International construction market survey 2016

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