Global building costs to rise

29th May 2018

According to a leading construction industry survey, construction costs will rise 4.3% globally this year.

The survey conducted by Leeds-based Turner & Townsend, identified one major force behind rising costs is skills shortages - the top 5 most expensive cities have seen labour rates rocket by 10% in the past year.

New York remained the world’s most expensive place to build, with construction workers in the city getting paid an average of £72.40 per hour.

The second most expensive place to build was San Francisco, followed by Hong Kong and Zurich, with London coming in fifth. An overwhelming 58.7% of markets in the survey reported a skills shortage, with only three - Houston, Muscat and Sao Paolo - reporting a surplus of labour.

The report also stated that 46% of markets are shown to be home to a large number of projects, a 13% rise from 2017. This has contributed to higher prices. Due to economic growth unlocking new projects in key marketplaces, costs are predicted to rise another 4.3% in the next year because of pressure on labour and resources.

The survey analysed input costs like materials and labour, before charting the average construction cost per metre squared for commercial and residential projects. Ho Chi Minh City, Jakarta and Shanghai were included in the report for the first time due to the growing significance of Asian markets.

Steve McGuckin, Global Head of Client Programmes at Turner & Townsend explained that fundamental changes needed to be made in the UK and globally to control costs.

He said: “Global GDP growth of 3.9% is driving a resurgence in construction activity across international markets. While this uptick will inevitably push up costs, inflation is being exacerbated by skills shortages: put simply, we need to do more work with fewer workers.”

Written by Ian Johnson