Singapore’s construction market is expected to stay strong in 2026, backed by public sector demand and major infrastructure projects, despite increased cost pressures from geopolitical tensions and supply chain disruptions, according to the ‘Singapore Construction Market Review and Outlook 2026’ published by SJ Group’s Project and Cost Management business unit.
Total construction demand is projected to hold at S$47 billion to S$53 billion this year, after reaching S$50.5 billion in 2025, driven largely by infrastructure and institutional projects. However, cost pressures are set to rise. The report forecasts construction costs to increase by 2-5% in 2026, with material prices already up by 5-15% amid disruptions linked to tensions in the Middle East. Oil prices exceeding US$100 per barrel and ongoing supply chain volatility are likely to further strain project costs and timelines.
Major projects to drive demand
The outlook for the construction sector remains underpinned by major developments, including works for Changi Airport Terminal 5, MRT expansions and healthcare projects. Civil engineering demand alone is anticipated to expand to between S$11.6 billion and S$13.4 billion this year.
The residential segment is forecast to see slightly softer demand, with public housing construction easing from last year’s peak. Around 19,600 build-to-order (BTO) flats are slated for launch in 2026, while private sector activity will be driven by a steady pipeline of government land sales (GLS) sites.
Meanwhile, demand in the commercial segment is projected to rise to between S$6.1 billion and S$6.7 billion after a weak 2025, led by projects such as the Marina Bay Sands expansion. Industrial demand is likely to continue benefitting from growth in advanced manufacturing and data centres, particularly in artificial intelligence-related sectors.
Boosting productivity is essential
The report also noted that labour constraints and rising business costs still pose structural challenges, with productivity improvements increasingly critical. To navigate these challenges, the industry needs broader adoption of digital technologies, greater design standardisation and wider use of modular construction methods to maintain resilience and growth. While global uncertainties may weigh on the outlook, the sector is expected to remain supported by sustained government investment and a steady pipeline of projects.
“Singapore’s built environment sector has once again demonstrated its resilience and adaptability. Even as global uncertainties drive cost pressures, a steady pipeline of public sector projects and continued infrastructure investment will underpin demand,” said Ho Kong Mo, senior executive director for project and cost management at SJ Group.
“Additionally, the Building and Construction Authority announced a shift from mandatory overseas skills testing to local testing in Singapore, starting progressively from January 2027, to ease prevailing constraints in the foreign worker market – thereby shortening the hiring timeline by approximately two to three months.”
He pointed out that “strengthening project management and accelerating productivity through technology adoption will enable the industry to manage costs, navigate current headwinds and support long-term growth.”
The Singapore Construction Market Review and Outlook 2026 presents a data-driven assessment of sector performance, key risks and emerging opportunities. It is intended for construction industry professionals, policymakers and investors. The full report can be downloaded here.
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