Singapore's construction cost inflation is forecast to rise to 4% in 2026 as AI-driven data centre projects tighten labour supply and contractor capacity.
inflation is expected to rise to 4% in 2026 from 1% in 2025 as demand for AI infrastructure, particularly data centres, continues to grow across the region, according to a report by Turner & Townsend.
The consultancy's latest Global Construction Market Intelligence report ranked Singapore as the 55th most expensive construction market globally, with average construction costs of $4437.08 per square metre . Across Asia, investment in AI infrastructure is driving demand for new data centres, making the sector the region's most constrained in terms of contractor capacity. Nearly 70% of Asian markets reported tightening or severe capacity constraints for data centre projects, the report found.
The report also said 90% of Asian markets are experiencing large or major impacts from skilled labour shortages, with mechanical, electrical, and plumbing trades among the most affected. These specialist trades are essential for building and operating data centres, with 82% of markets reporting shortages. Beyond data centres, industrial and logistics projects continue to expand as companies reconfigure supply chains and invest in automation.
Unlike many other regions, residential housing remains the strongest-performing construction sector in Asia, followed by data centres, industrial and logistics developments, and office fit-outs. Turner & Townsend said 16 of the 29 Asian markets it surveyed were classified as"hot" or"overheating," reflecting strong construction activity driven by investment in technology, manufacturing and logistics.
"The global construction market is shifting and new dynamics are reshaping the key drivers of cost performance," said Sumit Mukherjee, managing director for real estate for Asia at Turner & Townsend. "There is a very real risk that growth in the pool of skilled labour needed to build data centres won't keep up with demand, particularly in Asia where the market for these types of assets is booming,” he said.
Mukherjee said the region's construction market is entering another period of strong growth, led by data centres, industrial developments, and logistics projects, with labour expected to remain a key source of cost inflation. The findings are based on Turner & Townsend's 17th annual Global Construction Market Intelligence report, which covers 112 markets across 44 countries. Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies.
Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into. The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital.
The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card. If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.4.
Daily Markets Briefing: STI up 1.57%; Top stock is OCBC BankJTC, GovTech tap Panasonic to test AI building tech for Punggol Digital DistrictSingapore food firms move muscle abroad, keep brains localSingapore, Hong Kong take rival paths to capture global gold trade3. Seatrium starts exporting power from floating LNG-battery labHR & Education
Please follow us on Google to support usSingapore Latest News, Singapore Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
Meet Norway's Erling Haaland, who's casually aura farming at World Cup 2026Erling Haaland has not only brought Norway to new heights at the Fifa World Cup, but he has also captured the hearts of football fans and non-fans alike.On July 5, the 25-year-old footballer scored two goals in a match against Brazil, sending Norway into the competition's quarter finals for the very first time.
Read more »
Singapore Performance Analysis in the 2026 Rumavi Global Relocation IndexAn in-depth review of Singapore's standing in the 2026 Rumavi Global Relocation Index, focusing on tax efficiency, economic stability, and the challenges of high living costs.
Read more »
England player Jarell Quansah suspended for two games at World Cup 2026ATLANTA — England defender Jarell Quansah was handed a two-match suspension on Thursday (July 9) for his red card offence against Mexico in the World Cup round of 16.That means Quansah will miss England's quarterfinal match against Norway in Miami Gardens on Saturday and also the semifinals if Thomas Tuchel's team advances.
Read more »
CLI Reports Q1 2026 Revenue Growth Amid Mixed Performance Across SegmentsCLI saw fee-related revenue rise 10% YoY to $310m, driven by growth in its listed funds business, which made up 60% of total $487m revenue. Its real estate investment business declined 14% YoY, hit by the Synergy platform exit and Dalian IT Park divestment. Listed funds management revenue grew 14% YoY, private funds surged 58%, and Ascott's lodging segment reported steady RevPAU gains with strong occupancy, focusing on quality fundraising and membership expansion as it reached 8 million members.
Read more »