo Teck Puat Hospital (KTPH). Together with KTPH, these two hospitals will offer an integrated care experience for patients through a connected network of healthcare teams, information flow and treatment plans.

YCH has 428 beds and is well equipped to provide immediate care for recuperating patients who do not require the intensive care services of an acute-care hospital, delivering medical services such as helping patients recover and regain their health and daily functions through therapy and education.

The community hospital development has a total gross floor area (GFA) of 56,248m2 and is certified Green Mark Platinum. This hospital comprises of a four-storey podium for outpatient and rehabilitation services, a public and rehabilitation garden layer, a seven-storey inpatient ward tower, a canopy roof layer, and a structural system that allows vertical landscaping.

Rider Levett Bucknall is proud to provide project management services for this project.

MARKET TRENDS

SINGAPORE ECONOMY

SINGAPORE REPORT | JUNE 2016

2 |

According to the Ministry of Trade and Industry (MTI), Singapore’s real gross domestic product (GDP) grew 2.1% year-on-year (y-o-y) in 2Q 2016. On a quarterly basis, the GDP in 2Q 2016 grew 0.3% when compared to the preceding quarter.

Published figures by Monetary Authority of Singapore (MAS) and MTI show the Consumer Price Index (CPI-All Items) at -0.2% in September 2016, compared to -0.3% in August 2016, mainly due to a moderation in the fall in private road transport cost. CPI-All Items is projected to achieve around -0.5% in 2016 before improving up to 0.5-1.5% in 2017.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, eased slightly to 0.9% in September 2016 from 1.0% in the preceding month, on account of lower services inflation. MAS Core Inflation is expected to average around 1% in 2016 before rising to 1–2% next year, as energy related components begin to contribute positively to inflation and temporary disinflationary effects from budgetary measures fade.

The labour market is softening and employment growth is also moderating amid subdued economic conditions and economy restructuring. The local labour force growth, in particular, is slowing. Advance statistics from the Ministry of Manpower (MOM) showed that overall unemployment rose in June 2016 from March 2016. Unemployment increased for residents and citizens, after

declining in the previous quarter. Employment grew at a slower pace in 2Q 2016, compared with 1Q 2016 and a year ago.

More workers were made redundant in 2Q 2016 from the previous quarter and a year ago. A total of 4,800 workers were made redundant during the second quarter, up from 4,710 the previous quarter and 3,250 in the same period a year ago. This was the highest second-quarter redundancy since 2009, which saw 5,980 jobs shed, according to MOM.

According to the Ministry of Trade and Industry (MTI), Singapore’s overall labour productivity (measured by value added per worker) improved by 0.7% in Q2 2016 compared to the same period in 2015. The sectors which registered the highest increase in productivity included Manufacturing (4.6%), Construction (1.5%), and Transportation and storage (1.3%).

Signs of slowing growth momentum in Singapore’s economy are visible from the retail economy as domestic demand slumps. As a trade-dependent economy, amid ongoing macroeconomic risks and currency market volatility, market observers say the Monetary Authority of Singapore (MAS) is likely to actively review the need to weaken the Singapore dollar. For the full year, the Government’s forecast is for Singapore’s economy to grow by between 1.0% and 3.0%.

SINGAPORE REPORT | JUNE 2016

the second quarter of 2000. Rents moderated downwards by 0.6% during the second quarter, from the 1.3% drop in 1Q 2016.

In the public housing market, resale prices of HDB flats were unchanged in the second quarter compared to the first, said the Housing & Development Board (HDB). Resale transactions increased by 31.2% from 1Q 2016 to 5,838 cases in 2Q 2016.

The prices of office space fell by 1.5% in 2Q 2016. Office space rental prices commanded lower as it fell by 3.5% in the second quarter, of the year, faring worse off when compared to the 2.1% fall in the first quarter of the year.

With the softening global economy, the local retail market is witnessing rapidly increasing amount of physical retail space available. URA said the island-wide vacancy rate rose to 7.8% at the end of 2Q 2016, from 7.3% at the end of the preceding quarter. Meanwhile, prices for retail space fell by 3.1% in 2Q 2016, following a 1.9% slip in the previous quarter. Rentals of retail space also decreased by 3.9% in 2Q 2016, compared to the 1.9% fall in the first quarter. It is observed that older malls are constantly undergoing rejuvenation (such as changing their tenant mix and external facades) to keep up with competition from the new malls as landlords recognise the current market challenges and the need to retain their tenants.

The transaction prices for private residential properties decreased by 0.4% in the second quarter of this year, compared to the 0.7% decline in the previous quarter, according to figures released by the Urban Redevelopment Authority (URA). The continued decline, which entered into the 11th straight quarter, was mainly dragged by landed homes. The prices of landed properties declined by 1.5% in 2Q 2016, compared to the 1.1% decline in the previous quarter, while non-landed property prices dipped 0.1% compared to the previous quarter’s 0.6%.

Non-landed home prices in the Core Central Region (CCR) rose 0.3%, after a 0.3% rise in 1Q 2016. Prices in the Rest of Central Region (RCR) rose by 0.2% after being flat in 1Q 2016. But prices in the Outside Central Region (OCR) did not fare as well as CCR and RCR as it dipped 0.5% compared to the 1.3% fall in the first quarter.

Adding to the oversupply in the residential market, private developers had launched 2,371 uncompleted private residential units, excluding Executive Condominiums, for sale in 2Q 2016, compared to 953 units in the previous quarter. However, reports also showed demand picked up as developers sold 2,256 private residential units, excluding ECs, compared to the 1,419 units sold previously.

Vacancy rates of private residential units inched up 1.4 percentage points in 2Q 2016 to 8.9%, the highest since the 9.1% recorded in

3 |

MARKET TRENDS

SINGAPORE PROPERTY MARKET

4 |

SINGAPORE REPORT | JUNE 2016

Construction sector GDP moderated to 3.3% y-o-y in 2Q 2016, from 4.0% y-o-y in the preceding quarter. The growth was mainly the result of a pick-up in public sector construction activities. The weaker performance for this quarter was mainly due to a decline in private sector construction works, dragged down by a slump in private residential building works.

The total construction output contributed only 0.2% to the overall GDP growth for 2Q 2016. Construction demand in terms of contracts awarded fell sharply by 28.0% in 2Q 2016. This is a reversal from the 13.0% increase in the previous quarter. Both the public and private sector registered contractions in the number of contracts awarded.

BCA forecasts the total construction demand for 2016 to achieve between S$27 billion and S$34 billion. Construction demand from the private sector is expected to slow down further in 2H 2016 due to less favourable economic conditions and an increased supply of completed private housing projects and offices.

The construction market outlook in 2017 will be supported by public sector works, predominantly civil engineering projects. The average construction demand for the next four years (2017 to 2020) is projected to be sustained between S$26 billion to S$37 billion, with about 60% of the total demand anticipated from building projects and 40% from civil works.

Based on BCA’s published updates, average market prices of most of the key construction materials in 2016 have been gradually sliding due to weak global economic activities. Average market prices for cement, granite and ready-mixed concrete (G40 Pump) generally trended downwards, while the average monthly market prices for rebar were higher as compared to the preceding quarter. Looking ahead into the immediate next few months (2H 2016), prices for ready-mixed concrete (G40 Pump) and its raw materials are expected to remain competitive.

BCA’s Tender Price Index (TPI) for all buildings decreased by 2.28% in 2Q 2016 from 1Q 2016. Industry sentiments remain sombre and construction tender prices are projected to weaken further in 2H 2016. Tender prices are also expected to become more competitive due to the tighter market conditions. Profit margins are anticipated to shrink in view of the continued intense local market competition and slowing construction demand. Revised regulatory measures and enhanced constructability requirements to improve construction productivity will likely continue to put pressure on the currently bearish built industry.

MARKET TRENDS

SINGAPORE CONSTRUCTION INDUSTRY

5 |

In the United States, economic growth in 1Q 2016 was constrained by a strong dollar and sluggish global demand, which crimped exports. The gross domestic product (GDP) increased at a 1.1% annual rate, according to the Commerce Department. There are signs the economy has regained momentum in the second quarter, with retail sales and home sales rising in both April and May, even though business spending continues to struggle and job growth has slowed.

Eurostat showed GDP growth in 1Q 2016 as 0.6% quarter-on-quarter (q-o-q). For the first quarter of the year, among the largest economies in the EU, France grew at 0.6%, Germany 0.7% and Spain 0.8%. Italy could only manage a 0.3% growth rate while Greece contracted by 0.5%, Poland slipped by 0.1% and Hungary suffered a 0.8% drop in national income. Eurozone’s GDP growth was shortlived as its expansion rate slipped back to 0.3% q-o-q in 2Q 2016 and dried up entirely in Italy, the 19-country bloc’s most troubled large economy. The eurozone GDP growth is projected to come in at 1.7% in 2016, which would be up slightly from 1.6% in 2015 and the best performance since 2010. y-o-y in May.

Core inflation inched up from 0.7% year-on-year (y-o-y) in April to 0.8%. The eurozone has seen its price deflation hovering just above zero since early 2015. The European Central Bank (ECB) is worried as it remained depressed (i.e. deflation) below zero for the three consecutive months up to May. Furthermore, economic confidence in eurozone remains mixed with

the situation of ‘Brexit’ as the central bank has previously warned ‘Brexit’ could hit the bloc’s growth by up to 0.5%.

Over at East Asia, Japan’s economy continue to remain stagnant after plunging into recession in 2014. The country managed a meagre GDP expansion of only 0.2% y-o-y in 2Q 2016. Massive monetary and fiscal stimulus have so far failed to spur faster growth. Japanese businesses are suffering from the country’s strengthening currency, which has surged more than 18% against the dollar this year. That hurts exporters by making goods produced in Japan more expensive abroad.

The annual GDP expanded 6.7% in 2Q 2016, unchanged from 1Q 2016 on the back of some infrastructure sector growth as housing rallies and stimulus spending drove construction activity. Downward pressure on the economy remains significant as fixed-asset investment, which includes both infrastructure and manufacturing investment, grew at 9.0%, its slowest pace since 2000 in the first six months of the year. An acceleration in real estate investment helped stabilise overall investment in 2Q 2016, but there are signs that the property rally is starting to fade since property sales, construction projects, and investment all slowed in June after rising in April and May. China is still aiming for a full-year growth target of 6.5% to 7.0% for 2016 after growing 6.9% in 2015.

The International Monetary Fund projects global growth to slow to 3.1% for 2016 to reflect a more subdued outlook for advanced economies.

SINGAPORE REPORT | JUNE 2016

MARKET TRENDS

GLOBAL ECONOMY

6 |

Data Sources: BCA and RLB

Variances between the RLB and the BCA Tender Price index arise from differences in the index derivation methodology, the basket

of items and weightages used for each index and the variety of building projects utilised. The index basket here excludes piling works

and Mechanical & Electrical services.

Base Year 2010 = 100 is implemented with effect from the first quarter of 2015.

* Average indices as at 1st Quarter 2016

Note:

Data Source: BCA

Annual change 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *

RLB TPI -3.6% 83.7 106.2 123.2 100.2 100.0 103.1 105.7 110.5 112.0 110.2 106.2

BCA TPI -2.9% 90.2 107.1 119.9 101.3 100.0 99.7 99.8 104.6 106.8 104.0 101.0

BUILDING TENDER PRICE INDICES

Annual change 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *

HDB Flats -3.7% 87.2 103.6 124.3 107.2 100.0 93.0 92.0 97.8 99.8 96.0 92.4

PrivateNon-Landed

-1.7% 94.2 110.9 120.0 101.9 100.0 101.7 103.5 108.0 110.1 107.6 105.7

Commercial Office -2.2% 94.7 110.5 118.4 102.0 100.0 102.5 103.5 106.3 107.0 103.7 101.4

JUNE 2016|SINGAPORE REPORT

TENDER PRICE TRENDS

BCA TENDER PRICE INDICES

70.0

80.0

90.0

100.0

110.0

120.0

130.0

70.0

80.0

90.0

100.0

110.0

120.0

130.0

CRUDE OIL PRICES

Data Source: BCA

Data Source: IMF

Note: Crude Oil Prices above are expressed as monthly average prices of UK Brent, Dubai and WTI oil classifications.

7 |

STEEL REINFORCEMENT (16 - 32MM HIGH TENSILE) SUPPLY PRICES

METAL PRICES

Average 1Q 16 / 4Q 15 change

May 15

Jun 15

Jul 15

Aug 15

Sep 15

Oct 15

Nov 15

Dec 15

Jan 16

Feb 16

Mar 16

Apr 16

May 16

Crude Oil -28.8% 62 61 54 46 46 47 43 37 30 31 37 41 46

US

D/B

arr

el

SG

D/T

on

ne

US

D/T

on

ne

p: preliminaryLHS: Left Hand Side y-axis

RHS: Right Hand Side y-axis

SINGAPORE REPORT | JUNE 2016

COMMODITY PRICE TRENDS

Average 1Q 16 / 4Q 15 change

May 15

Jun 15

Jul 15

Aug 15

Sep 15

Oct 15

Nov 15

Dec 15

Jan 16

Feb 16

Mar 16

Apr 16

May 16P

Steel Reinf. -10.6% 519 507 486 474 462 450 425 397 392 411 447 535 544

Average 1Q 16 / 4Q 15 change

May 15

Jun 15

Jul15

Aug 15

Sep 15

Oct 15

Nov 15

Dec 15

Jan 16

Feb 16

Mar 16

Apr 16

May 16P

Copper -2.5% 6300 5833 5456 5088 5207 5221 4507 4628 4462 4594 4947 4850 4707

Aluminium 1.4% 1805 1683 1637 1539 1588 1523 1465 1494 1479 1535 1530 1564 1556

Copper (LHS)

Aluminium (RHS)

p: preliminary

Data Source: London Metal Exchange (LME)

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

300.0

400.0

500.0

600.0

700.0

1,250

1,350

1,450

1,550

1,650

1,750

1,850

3,000

4,000

5,000

6,000

7,000

8,000

9,000

50.0

100.0

150.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

S$/m3S$/Tonne

BASIC CONSTRUCTION MATERIALS

Data Source: BCA

Prices of rebar other than 16-32mm dimensions may be subject to surcharge.Prices of granite and concreting sand exclude local delivery charges to concrete batching plants.The market prices of rebar (without cut & bend) are based on fi xed price supply contracts with contract period 6 months or less.The market prices of ready mixed concrete are based on contracts with non-fi xed price, fi xed price and market retail price for Grade 40 Pump.

Note:

CURRENCYEXCHANGE RATES

Data Sources: IMF, Oanda

Note: Exchange rates above are expressed in terms of currency units per US Dollar; averaged monthly from daily unit rates.

8 |

CURRENCY UNITS PER USD

UNIT JAN 16 FEB 16 MAR 16 APR 16 MAY 16 JUN 16

Singapore Dollar $ SGD 1 1.43 1.41 1.38 1.37 1.37 1.36

Euro € EUR 1 0.92 0.90 0.90 0.88 0.89 0.89

U.K. Pound Sterling ₤ GBP 1 0.69 0.70 0.70 0.70 0.69 0.70

Australian Dollar $ AUD 1 1.42 1.40 1.33 1.30 1.37 1.35

Chinese Yuan ¥ CNY 1 6.57 6.54 6.51 6.48 6.53 6.60

Japanese Yen ¥ JPY 100 1.18 1.15 1.13 1.10 1.09 1.06

Malaysian Ringgit RM MYR 1 4.34 4.19 4.10 3.90 4.05 4.09

Indonesian Rupiah Rp IDR 1000 13.89 13.52 13.19 13.18 13.41 13.36

Vietnamese Dong ₫ VND 1000 22.11 22.05 22.04 22.14 22.55 22.60

Myanmar Kyat K MMK 100 12.81 12.28 11.97 11.63 11.91 12.05

Average 1Q16 / 4Q15 change

May 15

Jun 15

Jul 15

Aug 15

Sep 15

Oct 15

Nov 15

Dec 15

Jan 16

Feb 16

Mar 16

Apr 16

May 16P

Conc. Sand -4.6% 23.2 23.2 22.9 22.9 23.0 22.0 21.4 21.2 20.4 20.6 20.6 20.1 19.1

Granite (20mm) -10.1% 20.6 19.9 19.3 19.3 18.6 18.5 18.2 17.8 16.7 16.3 16.0 16.0 16.0

Cement -4.0% 93.6 93.0 92.6 92.6 92.4 92.0 91.0 90.8 88.9 87.3 86.7 84.5 83.8

Ready Mixed Conc. -7.5% 99.7 99.9 99.8 99.6 99.8 98.8 98.1 95.9 92.9 90.8 87.2 86.9 86.4

Cement (LHS)

Ready-Mixed Concrete (RHS)

Granite (20mm) (LHS) Concreting Sand (RHS)

SINGAPORE REPORT | JUNE 2016

MATERIAL PRICE TRENDS

p: preliminaryLHS: Left Hand Side y-axis

RHS: Right Hand Side y-axis

LOCALCONSTRUCTION

PRICES

Notes:CFA - Construction Floor Area is the area of all building enclosed covered spaces measured to the outside face of the external walls including covered basement and above ground car park areas.

GFA - Gross Floor Area is the area of building enclosed covered spaces excluding car park and driveway areas calcu- lated for purposes of planning submissions.

All Singapore construction prices stated herein are as at 1st Quarter 2016, and include a general allowance for founda-tion, carpark and external works. The price ranges herein are indicative and due consideration should be given to the impact of varying design, specifications, size, location and nature of each project when utilising this information. Prices described here may not fully reflect the extent of current market forces and tendering conditions on any specific project.

Exclusions:• Land cost • Legal and professional fees • Development charges • Authority fees • Finance costs • Loose furniture, fit-tings and works of art (unless otherwise stated) • Tenancy work • Site infrastructure work • Diversion of existing services • Green Mark cost premiums • Resident site staff cost • Models and prototypes • Future cost escalation • Goods and Services Tax

Disclaimer: While Rider Levett Bucknall LLP (“RLB”) has endeavoured to ensure the accuracy of the information and materials in this report (the “Materials”), it does not warrant its accuracy, adequacy, completeness or reasonableness and expressly disclaims liability for any errors in, or omissions therefrom. RLB shall not be liable for any damage, loss or expense whatsoever arising out of or in connection with the use or reliance on the Materials. The Materials are pro-vided for general information only. Professional advice should be obtained for your particular factual situation before making any decision. The Materials may not, in any medium, be reproduced, published, adapted, altered or otherwise used in whole or in part in any manner without the prior written consent of RLB.

9 |

DEVELOPMENT TYPE COST PER CFA

S$/m2

LANDED RESIDENTIAL

Terrace House 2,300 – 2,750

Semi-detached House 2,450 – 3,300

Detached House 3,450 – 5,650

Cluster Housing 2,650 – 3,000

INSTITUTIONAL

Institution of Higher Learning

2,800 – 3,500

Medical Institution 4,300 – 5,500

INDUSTRIAL

Single Storey Warehouse 1,100 – 1,600

Light Industrial Building 1,200 – 1,700

Heavy Industrial Building 1,450 – 2,000

CAR PARK

Above Grade Car Park 700 – 1,400

Basement Car Park 1,500 – 2,250

HEALTHCARE

Nursing Home 2,300 – 3,200

Medical Centre 2,900 – 3,300

Hospital 3,400 – 3,800

SINGAPORE REPORT | JUNE 2016

DEVELOPMENT TYPE COST PER CFA COST PER GFA

S$/m2 S$/m2

OFFICE

Standard (outside CBD) 2,000 – 3,200 2,500 – 4,150

Standard (within CBD) 2,100 – 3,350 3,000 – 4,400

Prestige (within CBD) 3,000 – 4,200 4,150 – 5,450

HOTEL (INCLUDING FF&E)

Serviced Apartment 3,100 – 3,600 4,100 – 4,700

Three Star 3,300 – 3,700 4,100 – 4,800

Four Star 3,600 – 4,450 4,700 – 5,850

Five Star 4,300 – 5,600 5,450 – 7,400

RETAIL

Medium Quality 2,200 – 2,900 3,050 – 3,650

Good Quality 3,000 – 3,400 3,750 – 4,450

CONDOMINIUM

Medium Quality Condominium

2,000 – 2,650 2,650 – 3,400

Good Quality Condominium

2,550 – 3,200 3,400 – 4,350

Luxury Quality Condominium

3,250 – 4,400 4,400 – 6,000

Cover: Singapore’s skyline of Downtown Core

PROFESSIONAL SERVICES

RIDER LEVETT BUCKNALL (RLB) is an independent, global property and construction practice with over 3,500 people in more than 120 offices across Asia, Oceania, Europe, Middle East, Africa and the Americas, serving major local and international clientele.

RLB’s global expertise and significant project experience provides comprehensive services and solutions to the development and construction of the built environment, extending to building and civil infrastructure, commercial, residential and hospitality buildings, healthcare, industrial and civil engineering projects. As a multi-disciplinary group, RLB offers a full range of services required by clients in the property and construction industry, ranging from cost consultancy and quantity surveying, project management, advisory services and market research.

RLB Research’s expertise in economic and market studies, industry participation and research publications position us as the choice consultant for advice on construction cost trends and market updates for the regional construction markets.

The extensive range of professional consultancy provided by RLB covers the following core services:

QS and Cost Consultancy Project Management Advisory Services

Feasibility Studies Project Management Services Asset Advisory

Value Engineering Risk Management Services Transaction Review

Cost Planning and Estimating Development Management Technical Due Diligence

Tender & Contract Documentation Client Representation Replacement Cost Assessment

Contract Procurement and Delivery Contract Administration Capital Cost Allowances Assessment

Cost Management Construction Management Building RElifing Services

Progress and Variation Valuations Facilities Management Consulting

Post-Contract Services Litigation Support

Financial Reporting and Management Construction Market Research

Final Accounts Industry Trend Analysis

Auditing Services

OTHER REGIONAL RLB PRACTICES

MYANMAR

Rider Levett Bucknall LLPUnion Business Centre, Nat Mauk Road, Bo Cho Quarter, Bahan Township, Suite 03-02, Yangon 11121, MyanmarTel: +95 1 860 3448 Ext 4004Fax: - Ema i l : r l b@mm.r lb .com Contact: Serene Wong

MALAYSIA

Rider Levett Bucknall Sdn BhdB2-6-3 Solaris Dutamas No. 1 Jalan Dutamas 150480 Kuala Lumpur MalaysiaTel: +60 3 6207 9991Fax: +60 3 6207 9992Email: rlb@my.rlb.comContact: Lai Kar Fook

INDONESIA

PT. Rider Levett BucknallJl. Jend. Surdirman Kav. 45-46 Sampoerna Strategic Square, South Tower Level 19, Jakarta 12930, IndonesiaTel: +62 21 5795 2308Fax: - Email: rlb@id.rlb.comContact: Widitomo Puntoadi

VIETNAM

Rider Levett Bucknall Co. LtdCentec Tower 16th Floor,Unit 1603, 72-74 Nguyen Thi Minh Khai Street, Ward 6, District 3, Ho Chi Minh City, VietnamTel: +84 83 823 8070Fax: +84 83 823 7803Email: rlb@vn.rlb.comContact: Ong Choon Beng

rlb.com

A Quarterly Publication from RLB Research of:

Rider Levett Bucknall LLP 150 Beach Road #09-01 Gateway West Singapore 189720 Tel: +65 6339 1500 | Fax: +65 6339 1521 | E-mail: rlb@sg.rlb.com | Web: www.rlb.com

MCI (P) 140/06/2016