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Construction costs in Singapore are likely to remain high, with tender prices expected to rise again in 2027, according to JLL.
The property consultancy forecasts construction cost increases of 2.5% to 3.5% in 2026 and 2.3% to 3.3% in 2027, compared with a wider Asia Pacific range of 3.8% to 4.7% in 2027.
The figures suggest Singapore may see slower cost growth than the regional average, but from a much higher base than a few years ago. Cumulative tender price inflation in Singapore has reached 30.2% since 2021, compared with consumer price inflation of 17.7% over the same period.
That gap is one of the widest in Asia Pacific, based on JLL's data, and points to a persistent mismatch between broader inflation measures and the cost of delivering building projects. For developers and investors, assumptions based on headline inflation are therefore likely to understate actual project costs.
Regional pressure
Across Asia Pacific, construction cost inflation is running at a pace similar to North America and faster than Europe. JLL attributed the trend to a mix of geopolitical disruption, labour shortages, limited land in major cities and rising demand for specialist projects such as data centres and advanced manufacturing facilities.
Singapore reflects several of those pressures at once. The city-state remains heavily dependent on imported materials, leaving project budgets vulnerable to swings in global commodities and freight costs. Base materials costs in Singapore rose 7.43% in the first half of 2026 from the 2025 average, the highest rate among the Asia Pacific markets in JLL's dataset.
Some moderation is expected in the second half, with base materials growth forecast at 1.10% as supply conditions improve and global prices ease. Steel, however, has been more volatile, falling 1.45% in the first half before an expected rebound of 10.34% in the second half.
Those shifts come as conflict in the Middle East continues to affect the region's supply chains. Asia Pacific is particularly exposed because of its reliance on Middle Eastern energy supplies and construction materials, as well as trade routes that pass through the region, JLL said.
Energy-intensive materials including steel, aluminium and cement have remained under pressure, while shipping delays and higher freight costs have added to procurement risk. Import-reliant markets such as Singapore feel those changes more directly than economies with larger domestic supplies of raw materials.
"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. Developers face a clear choice: adopt more agile risk and supply chain management to keep projects on course, or fall behind," said Daniel Malacchini, Head of Cost Advisory & Cost Management, Project and Development Services, Asia Pacific, JLL.
Labour strain
Labour remains another key source of cost pressure. Construction wages across major Asia Pacific markets rose between 8% and 35% from 2020 to 2026, outpacing both consumer inflation and materials inflation in many cases, JLL said.
In Singapore, wage growth has been more restrained than elsewhere, helped by a managed migrant workforce system. Even so, labour costs rose 2.93% in the first half of 2026 and are forecast to rise a further 2.58% in the second half.
Demographic shifts, limited training capacity and competition from technical sectors have tightened labour supply across the region, according to JLL. Those factors have supported wage increases even when some material costs soften.
"Energy price volatility, transportation disruption and base materials costs all feed directly into regional tender prices, and that is especially visible in Singapore, where near-total reliance on imported materials means global price swings flow straight into project costs. 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.
"Our regional construction inflation forecast of between 3.8% to 4.7%, and Singapore forecast of 2.3% to 3.3%, reinforce compounding factors that both developers and investors are explicitly planning for," Choudhari added.
Urban premium
JLL also highlighted the cost of building industrial and logistics assets in land-constrained cities. Globally, such projects are usually among the cheaper forms of construction, but the pattern is different in Singapore and Hong Kong.
In Singapore, warehouse and logistics construction costs are benchmarked at USD $1,324 to USD $1,702 per square metre in 2026, rising to USD $1,366 to USD $1,756 in 2027. The upper end of that range sits above typical global norms, reflecting land scarcity and local development constraints, JLL said.
The consultancy added that more complex schemes, including projects with heavy mechanical, electrical and plumbing requirements such as data centres, face pressures that headline tender price figures do not fully capture. That is affecting where investors commit capital and whether occupiers pursue regional networks instead of concentrating activity in high-cost gateway cities.
Many owners are responding by testing project feasibility more often, shifting investment towards higher-return assets and considering retrofits or repositioning work instead of ground-up development, JLL said. In a market where costs have already reset sharply since 2021, the issue for many developers is less whether inflation slows and more whether project economics still hold.
"In Singapore, construction costs across have surged and we're advising owners to proactively plan ahead rather than be optimistically patient," said Malacchini. "The owners who keep delivering returns in Asia Pacific are the ones who test feasibility against live cost data from day one, re-confirm it at every design and procurement gate, and consider retrofit and repositioning where it can beat ground-up on cost, speed, and carbon."