Following a year of strong performance and signs of stabilisation in 2025, construction markets across Asia Pacific (APAC) are entering 2026 in a more balanced position and are set for sustained growth and stability, according to a new report by Linesight.
Despite persistent labour and cost challenges, the company’s latest Construction Market Insights has revealed that the majority of APAC construction markets are expected to experience an annual growth rate of 3-6% between 2026 and 2029. This continued growth is fuelled by robust investments and activity in renewable energy, transportation and digital infrastructure, particularly in data centres and semiconductor sectors.
The construction industries in Singapore, Malaysia and India were standout performers in 2025 and are projected to have expanded by 5.2%, 8.3% and 7.1% respectively. Other APAC markets such as Japan have continued to maintain steady momentum and are projected to have grown by 1.6% in 2025.
Some highlights
Singapore’s construction industry is expected to grow at an average annual rate of 4.2% between 2026 and 2029, supported by transport infrastructure investment such as the Land Transport Master Plan 2040. Construction activity could also be boosted by additional capacity awarded to data centre operators, who are anticipating approval for an additional 300 MW of capacity.
Malaysia’s construction industry is projected to grow at an average annual rate of 4% between 2026 and 2029, supported by continued public and private investment in housing, oil and gas supply chains. Similarly, data centre investments to enhance digital infrastructure continue to be a stronghold in supporting further industry growth.
Japan’s construction industry is expected to largely sustain its growth at an average of 1.3% from 2026 and 2029. This is led by investments in transport infrastructure, offshore wind projects, AI-focused data centres and semiconductor plants.
‘Collaboration ensures speed, certainty’
With continued global macroeconomic and geopolitical uncertainty, navigating potential project schedules and managing budgets are top considerations for contractors and developers in 2026. Risks are expected to remain elevated as a result of persistent skilled labour shortages, rising costs, and supply chain disruptions linked to new US tariffs.
Nevertheless, the region’s construction industry outlook for 2026 looks optimistic. Tariff-related developments continue to influence construction markets, but their impact has been more limited than initially anticipated. In particular, commodity prices, with the exception of metals, have broadly moderated in 2025.
India may see steel price declines of around 3% for steel prices as the EU Carbon Border Adjustment Mechanism (CBAM) impacts steel exports. Diesel rates are likely to remain under 2% due to global oversupply and record US output. Moderate construction inflation is also expected this year.
Scott Halyday, regional director for Southeast Asia at Linesight, said, “APAC construction markets have emerged strongly, with resilient performance in 2025. Sustained growth and stability are projected to be defining themes for the region’s construction industry in 2026, with Southeast Asian markets leading the pack. Global trade tensions and tariff pressures alongside labour and cost challenges, however, will still remain front of mind for contractors and developers.”
“In 2026, speed and certainty will be driven by collaboration,” added Mr Halyday. “Early engagement with designers, contractors and the supply chain will enable faster decisions, clearer cost and schedule visibility, and more effective planning of constrained labour resources. Projects that align stakeholders early are better positioned to secure talent, mitigate resourcing risk, and deliver at pace with confidence”
The full report can be accessed here. The APAC markets analysed in this report include Malaysia, Singapore, South Korea, Taiwan, India, Japan and Australia.
Image: DL314 Lin/Unsplash
