London Tops Expensive Construction Cities List

THURSDAY, APRIL 18, 2024


Global design and consultant organization Arcadis has released its International Construction Cost report, with London narrowly hitting the top spot as the most expensive city for construction worldwide.

The 2024 Arcadis International Construction Costs Index covers 100 of the world’s large cities across six continents. The cost comparison was developed covering 20 different building types, including residential, commercial, and public sector developments.

The comparison is also based on a survey of construction costs, a review of market conditions and the professional judgement of Arcadis’ global team of experts. The calculations are based in USD and indexed against the price range for each building type relative to Amsterdam.

Report Findings

According to the study of comparative construction costs across cities, enhanced specifications associated with safety and sustainability have been pushing prices upwards, causing London to overtake Geneva (second) in the rankings, closely followed by Zurich (third) and Munich (fourth).

Rising costs and double-digit price growth in Munich have reportedly propelled the Bavarian capital significantly up the rankings, this year surpassing major United States cities like New York (fifth) and San Francisco (sixth) in terms of relative cost to build.  

According to Arcadis, 2023 was a difficult year globally, with high borrowing costs undercutting the positive impact of infrastructure investment in many countries. However, with markets stabilizing and inflation beginning to ease, it is now at a pivotal moment in the recovery of the global construction sector.

Additionally, increasing demand for labor, materials, and power means that productivity is now becoming an increasingly critical factor in investment decisions and project viability.

Arcadis highlights in particular the rapid acceleration of investment into the advanced manufacturing and technology sector, including data centers, pharmaceutical facilities, gigafactories and wafer-fabs.

The firm explains that the sheer scale and complexity of these end-date-critical projects results in more financial risk, meaning that clients need to evolve their design, procurement and construction capabilities even as these multi-billion-dollar programs are being built. 

“The key priority for clients is delivering an operational facility on time, but in a resource-constrained market, existing supply chains and delivery models might not be adequate to provide the assurance needed to protect multi-billion investments,” explained Martijn Karrenbeld, Global Director for Industrial Manufacturing at Arcadis.

“This will place a premium on productivity-led design, procurement, and construction to deliver projects at scale—and project teams need to be ready to adapt.”  

The top 10 most expensive cities include:

  1. London;
  2. Geneva;
  3. Zurich;
  4. Munich;
  5. New York City;
  6. San Francisco;
  7. Philadelphia;
  8. Copenhagen;
  9. Hong Kong; and
  10. Bristol, U.K.

Alternatively, Buenos Aires and Lagos topped the list for the least expensive cities for construction.

“As conditions stabilize for construction sectors globally, the market for delivery is evolving at a rapid pace. Better use of data, insight and decision-making is critical—whether that’s to meet sustainability requirements, improve stakeholder management, attract more capacity, or better engage with the capabilities of a global supply chain,” said Edel Christie, Chief Growth Officer at Arcadis.

“Delivering according to plan is critical and, even as construction programs become more complex and resources harder to secure, the need to effectively manage risk will be critical for start-ups and industry champions alike.”

The full report can be downloaded here.

   

Tagged categories: Asia Pacific; Business conditions; Construction; Economy; EMEA (Europe, Middle East and Africa); Good Technical Practice; Latin America; Market data; Market forecasts; Market trends; North America; Program/Project Management; Projects - Commercial; Supply and demand; Z-Continents

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