Singapore’s construction sector gains momentum with strategic selectivity

Singapore’s construction sector is growing and busy. Contractors are adopting a more discerning approach to project selection. Early engagement and collaborative contracting will define who delivers on time and on budget. 

Singapore’s construction sector is entering the second half of 2025 with strong momentum and a new level of selectivity. With average cost to build at US$3,104.40, project pipelines are robust and contract awards have surged, yet the pool of available contractors is narrowing.  

This shift is not the result of slowing demand but of a market operating near full capacity, where contractors are becoming more selective about the projects they pursue.  

In this environment, securing delivery partners is no longer on price alone, it requires early engagement, collaboration among stakeholders, equitable risk allocation and a focus on productivity to ensure programmes stay on track. 

High activity, rising selectivity 

The construction sector remains exceptionally active. In the first four months of 2025, the value of construction awards surged by 60 percent compared to the same period in 2024. Projects are proceeding as planned, with no major cancellations reported. 

However, beneath this headline activity lies a shifting tendering landscape. Singapore sits at 4.0 on our Global construction market intelligence report’s tendering competitiveness scale, with a declining competition outlook. Many contractors are adopting a more selective approach on the work they pursue - strategically selecting projects that align with their priorities, capacities and long-term goals - leading to fewer bidders per project. This requires a stronger focus on collaborative procurement models and early engagement to secure delivery partners. 

Macroeconomic stability with global watchpoints 

The 2025 general election delivered a strong mandate for policy continuity in housing, transport and sustainability – sectors that will continue to drive construction demand. Local developers remain active, with more feasibility studies underway for upgrades and rejuvenation of existing assets. 

“The new rates of the US’ tariff effective 7 August have introduced a degree of uncertainty, although the immediate impact on local pricing has been limited.”

Oversupply from China may soften some material costs, but recent tenders have shown minimal reductions. Freight costs have risen, particularly for long-lead equipment, which will continue to influence project planning. 

Second half outlook: heating up with capacity constraints 

The second half of 2025 is expected to heat up as several major projects are expected to come to market, further squeezing contracting capacity. Labour constraints, across both skilled trades and PMET roles, remain a persistent challenge. Contractors are cautious about overcommitting and expanding their workforce or operations too quickly. 

“Tender prices are forecast to escalate by 3 to 5 percent, underpinned by strong demand and selective bidding.”

While headline tender price movement for construction moderated at 1 percent in 2024, rising to 3 percent in 2025, our Global construction market intelligence report forecasts that this could reach 5 percent by 2026, creating additional medium-term cost pressure. 

Delivery priorities: securing capacity and building productivity 

In a busy and selective market, the winners will be those who engage early and offer fair, collaborative risk-sharing frameworks. Two-stage tenders, early contractor involvement and collaborative contracting approaches such as adopting provisions similar to the option modules under the Public Sector Standard Conditions of Contract (PSSCOC) and the NEC4 contract are becoming increasingly important.  

“Productivity is a strategic priority.”

Government-led pilots and private sector initiatives are accelerating the adoption of new contracting models, digital tools, robotics and offsite manufacturing to improve delivery certainty. These innovations are addressing labour shortages and site constraints, including the emerging pressure on waste disposal capacity as Semakau landfill nears its 2035 limit. 

Sector momentum: industrial, science and technology lead the way 

Industrial, science and technology and life sciences are expected to remain key growth areas. In life sciences, demand is concentrated in research and development facilities and advanced manufacturing plants, with Singapore’s stability and secure business environment continuing to attract global investment from multinational companies.  

“The industrial, science and technology segment is benefiting from strong interest in high-specification, mission-critical facilities, supported by long-term policy direction and sustained private sector appetite.”

Public infrastructure remains a steady contributor, aligned with government priorities in housing, transport and sustainability.  

Looking ahead: navigating an active, competitive landscape 

The remainder of 2025 will be defined by competition for capacity. For complex and high-value projects, securing the right partners early is essential. Clients should consider procurement models that encourage early engagement and fair risk allocation to attract high-quality contractors even in a tight market. 

“Managing cost pressures will require a balance between competitive tendering and realistic budgeting.”

Factoring in a 3 to 5 percent tender escalation in the second half of the year and planning for the 5 percent projected inflation in 2026, will support better financial certainty. Programme protection is equally important, particularly for projects dependent on imported materials or long-lead equipment, where freight and logistics remain vulnerable to disruption. 

The market is also moving toward delivery models that embed productivity gains from the outset. Digital tools, robotics and offsite solutions are shifting from optional enhancements to essential enablers, helping to offset labour shortages and improve delivery certainty.