UK REGIONS GAIN AS LONDON FALLS OUT OF TOP 5 MOST EXPENSIVE GLOBAL CONSTRUCTION MARKETS
- Major data-led study of construction costs in 90 global markets by Turner & Townsend lists Edinburgh as 32nd in global ranking
- London (8th), Bristol (16th), Birmingham (19th), Manchester (24th), Newcastle (29th) and Glasgow (30th) place in the top thirty globally, with Edinburgh (32nd) above Singapore and Paris.
Major UK cities are set to see the cost of construction soar over the next two years, as labour shortages and ongoing disruption to global supply chains from COVID-19 are exacerbated by a Government agenda focussing considerable investment outside of London and the South East.
The International Construction Market Survey (ICMS), published today by global professional services company Turner & Townsend, forecasts that rising prices being seen in the global construction sector will be sustained through 2022 and into 2023. Cost inflation in the UK is expected to rise to 4.0 percent by 2023 – exceeding forecasts for Europe, North America, Australasia, the Middle East and Asia.
London (£2,326 per sqm), which ranked third in 2019’s report, has fallen out of the top five in the global rankings. Edinburgh (32nd) places just outside the top thirty globally, behind London (8th), Bristol (16th), Birmingham (19th), Manchester (24th), Newcastle (29th), and Glasgow (30th). All of these cities now rank as more expensive to build in than key global markets such as Paris and Singapore.
Tokyo is now the most expensive city in the world to build in, with an average cost of £2,906 per sqm, followed by Hong Kong (£2,828 per sqm) and San Francisco (£2,701 per sqm).
Global cost increases are being driven by rising material costs and skilled labour shortages – both exacerbated in the UK by Brexit and the Government’s ambitious programme of investment to ‘level up’ the economy after the pandemic. The average hourly construction wage in London has now hourly construction wage in London has now hit £37.3, above the UK average of £33.0.
Widespread disruption to global supply chains seen through the pandemic is also being sustained by high demand and competition for key materials between global markets including the US, Europe and China. Globally, demand for steel, softwood and copper piping have seen prices rise sharply over the year, with increases of up to 40 percent seen in some international cities, including many in the UK.
Andy Outram, Scotland Strategic Lead at Turner & Townsend, said:
“The construction outlook for Edinburgh is positive which is critical for our economic recovery. With the COP26 summit now just months away, Scotland’s approach to sustainability and net zero is going to be centre stage for the world given the importance of the conference. COP26 gives us a massive opportunity to demonstrate what we are doing and can achieve. Scotland is already taking major steps to capitalise how we make sure we are building back greener. There are a number of initiatives being championed through various sources in the Scottish Industry, in recognition that our industry accounts for a significant proportion of carbon emissions. Collectively, we need to embed sustainability into every project so that we can accelerate our transformation to a net zero future. Scaling up the retrofit market to tackle the UK’s aging building stock presents a rare opportunity and could be a catalyst for a ‘green industrial revolution’.”
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Notes to Editors
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About the International Construction Market Survey
Compiling data from Turner & Townsend teams in 90 global markets, the International Construction Market Survey gives an in-depth analysis of construction costs – and what’s driving them – around the world.
It measures input costs for materials and labour to calculate the average cost per m2 across 15 construction types, including high-rise apartments, city centre offices, warehouses, hotel resorts and shopping malls.
All local construction costs have been converted into US dollars to allow accurate cost comparisons to be made between construction markets in widely diverse economies.
About Turner & Townsend
Turner & Townsend is an independent professional services company specializing in program management, project management, cost and commercial management and advisory across the real estate, infrastructure and natural resources sectors.
With 111 offices in 45 countries, we draw on our extensive global and industry experience to manage risk while maximizing value and performance during the construction and operation of our clients’ assets.