Construction costs rise in high growth markets

By Chris Sleight06 August 2012

Relative cosntrution costs in 2012. The base line is UK costs = 100. SOURCE: EC Harris.

Relative cosntrution costs in 2012. The base line is UK costs = 100. SOURCE: EC Harris.

This year's edition of the International Construction Costs Report from consultant EC Harris shows prices for putting infrastructure in place on the rise in growing markets - particularly Asia-Pacific, North America and parts of the Middle East. Construction costs in these regions are closing in on prices in Western and Northern Europe - historically the most expensive region of the world for the industry.

"Those countries that are least constrained by debt problems are continuing to invest in construction activities to help fuel their continued growth. In such a scenario the volume of work undertaken is creating an increased demand for both commodities and skills, which is inevitably driving costs upwards," said Mathew Riley, group head of cost and commercial at EC Harris.

Having said this, out of the 53 countries surveyed, Switzerland remains the most expensive with a cost index of 162, on a scale where the UK is the baseline at 100. However, the Swiss score has fallen 10% compared to a year ago, which EC Harris says is due to the fall in the value of the Swiss Franc.

Of the other expensive markets in the world, the cost of construction has risen some 20% in Australia, Hong Kong and Singapore to scores of 135, 121 and 119 respectively. Costs have also risen in Japan, Canada, New Zealand and Qatar - all of which scored more than 100 in this year's survey.

Elsewhere, the cost of construction in the US rose +10% to 99 points over the last 12 months, while the UAE was up 8% to the same value. Among the other cheaper markets, the biggest rises were in Macau - up +18% to 81 points - Saudi Arabia (+13% to 70 points) and the Philippines (+13% to 55 points).

The only markets that EC Harris saw get cheaper last year were Indonesia - down -1% to 36 points and India, down -3% to 25 points. This made India the cheapest construction market surveyed, with costs just one quarter of what they are in the UK.

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