Demystifying the cost of building in Japan ahead of World Expo 2025

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Nick Heald

Country Director, Japan


Countries looking to deliver a pavilion for the World Expo 2025 in Osaka should expect to contend with high construction costs and strong demand for building supplies and specialised services. When it comes to building, Japan presents a uniquely intense challenge for international organisations.

Understanding the Japanese construction market

In our 2022 International construction market survey, Japan was identified as one of the most expensive countries to build in globally. Key drivers for this were price escalation for crucial building materials, skills shortages and increased labour costs, and supply delays extending construction programme durations.

Japan’s economy is currently marked by a weak Yen and higher commodity prices for the likes of steel, chemicals, copper plastics and resins. For example, in 2022, the cost of structural steel beams (100 tonne) came in at 3,624 USD, making it the most expensive location in Asia for steel, and on par with USA costs.

The combined impact of higher commodity prices and weak Yen has been to see import costs soar and inflation at a level not experienced in decades.

In response to limited supply and tough market conditions, Japanese firms are often forced to pass on the increased costs of production to customers, meaning a hoped-for bargain pavilion delivery has become something of a pipe dream. 

While the Japanese government has relaxed COVID-19 restrictions on movement and travel, Japan is projected to achieve modest growth in 2023, according to the IMF’s World Economic Outlook. The stimulus to the economy afforded by the release of pent-up demand, supply chain improvements and policy support masks the devil in the detail. 

Osaka has its own placemaking rules 

For those focused exclusively on Osaka 2025, an awareness of the macroenvironment or near-term economic forecasts for Japan is of limited use, since the market dynamics affecting the Expo are decidedly unique. 

Even under normal conditions, Osaka is not a cheap place to build, with our 2022 International construction market survey ranking it as the third most expensive location globally. Against this reality, pavilion owners will likely find they have under-budgeted.

Top 10 most expensive places to build in
In 2022, Osaka is the third most expensive market to build in at US$4,558.5/m2, after San Francisco at US$4,729/m² and Tokyo at US$4,664.8. Our annual International construction market survey compares the average cost of 11 building types in key cities worldwide.

With a World Expo to contend with, demand and costs in Osaka will continue to be acute come what may, so backlogs and delays that could extend construction programme duration must also be built into plans.

Factoring in a large contingency is a must, but even better is to keep spending in check by drawing on the assistance from those experienced in the local market with both cost and project management insight. 

Taking advantage of lessons learnt 

World Expos are particular because of the challenge of showcasing cutting-edge innovations every five years.

A strong track record of successful, on time, on budget project delivery at World Expo 2020 in Dubai should be the priority when shopping around for an Osaka delivery partner.

With this in mind, fortune will favour those that leverage lessons learnt from past World Expos, proactively understand the different delivery packages available for Osaka, seek to mitigate risk by embracing innovation, and form closer supplier partnerships through local business networks.  

Creating cost and carbon savings through a digital-first approach 

With an immovable World Expo opening date of 13 April 2025, it is essential for country pavilion owners still sitting on the fence to confirm exhibition themes and design concepts without further delay.

The best approach to maximising cost-efficiency in pavilion construction will be to consider cost, form of delivery, market constraints and innovation from the onset. 

In this respect, drawing on innovative digital solutions, such as building information modelling (BIM), modular construction and design for manufacture (DfMa), can help to carve out more time to model, as well as deliver less carbon-intensive design choices.

Pavilions that have already shown their hand certainly indicate support for Osaka’s Expo aim to contribute to the UN’s 2030 Sustainable Development Goals.   

The use of BIM and DfMA is essential in modelling and delivering less carbon-intensive design choices, a marked move towards dematerialisation that countries prioritising carbon reduction will no doubt opt for. 

This approach would see design teams run digital models to ascertain whether certain features can be taken out. One example is removing a raised floor or a basement so that it is no longer part of the equation translates to simultaneous cost and carbon savings. 

When in Japan… 

Countries planning to participate at World Expo 2025 in Osaka must understand that the local contractor has considerable leverage and public sector support in Japan.

In a seller’s market, this asks for a pragmatic approach to relationship building to solidify trust and gain advantage.

With a very strong pipeline of work and order books bursting at the seams, it is a contractor-led market at present and country representatives will face tough and limited bargaining power. When you throw in the additional headache of having to navigate unfamiliar work regulations, culture and language, we see it is incumbent upon the potential foreign client to do the courting.

To avoid bottomless expenditure, a Japanese-savvy intermediary that can both walk the walk and talk the talk to effectively channel timely resources and support an approach which keeps costs palatable is essential to the successful delivery of country pavilions and budgets. 

Image provided by: Japan Association for the 2025 World Exposition.

For further information contact:

Nick Heald-web.jpg

Nick Heald
Country Director, Japan

t: +81 (0) 80 9163 4590