Singapore construction demand hit a 10-year high. Where to look for investment opportunities

Budget 2025 reached S$123.8 billion with S$26.8 billion for development projects alone. Year after year, this government is doubling down on long-term infrastructure.

What makes this different from an ordinary budget boost is the nature of the spending. These are not one-off stimulus cheques, they are decade-long construction programmes with contracts being awarded year by year, locking in revenue for the companies that win them.

Key Construction-Relevant Budget Allocations

Key Construction-Relevant Budget Allocations. Singapore Budgets 2025 & 2026. Source: MOF, MOT, BCA

For example, Singapore has committed significant spending to the Land Transport Master Plan 2040.

This includes ongoing investments in rail networks, public transport infrastructure and connectivity.

Other major areas include Changi Airport Terminal 5, Tuas Port, coastal protection, healthcare infrastructure and new housing supply.

These projects are important because they create demand across the construction value chain.

Main contractors may benefit from civil engineering and building contracts.

Specialist contractors may benefit from tunnelling, piling, mechanical and electrical works.

Building materials companies may benefit from higher demand for concrete, steel and other construction inputs.

The impact can also extend beyond construction.

Infrastructure spending may support related sectors such as logistics, industrial property, utilities and engineering services.

This is why government spending can act as a multiplier for the broader Singapore economy.

#2 – The major infrastructure projects driving Singapore construction demand

Several major infrastructure projects are likely to shape Singapore construction demand over the next few years.

The first is Changi Airport Terminal 5. The project is expected to support Singapore’s long-term aviation capacity and will involve construction, tunnelling, engineering and supporting infrastructure works over several years.

The second is the Cross Island Line. As one of Singapore’s major rail projects, it should continue to create demand for civil engineering, tunnelling and mechanical and electrical works.

The third is Tuas Mega Port. The port is being developed in phases and is expected to remain a long-duration infrastructure project.

The fourth is public housing. Singapore has been ramping up HDB flat supply, with new BTO projects adding to construction demand.

The fifth is coastal protection. Long-term plans such as Long Island could become an important part of Singapore’s infrastructure pipeline as the country prepares for rising sea levels.

These projects are not all at the same stage. 

Some are already under construction. Others are still in earlier phases.

This staggered timeline may help sustain construction demand beyond a single year.

#3 – Singapore’s infrastructure pipeline stretches beyond 2026

One reason this construction cycle stands out is the length of the pipeline.

BCA expects total construction demand to remain elevated in 2026, with a forecast range of S$47 billion to S$53 billion.

For the medium term, BCA projects construction demand of S$39 billion to S$46 billion per year from 2027 to 2030.

Even the lower end of this forecast range would still be above the levels seen before the recent upcycle.

Some of the biggest infrastructure projects are also still in the early stages.

Changi Airport Terminal 5 is expected to be developed over many years.

The Cross Island Line is being built in phases.

Tuas Mega Port will continue to be developed over the longer term.

The proposed Long Island coastal protection and reclamation project has not fully moved into construction yet.

This suggests that the construction pipeline may remain supportive for several years, rather than peaking in a single year.

For investors, the key point is that earnings visibility may improve when companies have a strong order book and exposure to long-duration public sector projects.

However, a strong order book does not automatically mean higher profits.

Execution, costs and margins still matter.

Where investors can look in the Singapore construction upcycle

Many construction stocks have already doubled in the past year. But the biggest projects are still in early stages and contracts worth billions are still being awarded. 

For investors, there are two broad ways to look at the Singapore construction theme.

The first is through main contractors.

These are companies that win and deliver major construction and infrastructure projects. They may benefit directly when public sector contracts are awarded. 

For this group, I would pay attention to order book size, project mix, government exposure, execution track record and balance sheet strength.

A large order book can provide revenue visibility.

However, investors should also check whether the projects are profitable, whether margins are improving, and whether the company has enough cash flow to support working capital needs.

Companies that have complementary businesses that provide recurring income, may help to support earnings across different stages of the construction cycle.

The second way is through building materials companies.

These companies may benefit from higher construction activity across the industry.

Unlike main contractors, they may not need to win each project directly.

Instead, they can benefit when demand for materials rises across public and private construction.

For this group, I would look at market position, pricing power, operating scale and exposure to long-term construction demand.

Companies with integrated operations may be better placed to manage costs and supply chain risks.

What to watch before investing in Singapore construction stocks 

Singapore construction stocks have already attracted more investor attention.

The market appears to be pricing in stronger earnings visibility, larger order books and the longer runway from infrastructure spending.

This is understandable, given the scale of Singapore’s infrastructure pipeline.

However, investors should be careful not to assume that the rally will continue in a straight line.

After a strong re-rating, the next phase may depend more on earnings delivery than valuation expansion.

This means quarterly results, new contract wins, margin trends and cash flow will become more important.

A construction company can have a large pipeline but still disappoint if costs rise faster than expected or projects face delays.

#1 – Labour shortages and construction cost inflation

The first risk is labour.

Singapore construction still depends on foreign manpower, specialist workers and project managers.

If labour remains tight, contractors may face higher costs and slower project execution.

The second risk is cost inflation.

Materials such as steel and concrete can be volatile.

If a company takes on fixed-price contracts and costs rise after the contract is awarded, margins may come under pressure.

This is one reason why productivity improvements such as DfMA matter.

Companies that can reduce labour intensity or improve construction efficiency may be better positioned to manage cost pressures.

#2 – Project execution risks in major infrastructure projects

The next risk is project execution.

Large infrastructure projects can be technically complex.

For example, major tunnelling, transport and reclamation projects often involve engineering challenges.

Delays, design changes and cost overruns can affect profitability.

This is especially important for contractors involved in large fixed-price contracts.

A company may have a strong order book, but profitability still depends on whether the work is delivered on time and within budget.

Investors should therefore look at execution track record, not just contract wins.

#3 – Valuation risks after the rally in construction stocks

The final risk is valuation.

Some construction-related companies have already moved up sharply.

Investors buying after a strong rally may need to be more disciplined about valuation and earnings expectations.

If earnings growth does not keep up with share price gains, valuations could become stretched.

The sector may also face competition.

Major infrastructure projects can attract global contractors.

Smaller listed companies may participate as subcontractors, which could mean different risk and margin profiles.

For investors, the key is to avoid treating all construction-related companies the same way.

Companies with strong balance sheets, better execution and exposure to long-duration public sector projects may be better placed than companies that are simply riding the sector theme.

What would Beansprout do?

Total construction demand reached S$50.5 billion in 2025, a 10-year high.

However, major projects such as Changi Airport Terminal 5, the Cross Island Line and Long Island are still in the early or pre-construction phases, which means much of the contract spending may still be ahead.

Budget 2026’s S$154.7 billion commitment also suggests that the demand pipeline is backed by government spending, not just market sentiment.

Overall, I would treat the construction sector as an expansion of the government spending theme we highlighted in our growth themes to watch in Singapore stocks. 

It also supports our view on why Singapore stocks are still worth looking at in 2026. 

However, I would avoid assuming that all construction-related companies will benefit equally. My approach would be to focus on companies with meaningful exposure to government-backed projects.

This could include top-tier contractors eligible for larger public infrastructure projects, as well as building materials companies that benefit from higher industry-wide construction volumes.

The two profiles complement each other, as contractors may benefit more directly from contract wins while building materials companies may offer broader exposure to construction activity.

Also, since many Singapore construction stocks have already re-rated, the next phase may depend more on earnings delivery, margins and cash flow.

To identify these stocks to put into my opportunity pot as part of Beansprout’s four pots of wealth, I would screen them using the four simple checks. 

If you are looking for more Singapore stock ideas linked to long-term growth themes, explore our high-conviction curated stock opportunities here.

If you prefer broad exposure to blue chips without picking individual names, you can learn more about the Straits Times Index (STI).

Which part of the Singapore market are you watching most closely now? Share with us in the comments below or in our Telegram group!

Planning to invest in Singapore stocks? Compare the best Singapore brokers to find the right trading platform, and see the latest promotions and sign-up rewards available.

Follow Beansprout on Youtube, Facebook and Instagram, and add Beansprout as your preferred source on Google so you never miss an update.