International construction market survey 2018

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Foreword: There’s no easy money!

Steve McGuckin Global Head of Client Programmes
"Global construction volume is on the up and the future is looking bright. But the industry faces more work with fewer workers. The challenge for the supply chain is how to convert this increased output into profit."

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Survey overview

The 2018 international construction market survey brings together data and experience from 46 markets around the world, to provide an insight into the current state and direction of travel of the global construction industry. This year it also brings optimism.

Three new markets entered the analysis for the first time this year: Ho Chi Minh City, Jakarta and Shanghai.

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Key construction facts for 2018-19

Global construction costs are expected to rise 4.3 percent in 2018 following a 4.0 percent rise in 2017.

21 of the 46 markets measured are expected to warm up in 2018, just two are expected to cool.

New York once again holds the top spot for highest construction costs, ahead of Zurich.

Perth and Muscat were the only two markets to see falls in construction costs.

Five markets were identified as running hot and three, Amsterdam, San Francisco and Seattle, were seen to be overheating.

There are signs that some weaker performing commodity driven markets are set to warm in 2018, notably Perth and São Paulo.


Global economic overview

A decade on from the global financial crisis and the world economy is finally reaching cruising speed. 2018 looks positive for employment, business profits, investment and construction.

The USA is enjoying rapid economic growth, European markets are catching up, China continues to surprise but there is uncertainty in the UK due to Brexit.

Read the full global economic overview


Heatmap, global cost performance analysis

Our ratings of markets as cold, lukewarm, warm, hot or overheating rely on several interrelated factors. In a cold market there is typically intense competition among contractors for very little work, reducing cost pressures.

Markets are considered warmer as competition decreases and prices begin to rise, as demand increases in relation to supply. 

Forecasted cost escalation 2018-2019

View full global cost performance analysis


Compare costs across markets

Our team of economists have worked closely with our local experts to analyse an expansive cost data set to provide insight into how the construction industry is performing.

Use the tool below to access the full data breakdown for the individual market of your choice or compare different markets around the globe.

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Most expensive places to build

The five most expensive locations are New York City, San Francisco, Hong Kong, Zurich, and London.

New York City retained its position as the most expensive place to build in the world even though building spend dipped in 2017. But that was from an all-time high in 2016 and growth in construction spending is set to resume in 2018 stretching resources.

Top five most expensive places to build
1. New York
2. San Francisco
3. Hong Kong
4. Zurich
5. London


View full construction cost analysis


Labour cost and availability

Labour shortages appear to be an increasingly common feature of global construction in recent years.

Last year’s report noted a rise from 20 to 24 markets registering skills shortage. This year the number has risen to 27, albeit from a slightly larger sample.

View more about labour cost and availabilty


Preliminaries and margins

Preliminaries and margins are two other drivers of overall construction costs.

  • 10.3% The average preliminaries globally in 2018
  • 15% Preliminaries in Tokyo and Buenos Aires in 2018
  • 5% Preliminaries in Madrid in 2018

The average margin globally in 2018 was 6.4 percent, but margins ranged between 15 percent in Kuala Lumpur to 3 percent in Northern Ireland. In broad terms, changes within a given market over a short period are one indicator to take into account when assessing market activity and cost pressures.

View more about preliminaries and margins


Calculating the effect of exchange rates

Conducting an analysis across markets by converting costs to a single currency can allow for direct comparison between markets. However, any devaluation or revaluation of a currency impacts both the wage levels and the overall construction cost.

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Comparing construction costs; Terms and references

It is important to compare construction costs between countries to inform expansion decisions. It can enable productivity comparisons and highlight how different practices and tools such as BIM can improve design and delivery.

Opportunities to improve the efficiency of the construction sector and reduce costs are also opportunities to grow the global economy faster.

View more about comparing construction costs: terms and references