Construction costs in Singapore one of the highest in Southeast Asia; cost inflation expected to rise 5% in 2026: Turner & Townsend
Construction costs in Singapore remain the highest in the Southeast Asia region at about US$3,104 ($3,977) psm, outpacing the second highest construction market in the region, Malaysia, where construction costs average US$1,354 psm.
According to a market report published by Turner & Townsend, construction cost inflation in Singapore is expected to top out at about 3% this year and rise another 5% in 2026. There has been strong development activity in Singapore, with a 60% y-o-y increase in the number of construction contracts awarded over the first four months of this year compared to the same period in 2024.
Five key Japanese markets top the list of the most expensive construction markets in the Asia Pacific region. At the No. 1 is Tokyo (US$4,647 psm) followed by Sapporo (US$4,577 psm), Osaka (US$4,479), Hiroshima (US$4,437 psm), and Fukuoka ($4,428 psm).
Other major real estate markets with relatively high construction costs include Hong Kong (US$4,377 psm) and Macau (US$4,150 psm), as well as Seoul (US$2,488 psm).
The Turner & Townsend report notes that while construction costs across the Asia Pacific look set to continue rising, there is also a surge in demand for critical infrastructure like data centres and a growing mandate for sustainable building practices.
Data centres have overtaken industrial, manufacturing, and distribution projects as the top-performing construction sector in Southeast Asia, where nearshoring trends and escalating demand for advanced manufacturing are the primary drivers of heightened construction activity.
“The region's commitment to digital transformation and sustainability, and the strategic advantages of nearshoring, are fundamentally reshaping the construction landscape,” says Brian Shuptrine, Asia managing director at Turner & Townsend.
Infographic: Turner & Townsend.
In Singapore, tight contractor capacity and persistent skilled labour shortages, coupled with rising waste management cost challenges, are some of the key factors pushing up construction costs.
The city-state is not alone in facing these challenges, especially the shortfall in skilled labour. Close to 90% of Asia Pacific markets including Malaysia, Indonesia, and Vietnam face a similar labour situation.
The demand for skilled trades and sustainability professionals is outpacing regional availability, says Sumit Mukherjee, managing director of Southeast Asia and head of real estate of Asia, at Turner & Townsend. “Focus is increasingly shifting towards value, efficiency, and supply chain resilience. The abundance of materials, especially from China, offers opportunities for faster and more cost-effective project delivery in some markets.”
These market pressures are pushing many builders into collaborative contracting models to align stakeholder expectations early in the development process, while reducing project risk and improving certainty around cost and delivery.
“Looking ahead, markets like Vietnam and Malaysia could potentially benefit from surplus Chinese supply of materials redirected from the US if reciprocal tariffs persists,” says Mukherjee, adding that this may help these markets to accelerate delivery, manage costs and increase their manufacturing capacity.
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