London, UK, and Geneva, Switzerland, are the most expensive cities in Europe, in terms of construction costs, in design and consultancy firm Arcadis’ new report, Tackling Costs in the Digital Age – International Construction Costs 2018.
However, while both cities are still in the top 10, they have moved down the league to eighth place in the case of London, and tenth for Geneva, having been displaced by more expensive cities in North America.
Six of the top 10 cities are North American – San Francisco, New York, Toronto, Boston, Philadelphia and Chicago – while the other two are Hong Kong and Macau.
The other European cities in the top 20 are Copenhagen, Denmark, at 11; Stockholm, Sweden, at 14; Frankfurt, Germany, at 15; Paris, France, at 18; and Brussels, Belgium, at 20.
Arcadis said it had expanded and reconfigured the cities featured in its construction cost comparison in order to provide a spread of key construction markets around the world. Eight cities in the US and Canada were added. Brisbane and Sydney were also new to the comparison, along with three cities in India.
Some European cities that were previously in the top 10, including Stockholm, Copenhagen, Frankfurt and Paris, have slipped out and are now in the top 20.
The relative strength of the US Dollar was said to be a key factor influencing the positioning of cities in the index this year. The strong Dollar places North American cities higher in the index compared to markets where the domestic currency is relatively weaker.
It added that construction demand growth had also played a key role. Markets where demand is strong typically see price inflation, it said, increasing the costs of construction for clients and investors.
In its forecast for growth in 2018, the largest year-on-year growth is predicted for Qatar, with 15%. The highest European country on the list is Sweden, in seventh place with 5.4% growth, while the Netherlands is forecast to see 5.1% growth, in tenth place.
Arcadis said the European construction industry had seen modest aggregated growth of 2% in 2016 and 2017. It felt growth was likely to remain between 2% and 2.5% per annum to 2021.
Investment in infrastructure drives a large share of construction activity, it said. The ability of EU partners to sustain infrastructure investment post-2019 after the UK, a top-five budget contributor, left the Union, was identified as a significant risk to many markets. This was particularly so in the East, where there is a greater dependence on EU support.
However, Arcadis said the European economy was surpassing growth expectations, registering the highest rate for a decade, and that this was likely to support growth in construction activity.
The Arcadis comparative cost assessment is based on a survey of construction costs in 50 locations undertaken by the company, covering 13 building types. It said costs were representative of the local specification used to meet market need and function.