Construction costs to ease to 3.3% in 2027 on steady project pipeline

Still, tender prices have increased 30.2% since 2021, outpacing consumer inflation.

Singapore's construction costs are forecast to increase by 2.3% to 3.3% in 2027, easing slightly from the projected 2.5% to 3.5% rise this year, according to JLL.

The property consultancy said the outlook is supported by a balanced pipeline of Build-To-Order (BTO) public housing, mixed-use commercial developments, and infrastructure projects.

Despite the slower projected increase, the market’s cumulative tender price inflation has reached 30.2% since 2021, compared with consumer price inflation of 17.7% over the same period.

The gap could affect project feasibility and development returns, particularly for developers using consumer inflation as a basis for construction cost estimates, JLL added.

Material costs have also fluctuated. Base materials costs rose 7.43% in the first half (H1) compared with the 2025 average, whilst growth is forecast to moderate to 1.10% in H2.

Meanwhile, steel costs declined 1.45% in H1 but are expected to rebound 10.34% in the second half.

"Energy price volatility, transportation disruption and base materials costs all feed directly into regional tender prices, and that is especially visible in Singapore,” said Shweta Choudhari, director of Work Dynamics Research for Asia Pacific at JLL. 

“Near-total reliance on imported materials means global price swings flow straight into project costs," Choudhari added.

Labour costs rose 2.93% in H1 and are forecast to increase another 2.58% in the second half, amidst demand from public housing, commercial developments and data centre projects.

In a separate Turner & Townsend report, Singapore ranked as the fourth most expensive market globally in terms of data centre construction costs.

The market also led construction costs in Southeast Asia at $20.20 per watt (US$15.39), well ahead of Jakarta at $15.70/W (US$11.96).

“The common theme is that wherever the project sits, power, land and skilled people are in high demand,” said Patrick Thilagaraj, project director for data centres at Turner & Townsend Malaysia.

For warehouse and logistics developments, JLL estimates construction costs of $1,695 (US$1,324) to $2,179 (US$1,702) per square metre in 2026, rising to $1,748 (US$1,366) to $2,248 (US$1,756) in 2027.

The consultancy also expects mechanical, electrical and plumbing-intensive projects, including data centres, to face above-average cost pressures that are not fully reflected in the broader tender price forecast.

"Geopolitical volatility, supply chain vulnerability and surging demand for AI-driven technical facilities will keep Singapore's construction cost environment challenging over the next 12 months," said Daniel Malacchini, JLL's head of Cost Advisory & Cost Management for Asia Pacific.

Malacchini said developers should reassess project feasibility during design and procurement and consider retrofitting existing assets where it offers cost and timing advantages over new construction.

$1 = US$0.78