Construction costs rise up to twice as fast as inflation: JLL

Developers risk underestimating project costs when relying on CPI-based budgets.

Construction costs in Singapore have risen 1.5 to 2 times faster than consumer prices over the past five years, according to JLL.

The property consultancy said industrial and logistics construction costs in the market reached $1,750 per square metre (sq. m.) at the high end, compared with the global benchmark range of $1,010 to $1,560 per sq. m.

The higher costs were attributed to land constraints, skilled labour shortages, and growing demand for specialised facilities, including data centres and advanced manufacturing

JLL warned that developers relying on consumer price inflation (CPI) to estimate construction cost increases risk underestimating expenses and having to reassess project budgets.

Even as central banks successfully moderate CPI, construction programs continue facing acute cost pressure that broader economic indicators don't reflect,” it said.

Overall construction tender prices across the Asia Pacific are forecast to rise by 3.8% to 4.7% in 2027, driven partly by energy and material supply disruptions linked to the Middle East conflict.

“Increasingly, contractors are now pricing in geopolitical uncertainty as a permanent risk premium rather than a temporary measure," said Shweta Choudhari, Director, Work Dynamics Research, Asia Pacific, JLL.

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