Cost escalation in SG construction sector to continue in coming years

SINGAPORE: According to a recent report by real estate consultancy JLL, Singapore’s construction industry is bracing for continued cost increases over the next few years. Projections indicate a 5-6% rise in FY 2025 and 5-7% in FY 2026.

The report highlights a surge in major construction projects and large-scale public infrastructure developments set to commence during this period, driving heightened demand for construction materials, equipment, and skilled labour.

This increased demand is expected to exert additional pressure on costs, even as supply chains stabilize following disruptions caused by the COVID-19 pandemic.

Despite normalising global supply chains, constraints on skilled labour capacity remain a persistent challenge for the sector. JLL cautions that these labour shortages could lead to project delays and further escalation in labour expenses, compounding cost pressures for construction firms.

However, the continued growth in Singapore’s construction sector reflects sustained momentum, underscoring the need for strategic cost management and meticulous project planning to maintain viability in an increasingly competitive landscape.

In addition to broader construction trends, JLL also provided insights into corporate interior fit-out costs, projected to climb by 3-4% between June 2024 and Dec 2025.

Notably, sustainable fit-out projects are anticipated to see a sharper cost increase, ranging from 10% to 20%, reflecting the growing emphasis on eco-friendly construction practices and materials.

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