Global construction costs are predicted to rise 4.3% this year, according to a new survey, with New York remaining the world’s most expensive place to build in.
Almost half of the 46 cities studied are home to a large number of projects that are pushing up prices.Labour costs rocketed 10% In New York and the other top five most expensive cities to build in. New York’s construction workers command an average of US$98.30 (£72.40) per hour.
Turner & Townsend’s International Construction Market Survey, a study of construction costs for both commercial and residential projects in 46 global markets. San Francisco remains in second place, with Hong Kong and Zurich switching places from last year, to be third and fourth, respectively. London comes in fifth.
Globally, Turner & Townsend’s International Construction Market Survey forecasts that construction costs will rise 4.3% as economic growth unlocks new projects in key markets – placing pressure on labour and resources.
According to the report, 46% of the markets surveyed are shown to be heating up, compared to 33% in 2017. Warming markets are typically characterised by a large number of projects that are pushing up prices.
In New York City, the average cost of construction in the city climbed 3.5% to US$3,900 per m2(£2,787) in 2018. New York City is followed by San Francisco – US$3,737 per m2 (£2,670), Hong Kong – US$3,704 per m2 (£2,640), Zurich – US$3,652 per m2 (£2,752) and London – US$3,618 per m2 (£2,677).
Skills shortages have been a major force behind cost escalation. The five top cities within the report have seen labour rates rocket by 10% in the last year, with New York construction workers commanding an average cost of labour of US$98.30 per hour. Overall, 58.7% of markets within the survey report a skills shortage, with only three markets – Houston, Muscat and Sao Paolo – reporting a surplus of labour.
The global trend towards higher construction costs has been offset only by Perth, Australia, and Muscat in Oman, where prices fell by 1% in 2017. Both cities have continued to see limited investment in new projects on the back of low commodity prices. However, the 2018 International Construction Market Survey forecasts that the bottom of the market may have been reached in Perth, which is expected to see price inflation return this year.