Construction demand may reach $53b amidst rising costs

Construction costs are expected to rise 2% to 5% in 2026.

Singapore construction demand is projected at $47b to $53b in 2026, driven by public sector demand and infrastructure projects, whilst global conditions continue to add cost pressure.

The forecast follows a market valuation of $50.5b in 2025, according to the Singapore Construction Market Review and Outlook 2026 by SJ Group’s Project and Cost Management business unit.

Construction costs are expected to rise 2% to 5% in 2026, whilst material prices have increased 5% to 15% due to disruptions linked to tensions in the Middle East.

Oil prices above $128 (US$100) per barrel and supply chain volatility are adding further pressure on project costs and timelines, the report noted.

Ho Kong Mo, Senior Executive Director for Project and Cost Management at SJ Group, said the built environment sector continues to adjust to external conditions whilst relying on public sector projects and infrastructure investment.

The report identifies Changi Airport Terminal 5 works, MRT expansion, and healthcare projects as key contributors to demand. Civil engineering demand is projected at $11.6b to $13.4b in 2026.

Residential construction demand is expected to ease from the previous peak. Around 19,600 Build-To-Order flats are scheduled for launch in 2026, whilst private residential activity is supported by Government Land Sales sites.

Commercial construction demand is projected at $6.1b to $6.7b after a weaker 2025, led by the Marina Bay Sands expansion.

Industrial demand is supported by advanced manufacturing and data centres linked to artificial intelligence.

Ho said the Building and Construction Authority will shift from mandatory overseas skills testing to local testing in Singapore from January 2027, which is expected to shorten hiring timelines by two to three months.

The report states that labour constraints and rising costs remain structural issues, calling for greater use of digital tools, design standardisation, and modular construction to support productivity and project delivery.

(US$1 = SG$1.28)