PTARAS: Construction Sector Maintains Overweight Rating Amid Strong Singapore Market Outlook

The construction sector has retained its “Overweight” rating, supported by a robust outlook for Singapore’s building and infrastructure market. An investment bank’s recent sector review highlighted significant developments across the Causeway, which are poised to benefit Malaysian contractors with a strong presence in the island nation.

Singapore Construction Demand Fuels Sector Growth

Singapore’s construction demand is projected to remain substantial, with an estimated SGD30 billion to SGD46 billion per year for the period between 2026 and 2029. This forecast underpins continued activity and opportunities for regional players. Public and private sector contracts awarded in the first eleven months of 2025 totaled SGD45 billion, surpassing the full-year 2024 figure of SGD44.6 billion. The residential segment, in particular, saw a notable increase, with government-awarded jobs reaching SGD9.4 billion in 11M25, up from SGD7.3 billion in 2024. Public residential contract flows are expected to be sustained, with approximately 19,600 Build-to-Order (BTO) flats slated for launch in 2026.

Key Players See Margin Gains and Strategic Wins

Key Malaysian contractors are well-positioned to capitalize on this demand. Sunway Construction (Suncon) is anticipated to benefit significantly from upcoming Housing Development Board (HDB) flat launches, especially through its precast segment, which accounts for approximately 16% of the group’s order book as of September 2025. The company has demonstrated sequential improvements in PBT margins, rising to 6.9% in 3Q25 from 3.9% in 1Q25. This improvement is largely attributed to several projects reaching their peak delivery stages, indicating effective cost management and efficient project execution.

Other notable Malaysian players include Pintaras Jaya, which maintains a foothold in HDB-related projects in Singapore, and IJM Corp’s 45.5%-owned associate, Hexacon Construction, which recently secured a SGD232 million contract for HDB flats and holds a total balance order book of SGD615 million.

Meanwhile, Gamuda, in partnership with its joint venture partners, successfully secured a land tender for a mixed commercial and residential project in Chencharu Close, with an estimated gross development value (GDV) of approximately MYR6.9 billion. The involvement of Woh Hup, a key partner for IJM in data centre projects in Johor, was also noted in various Singapore projects, including Union Square, W Residences Marina View, and a Collyer Quay development.

Navigating Increased Competition

Despite the optimistic outlook, a primary risk identified for Malaysia-based contractors operating in Singapore is the intensifying competition, particularly from South Korean and Chinese builders. This could potentially impact margins and market share in the long run, necessitating strategic adaptations from local firms to maintain their competitive edge.