Amid the AI boom, Singapore surfaces as the second-most expensive market to construct data centres
A Turner & Townsend report shows that Singapore is once again the second-most expensive market in which to build data centres
[SINGAPORE] The Republic held on to its place as the second-most expensive market for data centres in 2025, said a Turner & Townsend report.
The professional services company found that construction costs grew 5 per cent year on year, from US$13.8 to US$14.53 per watt, in its 2025 Data Centre Construction Cost Report.
This was only behind Tokyo, Japan, and ahead of the Silicon Valley region in the US. Regionally, Kuala Lumpur and Jakarta clocked in at US$11.37 and US$11.21 per watt, respectively, while Shanghai was even lower at US$6.12.
The report comes as suitable land for data centres becomes harder to find, with Keppel already coming up against such barriers. A Knight Frank report in September said Singapore’s “strict planning controls” have resulted in global tech firms looking north instead and Johor has emerged as the “top alternative”.
Singapore last month also announced plans to build a low-carbon data centre park on Jurong Island with up to 700 megawatts of capacity in what will be the country’s largest such facility.
Data centres capability and building have ramped up in the past few years amid the artificial intelligence boom, with these facilities housing the huge processing and computing power that AI requires.
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Turner & Townsend said that power requirements are “increasing significantly”, with power needs rising from around 3 kilowatts per rack to over 100 kilowatts per rack in advanced facilities.
“This shift is pushing capital expenditures up by 20 to 40 per cent, largely due to the integration of advanced cooling systems and upgraded electrical infrastructure,” said the company.
Project schedules in the Asia-Pacific region also face significant delays, with design changes cited as the top challenge by a third of respondents, found the report.
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In Singapore, while the supply chain is “improving”, specialised equipment and skilled labour for advanced cooling remain in short supply, extending lead times.
Additionally, the report found that delays in sourcing critical equipment, particularly for high-density and liquid cooling systems, add complexity to modular campus developments.
Turner & Townsend described Singapore’s cost dynamics as “uniquely intense” due to its market maturity and regulatory landscape.
Stricter environmental regulations, including a new mandate for up to a 30 per cent reduction in energy consumption and a focus on achieving a reduced Power Usage Effectiveness of 1.3 or lower, are contributing to higher costs, the report found.
Turner & Townsend added that complex design requirements further drive engineering and construction expenses higher, making development in Singapore more costly compared to other markets in the region.
While nearly half of respondents across the 52 markets polled said that power availability is the “most prominent obstacle” to on-schedule projects, power availability in Singapore is “determined by clear environment, social and governance (ESG) alignment”.
“Only projects with strong ESG alignment and low-carbon outcomes are considered for power allocation, and developers must present robust sustainability plans to qualify,” said Turner & Townsend.
Still, the report found that Singapore’s long-term policy stability and “clear ESG mandates” provide investors with “strong” assurances, helping them mitigate the regulatory uncertainty in other markets.
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