APAC

Construction
Forecast
Building Back Smarter and Faster in 2022
— ­IN T R ODUC T I ON

Build back better

“Optimism for the new year is soaring as regional markets
chart their paths towards a post-pandemic future.”
- Jones Lang LaSalle (JLL)

There is no doubt the last two years have been challenging for almost every country
in the world. In response to the adversity caused by the pandemic, the catchcry of
economists and governments has become “build back better”, and for the construction
industry, the emphasis on “build” is the good news we needed.

Financial experts have recognised the role of infrastructure and construction as

shots in the arm for national wealth. Evidence of this is seen through the Biden
Administration’s ambitious infrastructure agenda in the US, the EU’s continued focus
on the net-zero transition, and, in many Asian nations, the focus on social issues like
“While COVID-19 headwinds persist,
housing shortages. the virus should progressively
become less of a factor in driving
At the end of 2021, the rise of the Omicron variant forced economists to hastily amend
growth projections. However, economic recovery is still believed to be on the cards, economic outcomes … with the global
albeit slightly slower. The predictions from banks, the OECD, rating agencies and economy expected to continue
others project a rebound of around 4.5% global GDP growth for 2022.
expanding at an above-average pace.”

Ric Deverell
Macquarie Group Chief Economist
Contents
01 The Big Shifts 04

02 Top Trends for APAC Construction 07

03 Australia 11

04 New Zealand 15

05 Singapore 18

06 Philippines 21

07 Malaysia 23

08 Hong Kong 25

09 Conclusion 27
01
— C HA P TER ON E
The Big Shifts
What started in early 2020 as a rapid pivot to
digital solutions and virtual platforms to keep
companies operating during Covid lockdowns
has shaped a new trajectory for the world. The
digital transition was already a trend, and
Covid made it an imperative.
Significant challenges still remain, such as a
shortage of labour in many countries, mental
health impacts of the pandemic, and building
digital skills and capacity.
Labour Shortages
Labour shortages are faced worldwide due to multiple
factors. Currently, we see entry restrictions for non-citizen
workers in economies like Australia and the UK, while
Singapore has become reliant on migrant workers. Worker
shortages have been more noticeable than before. In fact,
even the shortage of workers within the supply chain, such
as the truck driver shortage in the UK, has sent shocks
through broader consumer supply chains.
Lockdowns have also played a major role. Throughout
2020 and 2021, job sites were shut down all around the
world at various times to slow the spread of Covid. This
has forced some workers to leave the construction industry
altogether due to income insecurity.
APAC CONSTRUCTION FORECAST | 4
Safety
The spotlight on psychological safety has grown, as
people’s mental health has deteriorated over the last two
years. RMIT researchers found project-based construction
professionals were impacted negatively at the height of the
first pandemic wave regardless of whether they worked
on-site or remotely. Anxiety relating to news coverage,
lengthy virtual meetings, working irregular hours to
manage increased correspondence, and overlap between
work and family life has increased.
—
“Organizations in the construction industry recognise
the value of making mental health more visible and
sharing resources. This serves to educate workers about
mental health, reduces stigma, and shows organisational
commitment to worker mental health and well-being.”
— Mental Health and Well-being in the Construction
Industry 2021 PULSE SURVEY
 APAC CONSTRUCTION FORECAST | 5

“In 2022, connected

construction will likely
be a catch-all for major
digital investments to
connect, integrate, and
automate operations
and bring the entire
value chain onto a
secure, intelligent
infrastructure.”
Deloitte

Digital
According to Deloitte, labour shortages, supply challenges,
price increases and scarcity of materials have contributed
to the emphasis on efficiency in 2022. Construction
firms’ interest in prefabricated and modular construction
techniques optimisable by digital design and project
management tools has peaked.
Dodge Data & Analytics surveyed construction firms
globally to find that those who have adopted BIM for
project design coordination are embracing other digital
and technology-enabled processes, including 3D printing,
virtual reality, cloud-based technology for project data
exchanges and safety analysis on site.
APAC CONSTRUCTION FORECAST | 6
The Zero Carbon Challenge
Since the net-zero commitments made at the COP26
Summit in Glasgow in 2021, there is a renewed focus on
climate action. Sustainability is now firmly on the agenda––
particularly in Australia, New Zealand, Singapore and
Malaysia. Turner and Townsend state this will impact the
way projects are designed and delivered.
—
“As one of the most significant contributors to carbon
emissions, the way that the construction industry
constructs, manages, and operates built assets is a
central focus in the race to reach [Net Zero Carbon],” ­
— Turner and Townsend, ANZ Market Insight Report.
02
— CHA P TER T WO
Top Trends for APAC
Construction
Since the net-zero commitments made at the COP26 Summit
in Glasgow in 2021, there is a renewed focus on climate action.
Sustainability is now firmly on the agenda––particularly in Australia,
New Zealand, Singapore and Malaysia. Turner and Townsend state this
will impact the way projects are designed and delivered.
“As one of the most significant contributors to carbon emissions, the
way that the construction industry constructs, manages, and operates
built assets is a central focus in the race to reach [Net Zero Carbon],”
Turner and Townsend, ANZ Market Insight Report.
APAC CONSTRUCTION FORECAST | 7
T RE N D # 1
Vaccination Levels Impact Economic Forecasts
Cushman and Wakefield predict a 4.5% increase in GDP overall across the Asia Pacific region.
However, individual nations will experience different speeds of growth largely relative to
vaccination levels. Singapore and Australia are both expected to have above-average growth due
to high vaccination rates.
T RE N D # 2
Fierce Competition for Skilled Labour
The labour market is expected to tighten, with most nations seeing unemployment rates of
under 5%. This makes retaining talent a priority for businesses. New Zealand, Australia and
Singapore are also likely to experience an ongoing shortage of skilled workers in sectors like
construction and manufacturing due to expected border restrictions that limit foreign worker
availability, Cushman and Wakefield note.
 APAC CONSTRUCTION FORECAST | 8

T RE ND # 3

Capital Looks for Bespoke Assets

PwC and the Urban Land Institute have identified key trends for investors in property––these
will shape the projects and client expectations for the construction industry. Lockdowns and
pandemic control measures have been in place for over 18 months, and many are questioning
whether they will ever return to an office full-time.

This means owners and investors in commercial property have to rethink their business model,
and tenants are considering optimising floor space to suit a reduced number of on-site staff or
hybrid working approaches. The open-plan office is being reconsidered, and fewer large new
commercial projects are breaking ground. Refurbishments, upgrades and custom fit-outs are
where the most work is likely in the office sector.

Other niche sectors are also rising in prominence, including retirement living, decentralised
commercial and retail property located outside the major cities and logistics facilities to service
the online retail boom.

“‘Build to suit’ opportunities exist across

the region as occupiers seek to diversify
risk, optimise the blend of efficiency and
responsiveness in their supply chains,
or re-shore mission-critical elements.”

Cushman and Wakefield


T RE ND # 4
More Digital Means More Data Centres
Data centres are a red-hot asset class, as both owners
and commercial property tenants look to smart building
features and fast, reliable digital infrastructure. Work-
from-home and hybrid working models, growing
demand for online education providers, and the rise of
online retailing are also driving a need for more data
centres. The crunch concerning labour and materials
costs is making budgets challenging. However, this
is not impacting the pipeline of new developments,
according to Turner & Townsend.
APAC CONSTRUCTION FORECAST | 9
“Data centres market
T RE N D # 5
Green Building Leads the Charge
According to the latest World Green Building Council
growth over the last
and Dodge Data & Analytics World Green Building few years has been
Report (WGBR), almost half of the surveyed Australian
construction firms are now delivering at least 60% of considerable, with total
their projects as green/sustainable. Australia and New
Zealand are actually ahead of the global curve. The Data Centres real estate
main drivers are clients seeking buildings that support
occupant health and well-being as well as the belief
capacity growing in the
that green buildings will encourage more sustainable four key countries in
business practices.
Asia Pacific but not only.
Singapore is a leader in Asia, with 44% of firms
expecting 60% or more of their projects to be green
The core Tier 1 markets
buildings by 2024. Overall, the WGBC report shows for data centres in Asia
new commercial office projects, institutional projects
and new high-rise residential are the strongest markets Pacific are Tokyo (Japan),
for sustainable building. Social responsibility, occupant
health and well-being, environmental legislation and Singapore, Sydney
regulations are key in shifting the local industry towards
energy-efficient, water-efficient and low-emissions
(Australia) and Hong
buildings. Kong SAR.”
Environmental approaches, digital tools used for
analytics and reporting, and construction quality will CBRE
become strong competitive advantages for construction
businesses.
 APAC CONSTRUCTION FORECAST | 10

Green Building
Leads the
Charge 82%
WGBR respondents using metrics to track
green building benefits.

Top metrics tracked

58%
Lower operating costs.
36%
Documentation and certification
33%
Improved occupant health
providing quality assurance. and well-being.
03
— C HA P TER T HR EE
Australia
Experts predict a strong recovery for Australia, with low
unemployment, strong consumer demand, and around 4.9% growth
in GDP for 2022. Drivers for the optimism include high vaccination
rates, relaxing of interstate and international border restrictions
and reopening of industries affected by lockdowns. Morgan Stanley
notes challenges remain, for instance, supply chain disruptions
and the chronic shortage of skilled labour that was previously met
through targeted immigrant skilled worker visa programs.
APAC CONSTRUCTION FORECAST | 11
OPPORTUNITY
Residential building
Record low-interest rates, state and federal government incentive programs and a structural
undersupply of housing in Australia have made residential building one of the strongest
market sectors. Public projects, particularly state government projects, are also driving activity
with projects like schools, quarantine facilities, energy projects, hospitals and transport
infrastructure.
—
“Twin booms in house building and infrastructure indicate that the economic recovery will be
led by building and construction, with twin growth trajectories set to add more than 100,000
jobs and to reach $256 billion in 2022,” — Kerry Barwise, ACIF Chief Forecaster and Managing
Director, FTI Consulting.
O B STAC L ES

Costs & Supply

Turner and Townsend report rising costs of key building materials, supply bottlenecks and labour
shortages are the three biggest challenges. By Q3 2021, steel construction products price had risen by
40%, largely because of high demand and reduced supply.

Over the next three years, it is expected there will be:

+120% +125% +140%

average growth in demand growth in demand growth in demand

for materials for equipment for plant

(Source: Infrastructure Australia)

“Major public infrastructure
activity will approximately
double over the next three
years, peaking at $52
billion in 2023. This record
investment creates new
opportunities for local
business and employment,
however, also risks
constraints in the capacity
of the market to meet this
growth in investment.”
Romilly Madew
CEO Infrastructure Australia
“Digitisation will
help small building
businesses to better
manage their projects so
they can more accurately
factor in the costs of
building products and
specialist tradespeople
into their quotes.”
Denita Wawn
CEO
Master Builders Australia
Goals for 2022
Quality
The NSW Strata Hub, escalating oversight and enforcement of compliance have increased the pressure
on builders and trades to achieve quality results. A recent report from the Property Council of Australia
and Procore shows that rework addressing defects or substandard quality is consuming a substantial
proportion of project time and budgets. The message is clear: Improving quality makes business sense.
Digitisation
Master Builders Australia has identified that digitisation is essential for small-to-medium construction
businesses to succeed. However, around 80,000 SMEs in the industry have low or no digitisation of
business processes, limiting their efficiency and opportunities.
04
APAC CONSTRUCTION FORECAST | 15

— C HA P TER F OU R

New Zealand OPPORTUNITY

New Zealand was one of the world leaders in Covid containment,
and so it led in terms of economic activity up until September
2021, when Delta took hold. While this reduced optimism levels,
economic experts at ANZ Banking Group describe the 2022
outlook as ‘the Great Normalisation’ of living with Covid.
Digital QA, prefab & BIM
New Zealand’s Ministry of Business, Industry and Employment has identified three major areas of
opportunity for construction businesses:

Unemployment is expected to remain extremely low, putting

pressure on businesses to recruit and retain talent. Although
construction has been booming, a decline in housing price rises
may soften the upward trajectory for new residential projects.

The NZ Treasury expects GDP growth of 3.8% in the March quarter,

with the upward recovery trend to continue throughout the year. ONE
Digital quality assurance products,
such as the app currently in
development by NZ tech firm
Conqa, should help reduce site
inspection requirements, improve
transparency, and help contractors
reduce the amount of rework on
projects.
T WO
Increased use of prefabrication
and modular construction could
address ongoing shortages of
skilled labour, rising wages, and
minimising waste of expensive
construction materials.
THREE
Using Building Information
Modelling (BIM) for innovative
purposes beyond planning and
design of projects should enable
better identification and mitigation
of worker safety risks.
 APAC CONSTRUCTION FORECAST | 16

“The recovery is
underpinned by pent-
up demand, higher
employment, continued
strength in building
consents, and the more
permissive COVID-19
Protection Framework
boosting activity at the
start of 2022.”
NZ Treasury
 APAC CONSTRUCTION FORECAST | 17

OB S TAC L ES

Materials & Costs

Due to strong demand, timeline disruptions, and import quantity restrictions relating to global
shipping constraints, prices of construction materials have escalated. There are also shortages,
Goals for 2022
for instance, in the case of timber framing for residential construction.
Increased focus on digitisation, inclusion and innovation.
NZ MBIE predicts prices will remain high in 2022. This, coupled with high wages, will put The Construction Industry Accord Transformation Plan
pressure on the construction industry bottom lines. is due to end in June 2022 – Accord 2.0 is already in
development. It will build on the current program of targeted
support for industry improvements, including reforms to
Unemployment and participation vocational education. The new plan will have a strong focus
on technology, innovation and advanced construction. It
% of labour force % of working age population
will also contribute to productivity, emissions reduction,
7 72 Unemployment and benefits to the Māori economy for participation in
construction.
Labour force participation (RHS)
6 70

Forecast
5 68

4 66

3 64
Jun-08 Jun-11 Jun-14 Jun-17 Jun-20 Jun-23 Jun-26
Quarterly
05
APAC CONSTRUCTION FORECAST | 18

— C HA P TER F IV E

Singapore
With one of the world’s highest vaccination rates, the Ministry
of Trade and Industry predicts Singapore will build on positive
economic growth between 3-5% throughout 2022.

OPPO RT U N I T Y

Quality Assurance
The nation has master-planned projects across transport,
residential, mixed-use and tourism that will be providing a
pipeline of work through to 2030. Underpinning new construction
emphasises digital tools and platforms to improve efficiency,
optimise the design and assure quality. The Quality Mark system
enables developers to register and make public the compliance
and standard of their previous, current and planned projects while
incorporating transparent information for potential property buyers.
 APAC CONSTRUCTION FORECAST | 19

“The Covid-19 pandemic

has put the whole
construction industry
under severe strain, with
many contractors facing
challenges of manpower
shortages, supply
disruptions, increased
cost of materials and
productivity loss.”
Housing Development Board
Singapore

O BS TAC L E
Skills Shortfall
The construction industry is historically reliant on foreign
workers, which means the restrictions on entry ease make
obtaining skilled labour particularly challenging. MTI states it
will take time for the shortfall to be fully addressed, potentially
preventing the full return of construction activity to pre-
pandemic levels. The Singapore Housing Development Board’s
affordable housing projects have been hit particularly hard by
the Covid pandemic, with delays of up to a year or longer on
project completions.
APAC CONSTRUCTION FORECAST | 20
Goal for 2022
The Digitalising Built Environment Alliance for Action, or AfA, was
formed in 2020 under Singapore’s Emerging Stronger Taskforce
(EST). In 2022, AfA aims to further encourage construction
industry businesses to adopt Integrated Digital Delivery for
their projects to improve collaboration, enhance efficiency and
reduce the risks of rework or rectification post-completion.
06
— C HA P TER SI X
Philippines
The Philippines vaccination rates lag. In addition to the impact
of the pandemic, it has experienced volcanic eruption and a
devastating typhoon in 2021. Nonetheless, the World Bank does
expect the economy to continue a slow recovery. An average
growth rate of 5.8% is expected, with public investment in
construction one of the key drivers for recovery.
APAC CONSTRUCTION FORECAST | 21
OPPORTUNITY
Public-Private Partnerships
The ‘Build, Build, Build’ initiative has seen infrastructure spending increase as a share of the
government budget to support the economic recovery. One of the channels used is Public-Private
Partnerships. There is a strong and diverse project pipeline currently being assessed by the relevant
government departments before deciding to proceed to tender. They include airport expansions, port
expansions, logistics hubs, rail expansion and medical facilities.
O B S TAC L ES
Domestic Internet Services
Despite the Philippines being one of the leading hubs in APAC for Business Process Outsourcing,
domestic internet services are still catching up, according to an Oxford Business Group study. This
restricts the ability of small-to-medium enterprises to utilise digital and virtual processes. The
government is working to change this and is proactively encouraging construction industry businesses
to use technological solutions, such as digital payment platforms and digitised licensing.
 APAC CONSTRUCTION FORECAST | 22

Goals for 2022

Increasing AI R&D and deployment
The Department of Trade and Industry has launched an AI roadmap
for the Philippines to position the country as a hub for AI-enabled
BPO enterprises, address domestic concerns, including supply
chain issues and improve efficiency.

Reduce construction’s carbon footprint

Global companies with local operations, such as Holcim, are leading
the industry in low-carbon approaches through product innovations
like low-carbon concrete and digital technology to optimise design,
streamline supply and reduce waste.
07
— C HA P TER SEV EN
Malaysia
The Malaysian Ministry of Finance expects a major turnaround in
construction activity in 2022, with an estimated growth of 11.5%.
Key sectors contributing to this positive outlook include civil
engineering (a result of the ramping up of infrastructure projects,
including transit systems like the Pan Borneo highways in Sabah
and Sarawak) and utility projects.
Support for residential construction aims to address a shortage
of affordable housing. Programs include a Rent-to-Own
scheme, stamp duty exemptions for first-home buyers, and the
government’s People-Friendly Housing scheme and People’s
Housing Project.
APAC CONSTRUCTION FORECAST | 23
OPPORTUNITY
Construction 4.0
The Construction Industry Development Board leads the transformation of the industry, with several
initiatives proposed as part of the government’s 12th Malaysia Plan. These include the CIDB Industrial
Building Systems (IBS) Excellence Programme, facilitated by new IBS hubs created in seven Malaysian
states. The momentum around Construction 4.0 is expected to escalate from 2022 onwards, with a
greater focus on technology uptake, targeted skills training for key trades, and the improvement of on-
site safety training and project management.
O B S TAC L ES
Covid-19
Covid-19 in the Malaysian community and associated government measures to slow spread impacted
construction sites and property development significantly. The major challenge for 2022 will be
recovery and making up for lost productivity, project delays and supply chain and disruption to the
labour market.
 APAC CONSTRUCTION FORECAST | 24

Goals for 2022

The Malaysian Government has made a formal pledge to target net-zero
carbon by 2050 or earlier, creating incentives for more sustainability
in design and construction. The Malaysian Green Building Council has
launched a CarbonScore Initiative to help designers, builders and asset
owners calculate both the embodied carbon and operational carbon of
both new and existing buildings.
08
— C HA P TER EI G HT
Hong Kong
The slow yet sustained recovery in 2021 is expected to continue
into 2022, according to economic researchers. The economy is
likely to have a continued low unemployment rate and modest
growth in GDP ranging between 2.8% and 3.8%, largely due to the
stabilising relationship with China.
APAC CONSTRUCTION FORECAST | 25
OPPORTUNITY
Upgrades & Refurbishments
According to Randstad, upgrades and refurbishments are one of the major areas of opportunity in
2022, with a significant number of property owners expected to seek enhancements to existing
buildings. Low-interest rates are also predicted to drive high demand for residential property,
particularly at the premium end of the market. New economic and residential hubs in the New
Territories and the new Kowloon CBD are also expected to contribute substantially to economic growth
and demand for construction workers.
O B S TAC L ES
Cost Consciousness
High construction costs, declining productivity, lack of innovation, low safety standards on some sites,
and the construction pipeline’s size have created a significant set of challenges for the Hong Kong
industry. The government is emphasising “cost consciousness” in project management and throughout
the supply chain. It has begun publishing resources to support the industry to lift practice and increase
the delivered value for public funds allocated to projects.
 APAC CONSTRUCTION FORECAST | 26

Goals for 2022

The Hong Kong Government continues to drive the
Construction 2.0 and HK Smart City Blueprint agendas.
Digitisation and use of technology have been made core
priorities, with a HK$1 billion Construction Innovation &
Technology Fund supporting the uptake of innovations,
including Building Information Modelling, Modular Integrated
Construction, robotics and digital systems for supervising
works.
09
APAC CONSTRUCTION FORECAST | 27

— C HA P TER N IN E

Conclusion
Common themes across APAC markets are labour shortages, high
demand for materials and the potential of digital technology to build
business resilience, improve efficiency and enhance project planning
and supply chain management.
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