Hong Kong is the most expensive market in Asia for construction while Japan, Macau and Singapore have seen significant relative cost reductions over the last year. However, Switzerland and Denmark overtook Hong Kong to become the top 2 most expensive markets in the world, according to the International Construction Costs Report released today by Arcadis.
The annual study, which benchmarks building costs in 43 markets across the globe, found that relative construction costs have been affected by currency fluctuations, commodity prices and increasing demand for development in some recovering economies. These changes have seen the relative cost of building in Asia markets decrease significantly compared to markets in other regions.
In contrast to last year’s index, European countries dominate the top ten. This is due, in part, to the ongoing economic recovery in the likes of Germany and France which is gradually translating into contractors demanding more for their services. Meanwhile, currency devaluation in many emerging markets like India, Indonesia, Malaysia, Thailand and Vietnam has caused the relative costs to drop considerably.
Hong Kong and Singapore saw strong growth throughout the year, driven by a combination of robust housing markets and high levels of infrastructure spend. In China, the gradual shift to a consumption-based economy means that the huge growth in construction that we have witnessed over the last ten years is unlikely to continue in the long term. Elsewhere in Asia, construction markets had another strong year, particularly in Japan, where the stimulus associated with one of the three ‘arrows’ of Abenomics has had a significant impact.