Asia Pacific is set to experience persistently high construction costs, with tender price inflation projected to reach between 3.8% and 4.7% in 2027, according to JLL’s Global Construction Costs Index 2026. This inflation rate surpasses Europe’s 2.2%-3.5% and aligns closely with North America’s 3.2%-4.2%. The report highlights the region’s vulnerability to geopolitical disruptions, particularly from the Middle East, which affects energy and material supply chains.
The ongoing conflict in the Middle East has disproportionately impacted Asia Pacific due to its reliance on Middle Eastern energy and construction materials. This dependency, coupled with complex supply chains, has led to increased project costs. “Energy price volatility, transportation disruption, and base materials costs all feed directly into regional tender prices,” said Shweta Choudhari, Director of Work Dynamics Research, Asia Pacific, JLL.
Hong Kong and Singapore are facing significant cost premiums, with industrial and logistics construction costs exceeding US$2,500 and US$1,750 per square metre, respectively. These figures reflect severe land constraints and complex development requirements, reshaping capital allocation decisions in these gateway cities.
Labour shortages further exacerbate the situation, with construction wages rising 8% to 35% across key markets from 2020 to 2026. This trend is driven by demographic shifts and competition from technical sectors like data centres and advanced manufacturing.
JLL advises developers and investors to adapt their capital strategies, focusing on long-term asset performance and considering retrofits as alternatives to new construction. “Construction costs across Asia Pacific have reset at a higher level than anywhere else globally,” said Matt Bennion, Head of Project and Development Services, Asia Pacific, JLL.
