International construction market survey 2016

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Analysis Figure 3: Percentage increase (in nominal terms) of construction costs in the last 12 months Figure 4: Expected percentage increase (in nominal terms) of construction costs in the next 12 months Moscow Kampala São Paulo Istanbul Dublin Santiago London San Francisco Seattle New York City UK central Scotland Hong Kong Brisbane UK south Sydney UK north Houston Kuala Lumpur Doha Johannesburg Northern Ireland Warsaw Amsterdam Toronto Munich Kigali Nairobi Perth Melbourne Bangalore UAE Zurich Seoul Singapore Muscat Paris Beijiing Beijing Kampala Seattle Moscow Istanbul Johannesburg Dublin Santiago London San Francisco Hong Kong São Paulo New York City UK south Brisbane Scotland UK central UK north Northern Ireland Kuala Lumpur Sydney Houston Bangalore Seoul Kigali Warsaw Amsterdam Nairobi Munich Toronto Doha Perth Singapore Melbourne Zurich Paris UAE Muscat Beijing -10 -5 0 Percentage 5 10 15 0 5 10 15 Percentage 12 Turner & Townsend
Analysis Over the long term, construction markets follow a boom and bust lifecycle. Tracking this cycle is key for real estate investors and developers who need to ensure they enter and exit markets at the right time. Counting projects and analysing approval and commencement data allows us to map future activity and help clients make informed decisions about viability and likely cost escalation for their projects around the world. Risers and fallers This year’s survey shows only nine markets are expected to grow warmer over 2016, while ten markets are estimated to cool (see figure 2). This compares to 17 markets that were predicted to warm up and eight forecast to cool down in our 2015 survey. The markets expected to cool in 2016 are mostly those with a heavy dependence on the natural resources sector, such as Johannesburg, Muscat, Perth, São Paulo, Santiago or those with strong connections to China’s economy, such as Hong Kong, Singapore and Kuala Lumpur. The UK’s central and north regions, as well as London and Northern Ireland are among those markets forecast to heat up. Similar drivers place Amsterdam, Dublin and San Francisco in this category, with warming led by developer-led construction booms and rising house prices. In Kampala and Kigali, demand for residential and retail construction is growing and gradually their construction sectors are responding, often driven by overseas investors. For example, global retailers are keen to capitalise on growing middle-class consumer demand and see East Africa as a good opportunity. This has pushed these two markets firmly into warming. Overall, our survey has found that construction costs have increased over the last 12 months (see figure 3). On average, they are set to rise slightly in the next 12 months, increasing to 3.4 percent from 2.9 percent for the year to January 2016 (see figure 4). Construction cost data For building costs in more depth, the data for each individual market is set out on pages 22 to 79. We have included output costs (cost per square metre) and input costs (labour, materials and plant) for each type of building, shown in the local currency and in USD. Our construction costs data comes from current programmes and reflects the prices at the beginning of 2016, with all costs excluding applicable taxes. We compared the average build cost in USD of six different types of construction (see figure 5), which included: ▪▪ apartment high-rise office block prestige large warehouse distribution centre general hospital primary and secondary school shopping centre including mall. Figure 5: Average cost of six building types in USD 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Bangalore Warsaw Moscow Johannesburg Beijing Istanbul Nairobi Kuala Lumpur São Paulo Kampala Kigali Seoul Muscat Santiago UAE Singapore Brisbane Toronto Melbourne Munich Perth Amsterdam Paris Doha Sydney Dublin Houston Northern Ireland Scotland UK central UK north Seattle UK south Hong Kong San Francisco London New York City Zurich International construction market survey 2016 13
Page 1 and 2: International construction market s
Page 3 and 4: Foreword The past year has seen wid
Page 5 and 6: 5newcomers 38 global markets £500b
Page 7 and 8: Redefining relationships with the s
Page 9 and 10: The ripple effect of China Followin
Page 11 and 12: The impact of currency Foreign exch
Page 13: Figure 2: Predicted construction ma
Page 17 and 18: Analysis Figure 6: Competition acro
Page 19 and 20: Figure 7: Typical preliminaries (sa
Page 21 and 22: Figure 9: The cost of labour Toront
Page 23 and 24: International construction market s
Page 25 and 26: International building costs, in 20
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International building costs, in 20
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Houston USD San Francisco USD Seatt
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Figure 11: CBD offices - high-rise
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References and further reading Amer
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Turner & Townsend is an independent
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International construction market survey 2016

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