The world's most expensive cities to build in
Building costs have been on the rise everywhere, but some cities exceed the average due to global and local market conditions. In fact, according to the 2023 International Construction Costs report by Arcadis, four out of the 10 most expensive cities in the world are in the U.S. Here are the top five cities that made the list:
- Geneva, Switzerland
- London, UK
- New York, US
- San Francisco, US
- Munich, Germany
Factors that impacted costs included high levels of inflation, which continued to affect most cities in the report. As a result, many of the top 10 most expensive cities remained unchanged from last year, including hotspots such as Munich, Copenhagen and Zurich.
The report covered 20 different building types, including residential, commercial, and public sector developments, and was based on a survey of construction costs, a review of market conditions, and the professional judgement of Arcadis’ global team of experts.
While it’s becoming increasingly expensive to build in prime locations, the report highlighted that sustainable buildings were increasingly in high demand. This is resulting in the application of a ‘green premium’ when it comes to how the most sustainable assets are being valued.
The world's least expensive cities to build in
The report also provided a list of the least expensive cities to build in. Here are the top five:
- Bengaluru, India
- Kuala Lumpur, Malaysia
- Delhi, India
- Mumbai, India
- Ho Chi Minh City, Vietnam
Inflation outlook
According to the report, fewer than 10 cities recorded zero or negative inflation, all of which were located in southeast and east Asia. Cities in New Zealand and Australia, previously affected by extended Covid-19 lockdowns experienced a V-shaped recovery that saw prices rise sharply. China, where lockdowns only ended in late 2022, is not likely to see a price bounceback until this year.
Arcadis predicted that construction inflation in China would hit 3% in 2023. In the U.S., costs could rise further despite a predicted contraction in the construction market of 3.5% to 5% in 2023. That’s because a slowdown in residential construction will be countered by demand for infrastructure driven by $1.5-trillion in infrastructure stimulus. That could trigger risks of delay and inflation amid a shortage of up to half a million workers.
The construction industry is facing several challenges, including rising costs and inflation. The 2023 International Construction Costs report by Arcadis shows that building costs continue to increase in most cities across the globe. Nevertheless, opportunities exist in the market, especially for sustainable buildings that can command a 'green premium' and those in the world's least expensive cities to build in.
