Regional analyses
Asia Pacific
Australia
Cost escalation: 5-8%
Economic growth: 2.1% ⁴
Construction activity is likely to stay broadly flat in 2026. Costs, however, will keep rising. Sydney and Melbourne to a lesser degree as infrastructure spend in New South Wales and Victoria eases. The commercial sector is also expected to stay quiet, with supply still ahead of demand.
Brisbane is more exposed. Strong demand in education and health, plus early Olympics work, will add pressure. Labour remains the key constraint, with interest rates and supply chain uncertainty also weighing in. Overall, investment will remain cautious due to rising costs, falling commodity prices and ongoing tariff uncertainty. Growth is expected to be strongest in data centres, public health/aged care, and defence. Data centres will face the sharpest pressure due to high demand and a shortage of specialised skilled trades.
China
Cost escalation: 0%
Economic growth: 4.8% ⁵
Construction activity is expected to rise in 2026, but only slightly. Government support is helping to work through developer debt, which should support activity. Even so, firms will stay selective. Returns will lead decisions, and land buying is likely to remain cautious.
Construction costs are expected to stay flat. Labour and material costs are unlikely to rise, and supply chains are well set after two years of lower construction volumes. Some price swings may continue thanks to global trade tensions, and foreign investment is expected to remain lower. Growth will be strongest in technology, AI-led projects, including data centres and semiconductors, and pharmaceuticals, linked to an ageing population.
Hong Kong
Cost escalation: 0-1%
Economic growth: 2.9% ⁶
Construction activity is expected to increase modestly in 2026. The market may start the year soft, but major public works and a gradual pick-up in private housing should support growth. As conditions steady, contractors are not expected to price as aggressively as they did in 2025.
After last year’s drop, construction costs will hold steady or rise slightly, within 0-1%. Labour and materials should remain stable, helped by strong links with Mainland China. Growth will be led by infrastructure, healthcare, and residential work, backed by government investment and improving housing market conditions.
India
Cost escalation: 4.5-5.5%
Economic growth: 6.2-6.5% ⁷
India will once again be one of the world’s fastest-growing large economies in 2026. Construction activity will grow, driven by domestic demand and public investment in infrastructure, transport, and cities. Growth corridors are also adding office, industrial and logistics work. And more manufacturing is driving demand for new and refurbished hotels, especially in tier-2 and tier-3 cities. The pace will vary by city and sector, but the overall direction is clear: steady momentum.
Costs will rise by 4.5-5.5%, and possibly higher for imported materials. The pressure points are clear: skilled labour shortages and wage growth, swings in steel and cement prices, and imported MEP (mechanical, engineering and plumbing) components exposed to global supply chain complexity. High demand across infrastructure and real estate will also put pressure on contractor capacity. Cost pressure will be highest in manufacturing, technology (including data centres) and premium office space. It will be lower in affordable housing and standard retail, helped by repeatable designs and stable supply chains.
Japan
Cost escalation: 10-12%, 14-16%
Economic growth: 1.1% ⁸
Japan’s construction outlook in 2026 will be shaped by two facts: costs are rising fast, and capacity is tight. Demand remains in semiconductors, data centres, and hospitality, supported by increasing tourism. But higher costs, including imported energy, will affect which projects go ahead.
Cost increases will be sharp. Base build materials are forecast to rise by 10%–12%, with MEP up 14-16%. Labour is a major driver and is in short supply, which also stretches programmes. Refurbishment of older buildings will be attractive where land and new-build costs are hard to justify.
Malaysia
Cost escalation: 3%
Economic growth: 4-4.5% ⁹
Malaysia should see more construction activity in 2026, supported by strong economic growth. Industrial and infrastructure investment will drive that growth. Steady domestic demand will add support. Technology projects will continue to grow rapidly, particularly data centres, while semiconductor investment is likely to be more selective.
Costs are expected to rise by 3%. Higher material prices and a shortage of skilled labour are the main reasons. Local cement and steel supply is strong, which helps keep core materials flowing. But specialised equipment is often imported. That means longer lead times, and a higher risk of price rises. Labour gaps may slow programmes and push costs up. And tighter environmental, safety and building rules may add time and complexity, especially for data centres.
Singapore
Cost escalation: 5-7%
Economic growth: 1-3% ¹⁰
Singapore will build more in 2026, and demand will stay high. The Building and Construction Authority forecasts S$39-46 billion of work a year from 2026 to 2029. Big transport and infrastructure programmes will lead, alongside public housing. Long-term programmes at Changi Airport, Tuas Port and the North–South Corridor will be central to the pipeline. Strong demand for AI, robotics, and automated solutions, particularly in high-tech manufacturing and e-commerce, is lifting investment in data centres, semiconductors and logistics. Hotels and resorts will keep upgrading to support tourism.
Construction costs are expected to rise by 5-7% in 2026. The main drivers are tariffs and trade impacts, global disruption, and a shortage of skilled labour. Technology projects face the most risk. They rely on specialist skills and materials, both of which are in short supply.
Taiwan
Cost escalation: 4-6%
Economic growth: 3.7-4% ¹¹
Construction in Taiwan is set to grow in 2026. The economy is slowing slightly from 2025 highs, but construction demand is holding up. The technology sector, particularly semiconductor manufacturing, will be a key driver, fuelled by the global AI boom. Government spending will also help, with investment in infrastructure, transport, and renewable energy. Higher costs and tighter regulations are reducing demand for housing, but new homes are still being built in major cities.
Construction costs are expected to rise by 4-6% in 2026. Labour remains a critical constraint; skilled workers are hard to find across the market. The shortage is most acute for semiconductor and MEP projects, pushing up wages and slowing build times. Material prices are also rising, driven by the introduction of carbon fees as Taiwan transitions to net zero by 2050, and global uncertainty. Cost pressures will be most severe for general construction projects, where labour shortages and higher material prices are hardest to manage. Conversely, technology projects are better positioned to absorb these increases due to robust supply chains and pricing power.
Thailand
Cost escalation: 3-5%
Economic growth: 1.7% ¹²
The construction contracting sector will expand at a modest average rate of 2.0–2.5% per year to 2027. Public construction investment is the main driver. Projects linked with the Eastern Economic Corridor, plus planned high-speed rail, and airport expansions will lead the way. Technology builds will also grow rapidly. Data centres are attracting new investment, driven by AI and strong regional demand. Manufacturing linked to electronics, semiconductors, EVs (electric vehicles) and auto parts is also expanding.
Costs are forecast to rise 3-5%. Labour is the biggest pressure due to tension between Thailand and Cambodia, alongside materials and compliance costs. Skilled MEP contractors are in short supply, especially for data centres. Demand is growing fast, and experienced workers are already tied up on projects. That will push wages up and slow delivery. Cement and steel are produced locally, so supply is steady. But imported equipment can take longer to arrive, which adds risk on technology projects. Data centres will face the highest cost pressure at 5-7%.
4 Oxford Economics
5 Goldman Sachs
6 Hong Kong Government
7 IMF Economic Outlook, S&P and Currie & Brown estimate
8 Daiwa Institute of Research
9 Economic Outlook | Malaysia Ministry of Finance
10 Singapore Ministry of Trade and Industry
11 Academia Sinica, Asia Development Bank and Currie & Brown estimate
12 National Economic and Social Development Council, Thailand
"There will be plenty of opportunity in Asia Pacific in 2026, but delivery will not look the same everywhere. Labour pressure and supply disruption will hit some projects harder than others. Plan for disruption early, keep sourcing flexible, and use the right mix of data and digital controls to spot risk early and keep moving."
Gary Cooper
Regional Director, Singapore
Currie & Brown