For the 43 markets included in this year’s survey, our analysis of global cost inflation stands at 3.7 percent for 2016 with a forecasted average rise of 3.5 percent in 2017. The analysis is conducted in local currencies for each market. The vast majority of markets were subjected to cost inflation with only four seeing no or negative growth in construction costs.
In advanced economies, 20 of the 25 markets saw construction costs rise by more than general inflation – the average price increase for these economies was 2.7 percent, with markets such as Dublin seeing cost inflation as high as 7 percent.
At the opposite end of the scale, Perth was the only market to see negative growth as construction costs fell by 2.0 percent after a period of significant growth during the resources construction boom of 2010–15, when the West Australian economy was one of the fastest growing economies in the world. Now, the residential construction sector is in a slump, contractors are cutting prices as competition for work intensifies.
Among developing economies, costs increased by an average of five percent over 2016, with cost inflation in Istanbul and Buenos Aires reaching 12 percent and 27 percent respectively.
Buenos Aires is forecasted to experience the biggest increase in costs over the next 12 months, with cost inflation expected to hit 20 percent as Argentina fights to escape from a period of high general inflation. It is also opening up its economy to outside investment following a decade-long lawsuit that blocked Argentina from international capital markets.
Brazil, Russia, and South Africa are towards the top of the list as a result of their relatively high rates of inflation of around 5–6 percent, which leads to pressure to increase wages and higher costs of materials and plant equipment.
Meanwhile Muscat, Paris and Singapore saw no increase in construction costs during 2016. Even Bangalore saw limited growth in construction costs of just 1.5 percent, despite experiencing increases of 8–10 percent in previous years.
To identify the most expensive place to build, the average build cost in USD of six different types of construction was assessed:
The most expensive locations are Hong Kong, London, New York, San Francisco and Zurich as they maintain their status as the five costliest places to build. The high growth in New York has seen the city overtake Zurich as the most expensive place to build with costs increasing by 3.5 percent since last year, whereas costs remained largely flat in Zurich.
London dropped back down to fifth place from third place in 2016, despite costs increasing by 5 percent. This is largely because of currency depreciation of the pound sterling following the vote for the country to leave the EU pushing down comparative costs in US dollars.
At the other end of the scale, Bangalore, Beijing, Dar es Salaam, Nairobi and Warsaw make up the five cheapest places to build, with Nairobi cheapest.
For building costs in more depth, the data for each individual market is set out on in our dedicated market section. We included output costs (cost per square metre) and input costs (labour, materials and plant) for each type of building, shown in the local currency and in USD.
Download a table of construction cost inflation for all 43 markets
Download a table of the average cost of six building types in USD in all 43 markets
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