Advance preparatory works to make the Circle Line a complete loop, by joining HarbourFront station to Marina Bay station, have begun.
Tenders for the civil works are expected to be awarded by the year end, and construction will begin in the first quarter of next year, the Land Transport Authority said late on Tuesday.
The 4km extension is expected to be completed in 2025 and will have three stations - Keppel, Cantonment and Prince Edward.
Preparatory works include relocating affected facilities at PSA Keppel Terminal for the construction of Keppel station, dismantling the platform canopy structures of Tanjong Pagar Railway Station (which will be repaired and reinstated after the construction of Cantonment station) and the relocation of Shenton Way Bus Terminal for the construction of Prince Edward station.
The extension project is expected to cost $3.7 billion, with the Government stating in its latest Budget book that the advanced works would cost $30.6 million.
The total cost translates to $925 million per km - more than three times the cost of the existing Circle Line, which cost an average of $300 million per km when it was completed in 2011.
Separately, another $2.3 billion has been allocated to expand the Kim Chuan depot to stable more trains that the extension will require.
The three additional stations will reach out to new commuters.
NEL extension studies in last stages
The Land Transport Authority is in the final stages of engineering and design studies for the 2km-long North East Line (NEL) Extension, which will serve the developing Punggol North.
In the latest Budget book, $6.2 million has been slated for these studies.
In response to press queries, the authority said the line "will be built in tandem with the developments there so that future residents in Punggol North will have train access to the city centre as well as other parts of Singapore".
The extension, which is likely to have two stops, is expected to be completed by 2030.
Punggol North will be a mixed-used area. It is slated to be an "enterprise district" housing digital and cyber- security industries.
It will be the first of such districts where new planning concepts will be applied. These include appointing a master developer to take charge of the entire district.
In Punggol North's case, JTC Corporation will be appointed.
The district will include the new Singapore Institute of Technology campus, located next to JTC's business parks.
The 50km Cross Island Line, slated to be completed in 2030, is also expected to pass through Punggol.
For example, Keppel station will serve commuters at Keppel Distripark, while Cantonment station will be near Tanjong Pagar Railway Station and offer access to Spottiswoode Park Estate.
The Prince Edward station will be near Palmer Road, where heritage landmarks are.
The extension will also serve part of the Greater Southern Waterfront, a massive mixed-used development that will commence once the Tanjong Pagar, Keppel and Brani port terminals are relocated to Tuas after their leases expire in 2027.
Besides reaching new commuters, the extension will allow those travelling between the south-western and south-eastern ends of the line - such as from Pasir Panjang to Nicoll Highway - to have more direct and quicker access.
Commuter Ashley Wu, 37, said any new MRT line or extension will be beneficial to all commuters.
"Personally, I have cut down on taxi rides since Downtown Line 2 opened last year," said the sales and marketing manager who lives in Bukit Panjang.
"The only issue is the traffic problems MRT construction would cause," she added.
"However, the end result outweighs the inconvenience."