Put water and sugar in a medium saucepan and bring to a boil.
Once boiling, lower heat and let mixture simmer for about 10 minutes until sugar is completely dissolved and mixture has thickened (it will continue to thicken as it cools).
Remove saucepan from heat and stir in the coconut extract and blue food coloring. Let syrup cool completely before using. Store in the fridge in an airtight container like a mason jar for up to a month.