Sumit Mukherjee, head of data centre cost management for Asia at Turner & Townsend
Singapore’s ambition to remain Asia’s premier digital hub has entered a decisive new phase. Following the government’s announcement of a 700 MW low-carbon data centre park on Jurong Island, attention has turned to how the city-state will balance soaring AI-driven demand with constraints around power, land, and sustainability.
For developers and investors, the question is no longer whether a data centre in Singapore makes sense, but how to secure a viable foothold in one of the world’s most competitive markets.
The latest 2025 Data Centre Construction Cost Report by Turner & Townsend underscores the scale of the challenge. AI workloads are rapidly redefining infrastructure requirements, pushing power density from the historical 3–4 kW per rack to well over 100 kW per rack. This shift has direct cost implications, with capital expenditure rising between 20 and 40 per cent due to the need for advanced cooling systems and more robust electrical infrastructure.
Yet despite these pressures, Singapore continues to attract hyperscalers and institutional capital. At US$14.53 per watt, it is now the world’s second most expensive market for building. Cost alone, however, does not tell the whole story.
“Singapore has been a data centre hub for many, many years,” said Sumit Mukherjee, head of data centre cost management for Asia at Turner & Townsend, in an interview with e27. “Certainly, as it relates to the Asia Pacific region, Singapore was one of the early movers in terms of the data centre sector.”
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Fundamentals have reinforced that early-mover advantage that few regional peers can match. Singapore’s dense network of subsea cables, cloud on-ramps, and carrier-neutral facilities has cemented its status as a digital crossroads for Asia.
“Singapore is incredibly well connected,” Mukherjee said. “It is the digital hub in the true sense, and it’s a position that it looks to protect very seriously.”
Policy stability is another differentiator. Over the past decade, Singapore has maintained a relatively consistent and transparent regulatory stance on data centres, even as it introduced moratoriums and tighter controls to manage energy use.
“The predictability of Singapore is almost a bigger factor than cost,” Mukherjee noted. “Clients feel very confident that if they’re there, they’ve got long-term stability and sustained revenues.”
This predictability is increasingly critical as developers contend with power access challenges. While Jurong Island’s new park signals a controlled expansion of capacity, lead times for critical equipment can stretch from nine to 18 months. Power readiness has become a strategic advantage rather than an operational detail.
“Operators are now engaging with regulators and utility companies at the absolute earliest stages of land development and design,” Mukherjee said. Instead of designing first and seeking power later, developers are adopting a bottom-up approach—shaping facilities around what power can realistically be secured.
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Crucially, sustainability has moved to the centre of these discussions. “The conversation has been less about the data centre itself, and more around the sustainable power strategy,” he said.
Regulators are scrutinising power usage effectiveness targets, low-carbon cooling methods, and ESG roadmaps before granting approvals. Those with credible sustainability strategies are finding it easier to unlock grid access.
AI is also reshaping how data centres in Singapore are designed and built. Where a one-megawatt facility was once considered significant, projects are now being planned at hundreds of megawatts, and even approaching the gigawatt scale. This has accelerated the industry’s shift towards modular engineering and prefabricated mechanical and electrical systems.
“Clients are now seeking hundreds of megawatts of capacity pretty much instantly,” Mukherjee said. Modular construction, he added, enables operators to deliver capacity more quickly, with greater precision and reduced on-site complexity.
Alongside this, innovation in liquid cooling—particularly water-based systems—is becoming essential. “Ultimately, water-cooled is the only way in which you can cool AI data centres,” he said, pointing to rapid advances in both performance and cost efficiency.
Speed to market has emerged as a defining competitive advantage. Prefabrication, standardised modules, and plug-and-play systems can significantly cut installation time, a critical factor in a market where demand continues to outstrip supply. “If you can get that pre-built and brought and plugged in and played, even at the largest scales, it’s going to bring efficiency and speed,” Mukherjee said.
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Despite rising costs, the outlook is not one of unchecked inflation. Mukherjee described the sector as moving towards “a new normal” rather than overheating. While demand-supply gaps persist, he does not expect year-on-year cost spikes of 50 or 60 per cent. Instead, the industry is in a transformative phase driven by AI, higher power densities, and resource scarcity.
Stabilisation, he suggested, is more likely over a three- to five-year horizon.
For Singapore, the challenge lies in sustaining its leadership while operating within hard constraints. Limited land, finite power, and stringent carbon goals mean growth will be measured rather than explosive. Yet these same constraints have forced a level of sophistication that investors value.
“On face value, it is an expensive market,” Mukherjee said. “But equally, it’s a very stable market for clients in terms of returns and investments.”
As AI reshapes global digital infrastructure, Singapore’s approach—anchored in policy clarity, sustainability, and long-term planning—may prove to be its greatest asset. For operators seeking a resilient base in Asia, the proposition of a data centre in Singapore remains compelling, not despite the costs, but because of what those costs help secure: predictability, performance, and a platform built for the next decade of growth.
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Image Credit: Turner & Townsend
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