Labour shortages, tighter foreign worker quotas could push up Singapore construction costs in 2026 amid busy public sector project pipeline

SINGAPORE: Singapore construction costs may increase this year due to labour shortages or tighter foreign worker quotas, as construction activity in the city-state accelerates amid a pipeline of major infrastructure projects in the public sector, according to UOB Kay Hian.

In its report on Tuesday (Jan 20), the Singapore-headquartered brokerage firm said, “Following pandemic disruptions, previously delayed projects are now being executed alongside newly launched developments, resulting in elevated construction activity.”

Major projects include Changi Airport’s Terminal 5, which The Independent Singapore reported Surbana Jurong (SJ) had expected to push construction costs higher in 2025, alongside developments such as the Deep Tunnel Sewerage System (DTSS), coastal protection and flood mitigation works, desalination and NEWater plants, and transport projects including new MRT lines.

However, government-linked projects make up most of the construction industry workloads, including the DTSS programme, estimated to cost about S$10 billion and the Cross Island Line (CRL), which is slated to cost over S$40 billion, reducing counterparty risk and earnings volatility.

The broker also flagged cost inflation, noting that rising prices could put pressure on firms’ margins. Project execution risks, such as weather disruptions or site readiness, could also further affect firms’ earnings visibility. /TISG

Read also: Singapore’s construction activity remains strong despite it being among the most expensive markets in Southeast Asia at US$3,104 per sq m

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