International construction market survey 2016

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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
5newcomers 38 global markets £500bn global construction investment International construction market survey 2016 3
Page 1 and 2: International construction market s
Page 3: Foreword The past year has seen wid
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
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Page 15 and 16: Analysis Over the long term, constr
Page 17 and 18: Analysis Figure 6: Competition acro
Page 19 and 20: Figure 7: Typical preliminaries (sa
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Page 25 and 26: International building costs, in 20
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International building costs, in 20
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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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