A study of construction costs across 90 global markets by Turner & Townsend found that while London had dropped from third to eighth most expensive place in the world to build, a raft of other UK cities have shot up the charts.
Bristol (16th), Birmingham (19th), Manchester (24th), Newcastle (29th) and Glasgow (30th) join London in the top 30 globally, with Edinburgh (32nd) and Leeds (33rd) close behind.All of these cities now rank as more expensive to build in than key global markets such as Paris and Singapore, according to International Construction Market Survey by cost consultant Turner & Townsend
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).Next come New York City, Geneva, Zurich, Boston and then London (£2,326 per sqm).
The average hourly construction wage in London has now hit £37.3, above the UK average of £33.0.
The report finds that construction costs are rising globally driven by rising material costs and skilled labour shortages, but UK cost inflation is expected to rise to 4.0% by 2023 – exceeding forecasts for the Europe Union, North America, Australasia, the Middle East and Asia.
Neil Bullen, managing director of global real estate at Turner & Townsend, said pressure on the construction sector needed to be carefully managed to ensure projects are kept on track: “Capacity constraints around the availability of skilled labour and disruptions to the supply chain are already providing significant inflationary pressure – and this is only going to be heightened in the coming months and years as we focus on building back better from the pandemic.
“It is more important now than ever that the industry embraces wholesale reform and invests in data, technology and improving productivity to help tackle costs and make savings where we can to remain competitive.This will complement the steps many businesses are already taking to diversify global supply chains and get closer to their suppliers – moving from a ‘just in time’ to ‘just in case’ approach to delivery.”