NEW YORK--(BUSINESS WIRE)--Once again, the global financial centers of New York, London and Hong Kong are the most expensive cities in the world in which to build, according to the International Construction Costs Index published today by Arcadis, the leading Design & Consultancy firm for natural and built assets.
The index, which analyzes the relative cost of construction across 44 major cities, finds that strong currency performance and significant resource constraints have seen these ‘world city’ locations command premiums of up to 60 percent compared with many European locations.
However, this price inflation comes at a cost, with the viability of important commercial and public sector schemes put at risk in these cities as prices continue to soar. Furthermore, rising costs and the falling value of currencies could restrict emerging market investors demand in these areas, potentially triggering a shift in interest to alternative lower-cost cities in the longer term.
Meanwhile, throughout 2015, every construction market in the world saw the overall level of cost inflation restricted due to the well-publicized drops in commodity prices. Particularly when it comes to oil, growing uncertainty over prices will inevitably have a long-term impact on the global construction industry, not least in the Middle East. Although low labor costs in Dubai and Doha have stabilized those regions.
Elsewhere, the gradual recovery in the Eurozone has meant that none of the high construction pricing seen in the UK or the US is effecting development across Continental Europe. While, in Asia, the Chinese economic slowdown and weakening demand in many cities, including Singapore and Jakarta, mean that growth in wider Asian markets is expected to ease as we enter 2016.
Kevin Herron, VP – Director of Cost Consultancy: “As we enter 2016, the trend of 40% of international real estate investment being in the Americas, looks set to continue. The impacts of the Chinese economic slowdown will need to be monitored, as this has potential to both increase and decrease investment into the US, while at the same time continuing the downward pressure on commodities pricing. Global investors and developers should be in close communication with their advisors to keep abreast of market developments and opportunities.”
The most and least expensive for construction according to the index are:
| Rank | City | Rank | City | |||
| 1 | New York | 35 | Jakarta | |||
| 2 | London | 36 | Sofia | |||
| 3 | Hong Kong | 37 | Sarajevo | |||
| 4 | Geneva | 38 | Prague | |||
| 5 | Macau | 39 | Bucharest | |||
| 6 | Copenhagen | 40 | Ho Chi Min | |||
| 7 | Stockholm | 41 | Kuala Lumpur | |||
| 8 | Frankfurt | 42 | Bangkok | |||
| 9 | Paris | 43 | Bangalore | |||
| 10 | Singapore | 44 | Taipei | |||
You may read the report here: www.arcadis.com/ICC2016
About the study
The comparative cost assessment is based on a survey of construction costs in 44 locations undertaken by Arcadis, covering 13 building types. Costs are representative of the local specification used to meet market need. The building solutions adopted in each location are broadly similar and as a result, the cost differential reported represents differences in specification as well as the cost of labor and materials – rather than significant differences in building function.
Costs in local currencies have been converted into a common currency for the purpose of the comparison, but no account has been taken of purchase power parity. Construction costs are current in Q2 2015. Exchange rates were current in October 2015.
About Arcadis
Arcadis is the leading global Design & Consultancy firm for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We are 28,000 people active in over 70 countries that generate more than $3.5 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. www.arcadis.com. Arcadis. Improving quality of life.
