The latest Arcadis 2020 International Construction Cost Index report claims Singapore is the fourth most expensive city in Asia, while perhaps unsurprisingly, London and New York take the lead.
Arcadis releases its annual Arcadis International Construction Cost Index this month. Out of 100 cities, Singapore is the fourth most expensive city in Asia once again and climbs in the overall global rankings to 45. Hong Kong and Tokyo both feature in the top 10 while all of the ten least expensive cities are in Asia with the majority of those found in China.
The 2020 Arcadis ICC Index covers 100 of the world’s large cities across six continents. The cost comparison was developed covering twenty building functions, based on a survey of construction costs and review of current market conditions.
According to the report, London has emerged as the most expensive construction location in the world in 2020. Continuing investment in higher residential and commercial developments has increased London’s cost range. On the North American front, the report claims that the latest data from New York and San Francisco suggests an easing of cost levels – particularly in connection with oversupplied market segments such as mid-town apartments.
The reports say that while comparing costs across countries such as the United States and the UK highlights that even when specifications are relatively similar, there is still plenty of scope for variation. Costs in Houston, for example, are half the level seen in New York. Explanatory factors include the cost of labor, materials and other construction resources. For example, the report says Texas has a low-cost, flexible workforce in contrast to the heavily unionized New York construction market. Another variable is the cost of management and allowances for profit and risk.
Some countries with a fragmented construction supply chain will have many more levels of sub-contractors – each adding extra allowances for ‘on-costs’, including management, risk and profit. These additional layers of on-cost contribute to premiums in some locations.
According to Arcadis Executive Director for Commercial Management Singapore Josephine Lee, this year’s report addresses two challenges: the unfolding effects of the COVID-19 pandemic and unchanged need for the industry to focus on rethinking resilience amid climate change while plotting a course towards a carbon neutral future.
“As with many other markets around the world, Singapore saw a slowdown of economic growth in 2019. In spite of this, we saw growth in the construction industry buoyed by both public and private investment. At the start of 2020, construction demand remained optimistic with labour and material cost expected to increase moderately. The outbreak of COVID-19 will undoubtedly cause delays within the construction industry due to travel lockdowns and supply shocks in terms of materials and labour resources. However, there has still been a steady flow of private and public sector jobs in the pipeline that will sustain the industry in challenging times ahead. After the virus is contained, construction activity will pick up the pace and companies will emerge stronger as they will accelerate their efforts in building up their workforce capabilities and embrace digitalization and technology to be agile and ready for future crisis,” says Lee.
The report claims that future enhancements to building specifications to deliver low-carbon developments are likely to further increase, arguing the market may see this effect emerging first in Europe, with the universal adoption of the requirement for the delivery of near zero-energy buildings (nZEB) in the public and private sector from 2020 onwards.
Ten most expensive cities
2. New York City
3. Hong Kong
5. San Francisco
10 least expensive cities
99. New Delhi
97. Kuala Lumpur
(Ed. To download the full report, click here.)