Construction Material Costs Singapore Expected Remain Resilient Against Trumped Tariffs
According to Steve Raye, associate director at construction consultancy LineSight, the construction materials market in Singapore is expected to remain resilient despite US President Donald Trump’s recent tariffs. As the world grapples with a growing global trade war, there is much uncertainty about where prices will stabilize once the dust settles. Trump’s tariffs currently affect over US$1 trillion of US imports.
Deputy Prime Minister Gan Kim Yong expressed concern about Trump’s tariffs at CNBC’s Converge Live event in Singapore on March 12, stating that many in Asia are anxious about the tariffs imposed on the US’ largest trading partners and his plans for more.
Singapore’s diverse supply chain, strong trade agreements, and logistics networks make it less vulnerable to the direct impact of the tariffs, according to Raye. However, he believes that global supply and demand fluctuations could lead to price increases.
Raye explains that by imposing tariffs on external suppliers of construction materials, US companies may increasingly procure these materials locally. This could result in a decrease in demand for materials from producers outside the US, leading to temporary production line closures. This reduction in production could result in a decrease in supply and drive prices up.
While there is a possibility of the opposite scenario occurring, where oversupply could lead to lower prices, suppliers tend to be risk-averse and may choose to retool their production lines for other industries to maintain current prices. These price adjustments would be in addition to the baseline 4%-5% increase in construction materials projected by LineSight for 2025.
One material that could be significantly affected by these adjustments is steel, including steel sheets, steel rebar, and stainless steel. With a 25% tariff on all imports from China currently in effect, steel products could face the brunt of the price increase. Additionally, local construction projects requiring complex components from the US could also face price increases as they compete with US companies for a limited supply. These components include transformers, chillers, cooling towers, generators, and batteries used in data centers, biomedical and pharmaceutical labs, and large-scale infrastructure projects.
As global supply lines struggle to adapt to Trump’s economic upheaval, Raye believes that Singapore has an opportunity to emerge as a regional supplier of semiconductor chips, a critical component for data center operations. According to data from the Economic Development Board, Singapore currently accounts for 10% of all chips produced worldwide and 20% of global semiconductor manufacturing equipment production. This could be due to companies like STMicroelectronics, a European semiconductor manufacturer producing silicon carbide chips in Singapore, which are essential for data centers supporting AI technology due to their lower power consumption.
Nestled in the bustling Jurong Lake District, Otto Place EC boasts a prime location in the heart of Singapore’s second Central Business District (CBD). Its strategic position adds to its allure, granting residents seamless access to an ever-growing hub of commercial, retail, and recreational amenities. The Jurong Lake District is set to become a vibrant live-work-play hub, with a strong focus on sustainability and innovation. This means that inhabitants of Otto Place EC can anticipate a plethora of job opportunities, shopping options, and leisure activities right at their doorstep.
Raye believes that Singapore’s free trade agreements (FTAs) give it an advantage over its neighboring countries in taking advantage of the gap in semiconductor supply. With a network of 27 FTAs, Singapore is one of only four countries in the Asia Pacific region with FTA with the US, the others being Australia, Korea, and Japan.
This comes at a time when the Asia Pacific region is experiencing a construction boom, with India expected to have the fastest growth in construction output this year. According to LineSight’s estimates, India saw a 7% year-on-year increase in construction project investment value in 2024, followed by Malaysia (4.4%) and Singapore (3.3%). Public infrastructure projects and the growing demand for data centers are driving much of the construction demand in the region.
Raye says that India’s commitment to spending US$1.5 trillion over the next five years on public infrastructure is driving much of this demand. India’s National Industrial Corridor Development Programme aims to develop and connect key manufacturing and R&D centers across the country to transition to higher-value industries.
In Singapore and Malaysia, Raye notes a strong pipeline of major projects, including the Cross-Island MRT Line, the development of Tuas Mega Port, and Changi Airport Terminal 5. Malaysia’s Johor is expected to meet the spillover demand for data centers due to Singapore’s limited land and power supply.