Zurich and New York are the world’s most expensive cities in which to build, closely followed by London.
At nearly US$3,700 per m2, average construction costs in Zurich are the highest in the world, closely followed by New York (US$3,650 per m2) and London (up 5.4% over the past year to US$3,550 per m2).
The research by Turner & Townsend finds that the international construction industry is heading in opposite directions, as some markets overheat while others suffer a sharp slowdown. A polarisation is developing between the overheating markets – overstretched by high demand and fierce competition – and those that are slumping because of an over-reliance on either China or the oil industry.
Booming markets like London, New York and Seattle report intense competition, rising costs and shrinking margins. At the other end of the scale, construction costs in Beijing have slumped by 10 percent amid weaker demand.
The latest annual International Construction Market Survey by Turner & Townsend gives a detailed snapshot of what’s happening in 38 construction markets around the world.
The International Construction Market Survey 2016 analyses input costs – such as labour and materials – and charts the average construction cost per m2 for both commercial and residential projects in the 38 markets.
The most expensive cities are being rapidly caught up by the tech hubs of San Francisco (US$3,400 per m2) and Seattle (US$2,800 per m2).
Turner & Townsend’s researchers warn the Seattle market is overheating, and predict that construction costs in the US city will rocket by a further 8 percent in the next 12 months.
Meanwhile average construction costs in San Francisco have already risen by 5% in the past year, and are forecast to continue increasing at the same rate this year.
At the other end of the inflationary scale, Beijing’s construction costs tumbled by 10% in the year to April – an acceleration of a downward trend that saw costs fall by 5% in the year before. The report predicts that prices will remain stagnant in the Chinese capital over the next year.