International construction market survey 2016

Overstretched and
over-reliant: the new global
construction market
The global construction industry has polarised between intense competition and shrinking
demand. Our 2016 international construction market survey shows a changing picture, with
general slowdown in global construction activity and few locations seeing significant price
growth throughout the year.
Our 2016 survey is our largest and most in-depth to date.
It presents detailed construction cost data collected from
our industry experts in 38 key world markets and analysed
by our team of economists.
Our teams have analysed input costs – such as labour
and materials – and charted the average construction
cost per m 2 for both commercial and residential projects.
Newcomers to the survey in 2016 include Istanbul, Kigali,
Paris, San Francisco and Zurich. We have also increased
our regional coverage by adding new regional data for
the USA.
For investors and developers with global expansion plans,
there are locations where favourable exchange rates
and reasonable construction costs make them an
attractive proposition.
This year we’ve identified some of the major common
challenges faced by the construction sector, such as
industry skills shortages in over-stretching markets, and
undertaken some analysis that has uncovered a number
of key trends.
Inherent construction differences in various regions
contribute to some cost differences – for instance, the
quality of a prestige house in one market may not be the
same as the quality of a prestige house in another market.
To avoid bias, our approach is to ask our experts to provide
cost details for what would be the typical construction
format in their region.
Survey highlights:
▪▪
Swiss city Zurich enters the survey as the world’s
most expensive construction market, with typical
costs reaching USD3,683 per m 2 .
▪▪
▪▪
▪▪
▪▪
Beijing saw the biggest fall in construction costs
in 2015 at ten percent.
New York City and Seattle are identified
as overheating.
Global construction costs are expected to rise
overall by 2.9 percent in 2016.
Activity levels will increase over the next year
in nine of the markets surveyed, stay the same
in 19, and fall in ten.
▪▪
Commodity-reliant markets such as Johannesburg,
Perth and São Paulo lead the list of markets that
will cool in 2016.
▪▪
Markets reliant on Chinese demand such as
Hong Kong, Kuala Lumpur and Singapore are
also set to cool.
We continue to use a variety of construction cost
comparison methodologies to ensure our findings deliver
both accuracy and insight. Methods such as straight-line
US dollar conversion, Purchasing Power Parity (PPP) and
location factors have been implemented to standardise
our data and draw useful conclusions. For more information
on the methods we use see pages 80 and 81.
Detailed explanations of what’s included in and excluded
from our cost information are given at the back of this
report on page 82.
2
Turner & Townsend