Singapore ranked world’s 2nd-most expensive market for data center construction

The cost of building data centers in the city-state rose 5 per cent year on year, from US$13.80 to $14.53 per watt, as outlined in the 2025 Data Center Construction Cost Report, released on Nov. 6.

Singapore’s data center construction costs trail only Tokyo, ranking ahead of Silicon Valley in the U.S. In comparison, Kuala Lumpur and Jakarta recorded lower costs at $11.37 and $11.21 per watt, respectively, while Shanghai’s cost was the lowest at US$6.12, as reported by Business Times.

Data center construction has surged in recent years, driven by growing demand for AI, which requires immense computing and processing power. Turner & Townsend noted that rising power demands are pushing up costs, with power requirements increasing from approximately 3 kilowatts per rack to more than 100 kilowatts per rack. Capital expenditures are climbing by 20 to 40 per cent, largely due to the integration of advanced cooling systems and upgraded electrical infrastructure.

Orchard Spring Lane, Merlion, Singapore, September 2020. Photo from Unsplash

Singapore’s data center market faces unique cost pressures due to its market maturity and regulatory landscape. Loh Chin Hua, CEO of Keppel, a Singapore-based asset manager and operator, noted at an October event that finding "large enough pieces of land" with the right connectivity and access to water is becoming increasingly difficult, adding that "the grids are really very congested."

Stricter environmental regulations are also driving costs higher. A new mandate requires a 30 per cent reduction in energy consumption, with a focus on achieving a Power Usage Effectiveness of 1.3 or lower.

With more than 70 data centers in operation, Singapore is turning increasingly to renewable energy to meet the growing demand, according to The Straits Times. In October, JTC Corporation and the Economic Development Board unveiled plans for Singapore’s largest low-carbon data center park, located on 20 hectares of land on Jurong Island.

Turner & Townsend also highlighted that complex design requirements are further increasing engineering and construction costs, making development in Singapore more expensive than in other regional markets. A report by real estate consultancy Knight Frank in September noted that Singapore’s "strict planning controls" have led global tech firms to consider other markets, with Johor emerging as a "top alternative."

While nearly half of the 52 markets surveyed indicated that power availability is the most significant obstacle to timely project completion, power availability in Singapore is closely linked to environmental, social, and governance (ESG) factors.

"Only projects with strong ESG alignment and low-carbon outcomes are considered for power allocation, and developers must present robust sustainability plans to qualify," Turner & Townsend said.