Currency changes hit international costs

Cost consultant EC Harris’ 2013 International Construction Costs report shows currency fluctuations were the dominant factor in driving relative construction costs over the last 12 months. The findings were based on benchmark building costs in 47 countries around the globe.

EC Harris said the fall of the Japanese Yen and Australian Dollar along with the appreciation of the Chinese Yuan have had a significant impact. Simon Rawlinson, head of strategic research and insight at EC Harris, said, “Currency fluctuations have had a substantial effect on relative construction costs over the past year, particularly the fall of the Yen and the appreciation of the Chinese Yuan - this not only makes Chinese imported materials to other countries more expensive, but has also contributed to China moving nearly half way up the global (cost) rankings.”

On the other hand, the consultant said the fall in demand commodities in many emerging markets had seen other costs drop, particularly those for metallic building materials.

Mr Rawlinson added, “With new sources of supply coming on stream, investment houses moving away from the commodity markets and a substantial reduction in the growth rates of the BRICS it is not surprising that prices have fallen in the short term. Some forecasters are predicting an end of the ‘commodities super cycle’ and claim that commodities have already entered a sustained period of below trend price growth. This development will be of huge importance for low cost construction economies, where material costs are a more significant component of project costs.”

Taking these factors into account, the ten most expensive countries to build in are, Hong Kong, Switzerland, Denmark, Sweden, Macau, Australia, Japan, France, Singapore and Belgium. In Hong Kong, the most expensive of all, construction costs are 1.42 to 1.68 times what they are in the UK – the benchmark which EC Harris uses.

The cheapest countries are India, Indonesia, Vietnam, Morocco and Malaysia. In India, the cheapest of all, costs are just 0.29 t0 0.34 what they are in the UK.

More information is available at www.echarris.com