The most expensive market to build

To identify the most expensive market to build, the average build cost in USD of six different types of construction was assessed:

  • Apartment high-rise
  • Office block prestige
  • Large warehouse distribution centre
  • General hospital
  • Primary and secondary school
  • Shopping centre including mall

This year San Francisco removes New York from the top spot, having increased by 5.0 percent in the last year. Singapore has construction costs closest to the average, while the closest to the median cost of USD2,272 is Auckland.

The five highest cost cities remain San Francisco, New York, London, Zurich and Hong Kong.

Low construction costs in Chinese and Indian cities are not much of a surprise, having been in this position in previous surveys. However, Istanbul continues to surprise by having such low construction costs. The Turkish Lira has fallen from close to USD0.50 to USD0.19 since 2015, which helps explain the dramatically low construction costs when converted back to US dollars.

The overall spread of average construction costs is remarkable and increasing. Bangalore costs are just 13 percent of those in San Francisco. The bottom ten markets have average construction costs of just 22 percent of the top ten markets. In other words, you could build five similar structures in the bottom ten markets for the same cost as one in the top ten markets.

In 2018, the average construction cost of the bottom ten markets was 25 percent of the average of the top ten markets. At this time, the lowest cost markets could build four similar structures for the same cost as the average top ten markets.

Trade labour costs

The survey includes an assessment of the cost of construction trade labour by market. We also asked the respondents to indicate the cost to the employer rather than just the wage, so the rates include, where appropriate, travel expenses, pension contributions and health insurance as well as other benefits. In some cases, these bump the labour cost up substantially above the wage.

The survey again highlights the massive disparity between labour costs worldwide. China, India, and Africa have the lowest costs, while North America has the highest costs with Europe and Australasia a little behind.

The highest labour costs recorded were in Zurich, where even a general labourer could cost as much as USD99 per hour, and a skilled electrician might cost USD118 per hour.

When comparing high-cost and low-cost labour markets it is worth considering education, skill levels and overall labour productivity. Generally, high labour-cost markets will invest much more heavily in labour-saving machinery and pay close attention to labour productivity. But, where labour is very low cost it is cost-effective and efficient to employ more labour.

Read more about ICMS 2019