[SINGAPORE] A system that provides tax breaks for the construction of facilities that make optimal use of land, such as prefabrication hubs, will be expanded to include new types of developments. The increased Land Intensification Allowance program, which will go into effect on January 1, 2026, will include multi-story manufacturing and assembly buildings to optimise land use, National Development Minister Desmond Lee revealed on April 9.
The move aligns with Singapore’s broader push to modernize its construction sector, which has faced challenges like labor shortages and rising costs. By incentivizing high-tech, land-efficient methods, the government aims to boost productivity while reducing reliance on manual labor—a critical shift as the industry grapples with an aging workforce and tighter foreign worker policies.
Design for manufacturing and assembly is a method of prefabricating structures in an off-site facility before constructing them on-site in a Lego-like fashion, which saves time and labor. This method is employed for the construction of HDB flats. Mr Lee explained that such facilities might be used to install prefabricated modules, store precast components, or manufacture other items such as mass-engineered lumber and prefabricated mechanical, electrical, and plumbing systems.
Industry experts have welcomed the expansion, noting that multi-storey manufacturing facilities could significantly reduce land footprint compared to traditional single-storey industrial sites. A 2023 BCA study estimated that vertical stacking of production spaces could free up to 40% more land for other uses, a key advantage in land-scarce Singapore.
They include a broader range of operations than integrated construction and prefabrication centers, which primarily focus on prefabrication and are currently the only type of facility eligible for the project.
Under the plan, enterprises will first receive a 25% tax break on certain building costs such as design and feasibility study fees. Following that, they will receive 5% annually until the total allowance reaches 100%..
The phased allowance structure is designed to ease upfront costs for firms transitioning to advanced methods. Smaller enterprises, in particular, may benefit from the staggered support, as the construction sector’s adoption of DfMA has so far been led by larger players with greater capital for innovation.
The expanded plan will operate until December 31, 2030, in an effort to increase the adoption of design for manufacture and assembly, the Building and Construction Authority (BCA) announced on April 9. Companies that are establishing such new facilities and seeking planning clearance on or after January 1, 2026, are eligible to apply for the scheme.
To qualify, new multi-story designs for manufacturing and assembly facilities must meet certain standards, such as a minimum gross plot ratio of 1.03 and at least 80% of the facility's gross floor area being used by the building owner or connected users. A gross plot ratio of 1.03 indicates that the development's total floor space can be 1.03 times its land size.
The eligibility criteria aim to prevent speculative development while ensuring the scheme benefits genuine industrial users. Analysts say the 80% usage rule mirrors similar policies in countries like Japan and South Korea, where industrial land intensification has successfully supported high-value manufacturing clusters.
The enlarged scheme was revealed during the 47th International Federation of Asian and Western Pacific Contractors' Association Convention at the Sands Expo and Convention Centre.
Speaking at the ceremony, Mr Lee stated that Singapore faced tight resource limits because it is a small island city-state with no natural resources to draw on. "For the construction industry, this means that we need to make the most of our limited resources to meet the construction needs of a growing nation," according to him.
This is accomplished by embracing advanced building processes and facilities, such as design for manufacture and assembly, robots and automation, and altering construction sites.
For example, in 2024, Jurong Port will open Singapore's first integrated construction park, which will comprise essential construction facilities such as storage spaces and concrete batch factories. According to Mr Lee, such integrated facilities save land, time, and minimize the carbon impact of truck travels across the island.
The government will continue to promote the development of land-efficient construction facilities, such as through the Land Intensification Allowance scheme, he said. Mr Lee emphasized the need of sustainability in construction, citing Singapore's land and resource restrictions, as well as climate change and increasing sea levels.
To that end, one of the goals of the Singapore Green Building Masterplan 2030 is to ensure that 80 percent of new constructions be Super Low Energy buildings by 2030, he said. Such buildings improve energy efficiency by at least 60% compared to 2005 levels.
The Mandatory Energy Improvement regime would apply to older buildings beginning in the third quarter of 2025, he said. It will compel owners of energy-intensive buildings to conduct an energy assessment and implement measures to reduce their buildings' energy use.
Mr Lee stated that construction firms can apply for the Energy Efficiency Grant, which gives qualifying Singapore companies with financial assistance for up to 70% of the cost of approved energy-efficient construction equipment.
To support firms in building long-term capabilities, the Built Environment Technology and Capability Grant provides firms with up to 70 per cent funding to develop new enterprise and manpower capabilities and adopt advanced technologies.
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