Global construction market recovery uneven as costs rise in hotspots

International
construction
market survey
2015
Global rebalancing:
a changing landscape
Welcome
The global construction industry is finally showing strong signs Overview
of recovery. However, while the picture is largely positive, it’s Global rebalancing:
a changing landscape, with some markets seeing significant a changing landscape 1
increases in activity, while others, which were booming, have fallen
Economic overview 11
back. Several cities are poised to grow led by overseas investors,
but for many it remains an uneven climb back to the levels of A tale of two cities 13
activity enjoyed before 2008. Comparing construction costs 16
Markets
For investors and developers with global expansion plans, there are
locations where favourable exchange rates and reasonable construction Australia 18
costs make them an attractive proposition. Brazil 20
Canada 22
Our 2015 international construction market survey draws on cost data
gathered from major programmes and projects in 35 markets around the Chile 24
world. Our team of economists has worked with our local offices in those China 26
markets to analyse the data, helping inform construction investment Germany 28
decisions, whether in home countries or overseas.
Hong Kong 30
We also look in more depth at New York and London, two of the world’s India 32
most active construction markets, and explore how their different Ireland 34
approaches are impacting on outturn costs. We provide a breakdown
Japan 36
of regional data for the UK and the USA to give context on the significant
regional variations created by the climb from recession. Kazakhstan 38
Kenya 40
Though all the local construction costs have been converted into US dollars
to allow easy comparison between markets, our economists continue to Malaysia 42
seek new ways to determine the relative value of different currencies, Netherlands 44
taking into account factors such as labour productivity and market heat. Poland 46
Over the past 12 months, our economists have developed a location factors Qatar 48
approach, adding to the Purchasing Power Parity (PPP) methodology, both
Russia 50
of which we compare on pages 16–17 of this report.
Singapore 52
Please contact us if you require any more information about this survey,
South Africa 54
or if you need data or advice that can help inform decision-making for
your project or programme. South Korea 56
UAE 58
Vincent Clancy Uganda 60
Chief Executive Officer UK 62
USA 66
Vietnam 70
What is PPP? 72
Global rebalancing:
a changing landscape
While mining and oil and gas programmes have been reduced over
the past 12 months, the number of property projects has grown.
Our 2015 international construction market survey shows that on
balance, global construction activity is increasing – though tender
prices generally remain competitive.
Our survey of construction markets around the world shows Our experts predict that construction activity will increase
that activity is increasing in many as economies improve, in 17 of the markets surveyed, with less competition for
with that trend set to continue over the next 12 months. tenders and rising construction costs (see figure 2). Ten
Recovery is patchy, however, varying at both regional and markets will enjoy unchanged levels of activity; and eight
national levels. will see a decrease in the number of construction projects,
greater competition on bids and, generally, lower rates of
In our assessment of current market conditions, the
construction cost rises.
survey reveals five hot locations out of the 35 markets
surveyed (see figure 1). In a hot market there are plenty With improving economic conditions there is some danger
of construction projects around with little tender price of the hot locations overheating over coming year. This could
competition. Trades skills shortages, increasing margins manifest in the form of lack of trade skills, delays in project
and higher input costs are causing construction costs to delivery and rapidly increasing tender prices.
rise strongly.
Many countries have significant plans to invest in
London, the south of the UK, New York, Seattle and Tokyo infrastructure. However with public sector budgets
are hot, benefitting from increased activity in residential constrained and public private funding partnerships not yet
and commercial property. However there are hotspots sufficiently mature, there are fewer projects in delivery.
elsewhere for particular sectors. For example, while the For markets such as the USA and Europe which have ageing
overall construction market in Toronto and Sydney is only infrastructure, investing at this point in the cycle offers low
lukewarm, they have particularly strong levels of residential risk of construction cost escalation and the chance to further
construction underway. boost their economies.
There are 11 markets classed as warm by our local experts.

In these locations contractors are finding they can pick and
Figure 1: Current construction market
choose which jobs they bid for, with more projects starting
up. On the other hand the majority of markets are described
as lukewarm, meaning there is still eager bidding to win jobs Cold Lukewarm Warm Hot
and price rises will be moderate. Moscow Amsterdam Bangalore London
This year there is just one cold location, Moscow. This Atyrau Doha New York
compares to three cold spots in our last survey. Following a Beijing Dublin Seattle
substantial fall in the oil price in Russia, investment activity Brisbane Hong Kong Tokyo
has slowed significantly, so there is strong competition for Ho Chi Houston UK – South
fewer contracts. However whilst construction activity levels Minh City
are falling, construction costs have risen strongly as a result Johannesburg Kuala Lumpur
of high inflation, higher import costs and the deflation of Kampala Munich
the ruble. Melbourne Nairobi
Seattle is boosted by its status as a tech city, with hi-tech Perth UK – Central
firms accounting for 40 percent of total office leasing activity Santiago UK – North
in the area (JLL, 2014). Other cities, such as Bangalore, are São Paulo UK – Scotland
also seeing increasing demand for both office and residential Seoul
space as hi-tech businesses locate there. Locations such
Singapore
as Dublin and Singapore are also attracting technology
Sydney
sector companies looking to set up regional hubs.
Toronto
Meanwhile, markets which had benefitted from the boom UAE
in natural resources, such as Perth, São Paulo, Atyrau UK –
and Santiago, are becoming less active. Those countries Northern
hit by the natural resources slump are looking to invest Ireland
in other traditional sectors, since the strength of the US
Warsaw
dollar is boosting exports, making trade-exposed industries
more competitive.
International construction market survey 2015 1

Overview
Figure 2: Predicted construction market in next 12 months
Cooler Staying
the Warmer
same
Australia – Perth Australia – Melbourne Australia – Brisbane
Brazil Canada Australia – Sydney
China Chile Doha
Kazakhstan Germany Hong Kong
Malaysia India Ireland
Russia Japan Kenya
Singapore Poland Netherlands
Uganda South Africa UAE
South Korea UK – Central
Vietnam UK – London
UK – North
UK – Northern Ireland
UK – Scotland
UK – South
USA – Houston
USA – New York City
USA – Seattle
2 Turner & Townsend

The impact of currency that though they look like good value, many are set for
Since our last report in 2013, the USD and the British significant construction cost rises.
pound (GBP) have strengthened considerably (see figure 3),
Comparing construction costs between countries and markets
offering opportunities for overseas investment at a reduced
is vital for companies with global expansion programmes and
cost for both countries. Conversely, the strong currencies
can help highlight areas for improvement. Currency issues
push both countries to the top of the global league tables
can sometimes muddy the waters if comparisons are made
when it comes to construction costs.
solely in one exchange (for our survey, we use USD), which
Those economies experiencing a weakening currency are is why we introduced the PPP methodology in 2013. (For an
gaining from increased interest from foreign investors. explanation of how we developed the PPP method with Bond
For example, overseas investors would find Malaysian University see page 72).
construction costs especially attractive. While materials
Expanding on this, we have also developed a further
rates are broadly in line with those in Singapore, the cost
comparison methodology, location factors, which aims to
of labour is lower and overall construction costs are some
progress the PPP method by adding in factors including
of the most favourable in the world, especially given the
tender heat, productivity and local margins. A location factor
high standard of infrastructure.
is a total project calculation that can be used to compare
Other markets whose currencies have fallen against the the cost of similarly specified building projects between
USD and GBP, hence offering opportunities for UK and USA one location and another. On pages 16–17 we lay out the
investors, are Singapore, São Paulo, Santiago, Warsaw, advantages and disadvantages of comparing costs by
Beijing and Bangalore. However, investors should be aware different means.
Figure 3: The impact of USD and GBP on local currencies since January 2014
120
100
Percentage increase/decrease
80
60
40
20
-20
ZAR
CAD
Euro
JPY
BRL
AUD
GBP
RUB
USD
USD GBP

Overview
Recovering economies, rising costs costs, despite falling activity, can indicate that there are few
Overall, construction costs are increasing but are by no contractors with the relevant capabilities to tackle major
means out of control (see figure 5). On average, they will projects and programmes.
be higher in the next 12 months compared to the last 12
For building costs in more depth, the data for each market
months, with an average predicted cost increase across all
is set out on pages 18 to 71. We have included output costs
markets of 4.2 percent compared to 3.6 percent last year
(cost per square metre) and input costs (labour, materials
(see figure 6).
and plant) for each type of building, shown in the local
Most warming markets will see increased construction costs currency, and in USD.
while cooling markets will see a decrease, though there
The data comes from current construction programmes and
are some exceptions. Moscow will see less construction as
reflects prices at the beginning of 2015. All costs exclude
economic sanctions and lower oil prices impact adversely
applicable taxes.
on foreign investment and consumer confidence, however
construction costs are expected to rise by 15 percent in We compared the average build cost in USD of six different
2015–2016. types of construction (see figure 4), which included:
Also bucking the trend, Atyrau in Kazakhstan is cooling, with ■■ apartments high-rise
less construction activity as oil prices fall, but it is expecting ■■ office block prestige
around seven percent cost increases in 2015–16. Similarly, ■■ large warehouse distribution centre
construction activity is expected to decrease in São Paulo ■■ general hospital
and Kampala, while costs are expected to increase by ■■ primary and secondary school
7.5 percent. Johannesburg expects the market to stay the ■■ shopping centre including mall.
same, but costs to rise by 7.5 percent. Rising construction
Figure 4: 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
Atyrau
Warsaw
Johannesburg
Kampala
Kuala Lumpur
São Paulo
Amsterdam
Toronto
Doha
Ho Chi Minh City
Beijing
Nairobi
Moscow
Seoul
Santiago
Singapore
Brisbane
UAE
Munich
Houston
Perth
Dublin
Sydney
Seattle
UK – Scotland
UK – Central
UK – North
UK – South
Tokyo
Hong Kong
London
New York City
Melbourne
4 Turner & Townsend

Figure 5: Percentage increase (in nominal terms) Figure 6: Expected percentage increase (in nominal
of construction costs in the last 12 months terms) of construction costs in the next 12 months
Beijing Melbourne
Melbourne Singapore
Nairobi Warsaw
Singapore Perth
Perth Amsterdam
Seoul Brisbane
Warsaw Nairobi
Brisbane Seoul
Amsterdam Tokyo
UAE Toronto
Ho Chi Minh City Houston
Kampala Munich
Munich Beijing
UK – Northern Ireland UAE
Toronto UK – Northern Ireland
Sydney UK – Central
UK – Central UK – North
Houston Doha
Kuala Lumpur Ho Chi Minh City
UK – Scotland Sydney
UK – North UK – South
Doha UK – Scotland
Tokyo Dublin
UK – South Kuala Lumpur
Dublin London
Hong Kong New York City
London Santiago
New York City Seattle
Seattle Bangalore
Santiago Atyrau
São Paulo Hong Kong
Atyrau São Paulo
Johannesburg Johannesburg
Bangalore Kampala
Moscow Moscow
-10 -5 0 5 10 15 20 25 0 5 10 15 20
Percentage Percentage

Overview
Figure 7: Strong competition is keeping tenders competitive in the majority of markets
Intense trong
S oderate
M ow competition,
L
competition, competition, competition, lots of work,
not much work, moderate moderate prices high
prices low tender prices tender prices
Moscow Amsterdam Bangalore London
Atyrau Doha New York
Beijing Dublin Seattle
Brisbane Hong Kong Tokyo
Ho Chi Minh City Houston UK – South
Johannesburg Kuala Lumpur
Kampala Munich
Melbourne Nairobi
Perth UK – Central
Santiago UK – North
São Paulo UK – Scotland
Seoul
Singapore
Sydney
Toronto
UAE
Warsaw
6 Turner & Townsend

Tender price outlook Figure 8: Typical preliminaries (same job) for an
About half of the markets surveyed, including European, office building (5,000m2 gross floor area) as a
Canadian, Australian and most Asian cities, are expecting percentage of total costs
only moderate tender price increases of around three
percent in the next 12 months.
Nairobi
Above this level, London expects five percent, Dublin five Atyrau
percent, New York five percent and Seattle six percent.
Beijing
Latin America, Johannesburg, Kampala, Hong Kong, Atyrau,
Bangalore and Moscow are expecting the highest rises. Kampala
Moscow
In Hong Kong, Seattle and New York, high tender price
Singapore
increases are forecast even though inflation is low. In other
cases both inflation and tender price increases are high: in Dublin
Moscow, Johannesburg, Bangalore and São Paulo. Bangalore
Preliminaries Ho Chi Minh City

Preliminaries – or general conditions – are the set-up Kuala Lumpur
costs for a project: site offices, approvals, scaffolding, Melbourne
shop drawings, site security, construction plant, power
Seattle
and consumables.
Toronto
Typically hot markets tend to have higher preliminaries
Houston
due to requirements for higher safety standards and
levels of supervision. Space restrictions, for example in Johannesburg
congested central business district locations, will also add Munich
to preliminaries. London and Hong Kong have the highest UK – Northern Ireland
level of preliminaries at 15 percent.
São Paulo
The way subcontractor packages are procured also has Brisbane
an impact since, in some markets, more preliminary UAE
costs are included in subcontractor packages. Higher cost
Perth
locations such as Singapore, Toronto and Dublin have
lower preliminary costs than might be expected at eight Santiago
or nine percent. Seoul
In figure 8, typical preliminaries for an office building Sydney

with a gross floor area of 5,000m2 are shown. Tokyo
UK – Central
UK – North
New York City
Amsterdam
UK – Scotland
UK – South
Warsaw
Doha
Hong Kong
London
0 5 10 15 20
Percentage

Overview
Margins Figure 9: Typical contractors margin on medium

Lower margins tend to indicate that there is little construction commercial job (5,000m2 ground floor area)
activity and high levels of competition for what projects there
are. Seoul and Northern Ireland, for example, have margins
of three percent and 2.5 percent respectively.
Seoul
However, in some regions contractors typically achieve
Brisbane
higher margins. In the Middle East, Latin America and some
African markets, margins tend to be higher. Where there are UK – Scotland
fewer contractors with the skills and experience required to UK – Central
deliver major projects or programmes, higher margins can Dublin
be achieved.
Melbourne
In the Asian regions, margins are mid-range whereas in Sydney
European and Australian cities they are at the lower end UK – North
of the scale.
UK – South
Wages Amsterdam
Labour costs include the basic hourly wage, allowances,
Ho Chi Minh City
taxes, annual leave cost, and where paid by the employer,
workers’ compensation and health insurance, pensions and Houston
travel costs and fares. It excludes overheads, margins, Munich
overtime and bonuses. Perth
Countries with higher input costs are introducing methods Seattle
to increase productivity. This will reduce the unit cost of Singapore
construction and counter inflation pressures.
Warsaw
There are huge variations between regions in the USA. London
New York City pays the highest wages, 65 percent higher Beijing
than Houston for example, due to New York’s heavily
Hong Kong
unionised workforce.
Kampala
The UK also has a high degree of variation with London
New York City
labour costs around 65 percent higher than Northern Ireland.
Toronto
Bangalore, Nairobi, Kampala, Beijing and Johannesburg
Moscow
have the lowest wages in USD. However, the fall of Indian
and African currencies against the USD makes their labour Nairobi
costs look even lower. São Paulo
Tokyo
UAE
Kuala Lumpur
Santiago
Atyrau
Johannesburg
Bangalore
Doha
0 2 4 6 8 10 12 14 16
Percentage
8 Turner & Townsend

Figure 10: The cost of labour
UK – UK –
Toronto North Atyrau
Scotland Amsterdam
Seattle Northern
Ireland
London Moscow
UK –
Central
Munich
Dublin
Warsaw
New York City

Houston Doha
UK – Ho Chi
South Minh City
Kuala Lumpur
São Paulo UAE

Sydney Bangalore
Santiago
Hong Kong
Beijing
Brisbane
Johannesburg
Perth
Kampala Singapore
Tokyo
Nairobi Melbourne
Seoul
Very high cost

50+ USD per hour
High cost
35-50 USD per hour
Mid cost
10-35 USD per hour
Low cost
0–10 USD per hour

Economic overview
Global picture Though China’s growth has slowed, its influence continues
to be felt around the world. The booms in London, New York
3.4%
and Sydney are being strongly assisted by Chinese
investment. Africa is another beneficiary. For example,
Kenya looks set to benefit from more infrastructure
global growth in 2014 investment from China following a recent extension of
the two countries’ industrialisation partnership (Pinsent
3.5%
Masons, 2013).
global growth forecast in 2015 The USA: a slow recovery
3.85%
global growth forecast in 2016
2.4%
growth in 2014
3.6%
According to the International Monetary Fund (IMF), the
rate at which global economies are growing is increasing,
particularly in the West (2015). The UK and USA are
stronger than they were last year and, in most regions, growth forecast in 2015
property markets are recovering with resulting increases
in construction activity. With property prices at or above
pre-2008 levels in New York, London and Sydney, there are
concerns that these markets may overheat again. In other
3.3%
growth forecast in 2016
places, there is still a fair distance to go before the end of
the current cycle.
The good news is that the USA’s economy is growing,
There is a change in mood in many locations, as governments
property values are rising, and jobs are being created.
seek to stimulate their economies by cancelling austerity
But the rebound is not as strong as expected following
policies and beginning to invest.
recession; wage growth is minimal and confidence
remains weak.
China’s influence Property values are rising, but growth is patchy and
concentrated in certain locations. While rising share markets
7.4%
demonstrate confidence among businesses this has failed
to feed through to consumers, most of whom continue to
save rather than spend. The recent fall in oil prices failed
growth in 2014 to stimulate retail spending as expected.
6.8%
The American Society of Civil Engineers has estimated
that the USA needs to invest an additional $157bn per year
through to 2020 in order to replace and repair ageing and
growth forecast in 2015 unreliable infrastructure (2013). Were this investment to go
ahead, it would be the largest construction programme in
6.3%
the world.
growth forecast in 2016
Though the world’s second largest economy has slowed,

seven percent growth is still significant. China is responsible
for nearly 50 percent of the world’s consumption of key
commodities such as cement, coal, steel and base metals.
The focus of Chinese investment is shifting away from
infrastructure and property to consumer goods. This
will keep global commodity prices down and discourage
construction of further natural resources projects worldwide.

In New York and in London construction is booming, with
high-end residential and commercial development in
particular looking hot in both cities. On the face of it, these
two markets are similar. The financial services sector, back
to strength, leads the economies of both cities, while the
busy construction sector in each face the same challenges
of constrained sites, competition for supply chain resource
and heavy regulation.
A straight comparison of indicative outturn costs shows

parity too. In most categories, London and New York
look similar in dollars per square metre. However, our
location factor approach (see page 17), which takes into
account labour and materials costs and an adjustment for
labour productivity, tender competition, skills shortages,
preliminaries and margins, tells us that New York’s input
costs are 35 percent higher than London’s. So why isn’t
there the same disparity between outturn costs?
The same but different

Whether it’s the busy streets of Manhattan or central
A tale of
London, contractors delivering high-rise offices and
residential apartments must cope with similar constraints:
the need to limit the impact of deliveries on the transport
two cities
network, consideration for neighbouring businesses and
residences, environmental controls, stringent codes and
a lack of storage space.
Both cities have major transport programmes underway,

adding to congestion and pressure on resources. New
London and New York are amongst the York’s Metropolitan Transport Authority is spending
$13.6bn annually while Transport for London's annual
hottest markets in the world. On the
budget is £9bn ($13.7bn).
face of it, their stories are similar, but
One significant difference between the two construction
look deeper into the figures and there’s markets is the labour force. In New York, labour is heavily
a different tale to be told. unionised on large projects, with the unions currently
enjoying a resurgence of strength given the volume of work.
In London, a ready supply of EU workers has helped to limit
wage increases.
That difference feeds through to wage costs, with average

hourly rates in New York 70 percent higher than those in
London. Since wage costs account for around 40 percent, we
might expect this to lead to higher outturn costs in New York.
The contracting marketplace also differs widely between the

two locations. In New York, the number of major contractors
able to handle large-scale projects has shrunk further
recently, to around six. New York contractors are under
watch by law enforcement, and over recent years a number
of large firms have shut their doors or lost market share.
New York
$103.8bn $13.6bn
construction spend annual spend
forecast in next by Metropolitan
three years Transportation Authority
23,000
households predicted
$78
per hour wages*
to be built per annum
*average of labour wages

In London, there’s a wider choice of smaller contractors, In New York, weekend working on Saturdays is commonplace
who are achieving margins of five percent in the property and Sundays are often worked too, which, though it adds to
sector on average, compared to their New York peers who labour costs due to premium mark-ups, reduces programme
command six percent or more. time and overheads as transportation and general logistics
ease on weekends.
There’s also an interesting difference in procurement routes.
While in London, two-stage design and build currently Bright future
dominates in the property sector, New York developers tend With New York expecting around $35bn worth of construction
to favour a traditional tender route where contractors bid annually for the next couple of years, and London set for
competitively on drawings and specifications with lump-sum around $30bn a year, the construction markets in these cities
pricing or a construction management-type arrangement can only get hotter. In New York, the unions will push for
where a contractor is brought on board for pre-construction higher wages; in the UK, London’s contractors' will aspire to
services and then negotiates a guaranteed maximum price, reach the margins of their US counterparts. We predict that
often with incentives for early delivery. cost inflation in both locations will be comparable, at around
five percent.
Though design and build is often lauded for its speed of
delivery, allowing ground to be broken before all packages The challenge for London will be to reduce the unit cost for
are designed, it seems that in New York the more traditional construction by increasing industrialisation and productivity
procurement methods are delivering better value for money. during delivery. This will be a challenge due to:
New York contractors are driven by volume and speed to ■■ the fragmentation of the market
market, so that they can quickly move their labour to new ■■ the lack of investment in innovation
projects. Additionally, contractors will take on the risk of ■■ particular logistics and geographic factors.
buying schedules, and then drive their labour and supply
chain to deliver.
One theory for this could be that the whole supply chain – Figure 11: Cost comparison between London
including designers and architects – are more integrated, and New York
so there is less inefficiency in the design and construction
process. Consequently, the whole show runs like clockwork. Category London New York
The use of BIM (building information modelling) as part of Labour costs (average) USD 47 78
this well-oiled New York machine will have a part to play. Location factor 100 132
Though only in use at a less mature level as a design tool, Margins 5% 6%
as many as 75 percent of high-rise projects in New York Prelims 15% 12.5%
could be employing it. In London, that proportion is between
Cost increase forecast 5% 5%
20 and 40 percent.
Past cost increase 5% 5%
New York’s contractors have a more efficient approach Cost apartments USD 3,970 2,950
to logistics. However, London projects do have additional Cost CBD office USD 4,410 5,500
headaches including:
Cost warehouse USD 1,400 1,400
■■ heritage buildings that must be protected and monitored Cost hospital USD 5,000 5,330
■■ archaeological digs required – or at least a watching brief Cost school USD 2,570 2,250
– on many sites Cost mall USD 2,790 3,500
■■ listed buildings and conservation issues Average cost USD 3,357 3,488
■■ limitations on working hours.
London
£62.1bn £9bn
on construction spend annual budget from
forecast in next three years Transport for London
21,000 £32
households to be per hour wages*
built per annum
*average of labour wages
14 Turner & Townsend

Comparing construction costs
It is important to compare construction costs between

Method one: convert to a single currency such
countries to inform expansion decisions. It can also allow
as USD or Euros
productivity comparisons to be made, highlighting how
This is the most common means of comparison, useful
different practices and tools, such as BIM, can improve
for a multinational organisation paying for projects in its
design and delivery. Opportunities to improve the efficiency
home currency.
of the construction sector and reduce costs are also
opportunities to grow the global economy faster. Advantages
■■ Easy to understand and visualise
Here we look at the advantages and disadvantages of
■■ Gives the cost of typical building in each country
three methods to compare construction costs using an
example building type, Central Business District (CBD) Disadvantages
offices – high-rise prestige. ■■ A change in the exchange rate makes a huge difference:
if a particular currency is strong compared to the base

currency, the cost of construction looks expensive
■■ Is not a reliable indicator of relative costs and efficiency
of construction between countries
Figure 12: CBD offices – high-rise prestige using a single currency average (USD)
6,000
5,000
4,000
3,000
2,000
1,000
0
Bangalore
Kuala Lumpur
Warsaw
Johannesburg
Kampala
Melbourne
UK – Central
London
Ho Chi Minh City
Moscow
Beijing
Seoul
Nairobi
UAE
São Paulo
Singapore
Santiago
Brisbane
Amsterdam
UK – Scotland
Toronto
Doha
Munich
Tokyo
UK – North
Hong Kong
Perth
UK – South
Sydney
Dublin
Houston
Seattle
New York City
Method two: Purchasing Power Parity (PPP) Advantages

The PPP shows costs in relation to cost of living in the ■■ Leaves exchange rate out of the equation
country. It indicates the construction cost per square ■■ Useful for governments, policy-makers and researchers
metre in the local currency, relative to the costs of a to compare costs and efficiency with other countries
basket of construction materials and labour. The PPP
Disadvantages
cost of a particular building type is calculated by dividing
■■ For a global firm looking to build overseas, it can be
the cost in m2 in local currency by the PPP coefficient.
more convenient to look at cost in its home currency
A lower PPP cost generally indicates more efficient
■■ The cost of the basket of goods ignores contractors’
construction (see page 72 for more detail).
margins, labour productivity and preliminaries

Figure 13: CBD offices – high-rise prestige using PPP
4,000
3,000
2,000
1,000
Bangalore
Kuala Lumpur
Toronto
Johannesburg
Kampala
Ho Chi Minh City
Moscow
Brisbane
Warsaw
Singapore
Seoul
Seattle
Melbourne
Amsterdam
São Paulo
UK – Scotland
UK – South
UK – Central
UK – North
Hong Kong
Sydney
Tokyo
Perth
Munich
Santiago
Houston
Nairobi
New York City
Beijing
Dublin
UAE
London
Doha
Method three: location factors Advantages
Location factors extends the basket of goods approach used ■■ Useful for a company considering a complex investment
in method two (PPP) by adding labour, productivity, market in several locations and wanting to know the cost in a
conditions, contractors’ preliminaries and margins. single currency
■■ Will show the difference in cost between countries of
A similarly specified building constructed for USD100m in
buildings built with similar specifications and inclusions
London (location factor 100) should cost USD96m in Toronto
(location factor 96) at the exchange rate as of the first Disadvantages
quarter of 2015. ■■ As this method uses a common currency, it is subject
to the same disadvantages as method one

■■ In practice, local building codes, methods and
specifications are different between regions countries
Figure 14: CBD offices – high-rise prestige using location factors (USD)
140
120
100
80
60
40
20
0
Kuala Lumpur
Warsaw
Bangalore
Kampala
Johannesburg
Beijing
Seoul
Singapore
Melbourne
Amsterdam
Atyrau
Brisbane
UK – South
Ho Chi Minh City
Moscow
Nairobi
UAE
São Paulo
Doha
Santiago
UK – Central
UK – Scotland
UK – North
Dublin
Munich
Tokyo
Perth
Hong Kong
Houston
Sydney
Toronto
London
Seattle
New York City
Location factor London = 100
In conclusion, it may be necessary to consider each of the three comparison methods above in order to
make a fair assessment of whether a country is a cheap or expensive location to build. For each market
in this survey, we have calculated the associated costs using these three methods.

Around the globe
Australia
With the resources boom over, it’s a good time to build
Economic overview Future outlook
Economic growth is slowing in Australia and interest rates With the exception of Sydney’s apartment market, the cost
are at a record low. As the natural resources boom comes of construction is flat and the outlook moderate over the
to an end, projects in that sector are complete or completing medium term. Labour availability has improved significantly.
with few new projects in the pipeline. A falling exchange rate Wages are forecast to be flat in real terms or even falling
will help balance the economy, benefitting industries such as in locations such as Western Australia. Materials prices
tourism, education and agriculture. are also forecast to be flat or falling. Overall, this is a good
time to build. Construction costs should remain fairly stable
Construction markets and trends
although some residential construction trades may become
The residential property sector is making a comeback with
increasingly difficult to source, adding pressure to costs.
Sydney leading the way due to cuts in interest rates in early
2015 and other states are set to follow. There are major
infrastructure projects underway and planned such as the
Sydney Metro Northwest, Sydney Metro City & Southwest
and the Melbourne Rail Link. However, tight government
budgets are a constraint for this sector.
Sydney USD
International building costs Brisbane Melbourne Perth Sydney (exchange
per m2 of internal area, in 2015 AUD AUD AUD AUD rate: 1.28)
Airports
Domestic terminal, full service 5,000 4,900 4,900 5,000 3,900
Low-cost carrier terminal, basic service 3,900 3,880 3,880 4,000 3,120
Car parks
Multi-storey above ground 820 820 820 840 660
Multi-storey below ground 1,500 1,550 1,800 1,700 1,330
Commercial
Offices – business park 1,500 1,600 1,600 1,700 1,330
CBD offices – up to 20 floors medium (A-Grade) 3,000 2,950 3,100 3,200 2,500
CBD offices – high-rise prestige 3,400 4,000 4,500 5,000 3,900
Education
Primary and secondary schools 1,600 1,940 1,500 2,000 1,560
University 3,200 3,140 3,140 3,200 2,500
Hospitals
Day centre (including basic surgeries) 3,000 2,960 2,960 3,000 2,340
Regional hospital 3,450 3,500 3,500 3,500 2,730
General hospital (eg city teaching hospital) 5,400 5,600 5,800 5,800 4,520
Hotels
3 star travellers 2,400 2,350 2,350 2,400 1,870
5 star luxury 4,000 4,200 4,200 5,100 3,980
Resort style 3,600 3,600 3,600 3,700 2,890
Industrial
Warehouse/factory units – basic 800 750 770 750 580
Large warehouse distribution centre 1,000 950 950 1,000 780
High-tech factory/laboratory 3,300 3,600 4,000 3,500 2,730
Residential
Individual detached or terrace style house medium standard 1,650 1,600 1,650 1,750 1,360
Individual detached house prestige 3,000 2,700 3,000 2,850 2,220
Townhouses medium standard 1,700 1,750 1,850 1,900 1,480
Apartments low-rise medium standard 1,800 1,960 1,900 2,100 1,640
Apartments high-rise 2,500 2,700 2,900 2,700 2,110
Aged care/affordable units 2,400 2,350 2,600 2,500 1,950
Retail
Large shopping centre including mall 2,500 2,240 2,240 2,640 2,060
Neighbourhood including supermarket 1,700 1,800 1,800 2,000 1,560
Prestige car showroom 2,700 2,500 2,500 2,700 2,110

Sydney USD
Brisbane Melbourne Perth Sydney (exchange
Australia – international building costs AUD AUD AUD AUD rate: 1.28)
Composite trade rates

Excavate basement (m3) (1,800m3 job) 25 22 12 23 18
Excavate footings (m) 35 36 40 37 29
Concrete in slab (m3) (1,500m3 job) 290 297 314 310 242
Reinforcement in beams (tonne) 2,100 2,076 2,100 2,138 1,667
Formwork to soffit of slab (m2) 125 122 130 126 98
Blockwork in wall (m2) (10,000m2 block job) 135 134 136 138 108
Structural steel beams (tonne) 5,000 5,250 4,900 5,500 4,289
Pre-cast concrete wall (m2) 420 398 425 418 326
Curtain wall glazing including support system (m ) 2
1,200 1,200 1,200 1,300 1,014
(1,000m2 job)
Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 35 35 35 36 28
Single solid core door including frame and hardware (no) 800 773 775 796 621
(50 door job)
Painting to walls primer + 2 coats (m2) 16 14 15 14 11
Ceramic tiling (m2) (1,000m2 job) 115 110 120 110 86
Vinyl flooring to wet areas (m2) (500m2 job) 65 70 52 54 42
Carpet medium tufted (m2) (4,500m2 job) 65 60 50 60 47
Lighting installation (m2) (5,000m2+ job) 85 82 125 84 66
Copper pipe 15mm to wall (m) (1,000m+ job) 61 61 61 62 48
Fire sprinklers (per m2) (5,000m2 job) 46 46 45 48 37
Air conditioning including main plant (m2) (5,000m2+ job) 250 250 450 250 195
Labour costs
Group 1 tradesman eg plumber, electrician 68 66 95 70 55
Group 2 tradesman eg carpenter, bricklayer 61 59 70 62 48
Group 3 tradesman eg carpet layer, tiler, plasterer 54 52 60 55 43
General labourer 39 38 45 40 31
Site foreman 77 72 105 79 62
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 150 155 178 205 160
Reinforcement bar 16mm (tonne) (120 tonne job) 1,125 1,250 1,200 1,300 1,014
Concrete block (400x200) per 1,000 (>10,000 block job) 3,400 3,500 4,000 3,150 2,456
Standard brick per 1,000 510 520 755 590 460
Structural steel beams (tonne) (100 tonne+ job) 2,000 2,000 2,000 2,050 1,599
Glass pane 10mm tempered (m2) 250 250 250 250 195
Softwood timber for framing 100mm x 50mm (m) 4 4 4 4 3
13 mm plasterboard (m2) 8 8 8 8 6
Emulsion paint (litre) 12 12 12 12 9
Copper pipe 15 mm (metre) (1,000m+ job) 12 12 12 12 9
Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 4 4 4 4 3
Plant
Hire 50t mobile crane + operator (day) 2,100 2,100 2,100 2,100 1,640
Brisbane Melbourne Perth Sydney
Market: warmer staying the same cooler warmer

Tendering: lukewarm lukewarm lukewarm lukewarm
Cost escalation 2014–15: 1.5% 1.0% 1.0% 3.0%
Cost escalation 2015–16: 2.0% 1.0% 1.5% 4.0%
Contractors’ margin: 3.5% 4.0% 5.0% 4.0%
Preliminaries: 12.0% 10.0% 12.0% 12.0%
Location factor (USD): 77 76 86 89
PPP coefficient: 1.69 1.69 1.87 1.79

Around the globe
Brazil – São Paulo

Government looks to private investors to boost infrastructure development
Economic overview a strain on the economy, leading to reduced investment from
These are difficult times for Brazil. Cuts in public investment the private sector.
to compensate for overspending, and a lack of structural
The government underlined its commitment to public-private
reforms are slowing economic growth. Business confidence
investment in June when Brazil’s president announced a
is very low and consumer spending is weakening. Brazil’s
package of infrastructure concessions worth almost
economy is expected to contract by one percent in 2015,
R$200bn. This sum includes R$66bn for the construction and
and grow by 1.1 percent in 2016.
operation of almost 7,000km of roads, R$9bn on airports at
Construction markets and trends Salvador, Florianópolis, Fortaleza and Porto Alegre, R$37bn
Construction activity is also slowing. Major construction for ports and R$86bn for railways.
projects related to the 2014 FIFA World Cup have completed
Future outlook
and residential construction has declined. Despite this,
Despite the resources slowdown, construction of the
construction costs remain high.
Olympic stadia and infrastructure is likely to put pressure
Future growth will depend on the successful implementation on construction trades. Inflation has been rising and this
of an economic recovery plan that maintains investment may lead to strong wage increases, which will further add
levels while government spending is reduced. Tax rises must to construction costs.
also be avoided as the current level of taxation is putting
USD
International building costs (exchange
per m22of internal area, in 2015 BRL rate: 2.85)
Airports
Domestic terminal, full service – –
Low-cost carrier terminal, basic service – –
Car parks
Multi-storey above ground 1,766 620
Multi-storey below ground 2,300 810
Commercial
Offices – business park 2,800 980
CBD offices – up to 20 floors medium (A-Grade) 2,800 980
CBD offices – high-rise prestige 6,000 2,110
Education
Primary and secondary schools 2,119 740
University 2,825 990
Hospitals
Day centre (including basic surgeries) 2,825 990
Regional hospital 4,200 1,470
General hospital (eg city teaching hospital) 6,125 2,150
Hotels
3 star travellers 2,793 980
5 star luxury 3,713 1,300
Resort style 3,360 1,180
Industrial
Warehouse/factory units – basic 2,050 720
Large warehouse distribution centre 1,600 560
High-tech factory/laboratory 8,000 2,810
Residential
Individual detached or terrace style house medium standard 1,704 600
Individual detached house prestige 1,800 630
Townhouses medium standard 2,500 880
Apartments low-rise medium standard 2,300 810
Apartments high-rise 2,200 770
Aged care/affordable units 1,100 390
Retail
Large shopping centre including mall 2,000 700
Neighbourhood including supermarket 3,400 1,190
Prestige car showroom 4,100 1,440

USD
(exchange
Brazil – international building costs REAL rate: 2.85)

Excavate basement (m3) (1,800m3 job) 15 5
Excavate footings (m) 25 9
Concrete in slab (m3) (1,500m3 job) 300 105
Reinforcement in beams (tonne) 5,000 1,755
Formwork to soffit of slab (m2) 80 28
Blockwork in wall (m2) (10,000m2 block job) 80 28
Structural steel beams (tonne) 7,000 2,457
Pre-cast concrete wall (m2) 300 105
Curtain wall glazing including support system (m2) (1,000m2 job) 1,500 527
Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 60 21
Single solid core door including frame and hardware (no) (50 door job) 1,300 456
Painting to walls primer + 2 coats (m2) 30 11
Ceramic tiling (m2) (1,000m2 job) 100 35
Vinyl flooring to wet areas (m2) (500m2 job) 150 53
Carpet medium tufted (m2) (4,500m2 job) 150 53
Lighting installation (m2) (5,000m2+ job) 230 81
Copper pipe 15mm to wall (m) (1,000m+ job) 130 46
Fire sprinklers (per m2) (5,000m2 job) 45 16
Air conditioning including main plant (m2) (5,000m2+ job) 200 70
Labour costs
Group 1 tradesman eg plumber, electrician 40 14
Group 2 tradesman eg carpenter, bricklayer 40 14
Group 3 tradesman eg carpet layer, tiler, plasterer 35 12
General labourer 25 9
Site foreman 65 23
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 350 123
Reinforcement bar 16mm (tonne) (120 tonne job) 1,750 614
Concrete block (400x200) per 1,000 (>10,000 block job) 1,500 527
Standard brick per 1,000 945 332
Structural steel beams (tonne) (100 tonne+ job) 5,400 1,895
Glass pane 10mm tempered (m2) 580 204
Softwood timber for framing 100mm x 50mm (m) 8 3
13 mm plasterboard (m2) 20 7
Emulsion paint (litre) 17 6
Copper pipe 15 mm (metre) (1,000m+ job) 20 7
Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 1
Plant
Hire 50t mobile crane + operator (day) 1,000 350
Market: cooler
Tendering: lukewarm
Cost escalation 2014–15: 6.95%
Contractors’ margin: 7.0%
Preliminaries: 11.0%
Location factor (USD): 56
PPP coefficient: 2.33

Around the globe
Canada – Toronto
Tide turns from resources to traditional industries
Economic overview cut investment plans. Proposals for LNG export terminals
In recent years, Canada was typified by a strong divergence on Canada’s Pacific coast may be delayed or cancelled.
between the high-growth energy economies of Western
Non-residential construction is declining, overall, due to
Canada and the slower-growth manufacturing-based
major cutbacks from the energy sector. These declines
economies of central Canada. The sudden decline in the
are partially offset by ongoing investment in infrastructure
price of oil cooled growth in the west, but it also lowered the
and industrial construction.
Canadian dollar, which strengthened central Canada’s export
competitiveness. The national economy is now poised for Residential construction is strong across Canada, fed by
moderate and even growth. continuing population growth, economic growth and low
interest rates. Recent developments include a softening of
The Canadian dollar’s fall against the USD should assist
the market in Alberta, and a shift towards the construction
export-oriented sectors including forestry, manufacturing,
of rental units in the Toronto area.
agriculture and tourism. While the oil and gas sector remains
important to the national economy, other industries are set Future outlook
to re-emerge as growth leaders. In Canada’s stable but growing economy, construction costs
are set to remain flat in the short term but expected to
register a modest growth in the medium term.
Natural resource companies scaled back their expenditure
plans, in response to the lower price of oil. Oil producers
USD
per m2 of internal area, in 2015 CAD rate: 1.25)
Airports
Domestic terminal, full service 5,870 4,710
Low-cost carrier terminal, basic service 4,100 3,290
Car parks
Multi-storey above ground 830 670
Commercial
Offices – business park 1,740 1,400
CBD offices – up to 20 floors medium (A-Grade) 2,370 1,900
Education
Primary and secondary schools 1,950 1,560
University 4,000 3,210
Hospitals
Day centre (including basic surgeries) 3,800 3,050
Hotels
3 star travellers 1,440 1,160
Industrial
Warehouse/factory units – basic 930 750
Residential
Individual detached or terrace style house medium standard 2,930 2,350
Individual detached house prestige 3,970 3,180
Townhouses medium standard 1,465 1,180
Apartments low-rise medium standard 1,960 1,570
Apartments high-rise 1,750 1,400
Aged care/affordable units 2,060 1,650
Retail
Large shopping centre including mall 2,450 1,970

USD
(exchange
Canada – international building costs CAD rate: 1.25)

Curtain wall glazing including support system (m2) (1,000m2 job) 950 762
Labour costs
Site foreman 80 64
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 1,450 1,163
Concrete block (400x200) per 1,000 (>10,000 block job) 1,500 1,203
Plant
Hire 50t mobile crane + operator (day) 1,840 1,480
Market: staying the same

Tendering: lukewarm

Around the globe
Chile – Santiago
Falling copper prices wound economy – but infrastructure looks promising
Economic overview Construction markets and trends
Chile’s economy slowed further during 2014, due to Overall construction activity levels have fallen with weak
falling investment, particularly in the mining sector, and growth in infrastructure and residential construction.
a deceleration in private consumption. However, in the However, the outlook for infrastructure looks strong. In
first quarter of 2015, there were more positive signs; the 2014, the Government announced a seven-year plan that
economy grew 2.4 percent, credited to a growth in private would see USD18bn spent on improving road infrastructure
consumption and small increase in government spending. and USD9.9bn on roads to be operated by concessionaires.
The recent fall in the price of copper, which accounts for Future outlook
54 percent of Chile’s exports, has impacted heavily on Chile’s dependence on resources exports and lower
revenues from export. While the depreciation of the peso commodity prices will negatively affect construction activity.
goes some way to counterbalance this, business and However, some persistent inflation will add to wage and
consumer confidence have been weak. materials costs, causing construction costs overall to keep
rising sharply.
USD
per m2 of internal area, in 2015 CLP* rate: 618.55)
Airports
Domestic terminal, full service 1,244,880 2,010
Low-cost carrier terminal, basic service 1,018,540 1,650
Car parks
Commercial
CBD offices – high-rise prestige 1,392,890 2,250
Education
University 1,133,200 1,830
Hospitals
Hotels
5 star luxury 1,487,320 2,400
Resort style 1,189,860 1,920
Industrial
Residential
Retail
Prestige car showroom 1,159,760 1,870

USD
(exchange
Chile – international building costs CLP rate: 618.55)

Excavate basement (m3) (1,800m3 job) 7,840 13
Excavate footings (m) 10,400 17
Concrete in slab (m3) (1,500m3 job) 121,940 197
Reinforcement in beams (tonne) 1,027,824 1,662
Formwork to soffit of slab (m2) 53,010 86
Blockwork in wall (m2) (10,000m2 block job) 46,170 75
Structural steel beams (tonne) 1,032,840 1,670
Pre-cast concrete wall (m2) 64,638 104
Plasterboard 13mm thick to stud wall (m ) (3,000m job)
2 2
22,516 36
Painting to walls primer + 2 coats (m2) 5,920 10
Ceramic tiling (m2) (1,000m2 job) 15,200 25
Vinyl flooring to wet areas (m2) (500m2 job) 14,187 23
Carpet medium tufted (m2) (4,500m2 job) 6,500 11
Lighting installation (m2) (5,000m2+ job) 35,340 57
Copper pipe 15mm to wall (m) (1,000m+ job) 6,270 10
Fire sprinklers (per m2) (5,000m2 job) 11,900 19
Air conditioning including main plant (m2) (5,000m2+ job) 61,500 99
Labour costs
Group 1 tradesman eg plumber, electrician 15,960 26
Group 2 tradesman eg carpenter, bricklayer 14,360 23
Group 3 tradesman eg carpet layer, tiler, plasterer 12,770 21
General labourer 9,580 15
Site foreman 22,340 36
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 87,100 141
Standard brick per 1,000 125,000 202
Structural steel beams (tonne) (100 tonne+ job) 588,300 951
Glass pane 10mm tempered (m2) 55,000 89
Softwood timber for framing 100mm x 50mm (m) 1,500 2
13 mm plasterboard (m2) 4,514 7
Emulsion paint (litre) 2,632 4
Copper pipe 15 mm (metre) (1,000m+ job) 2,190 4
Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 1,710 3
Plant
*
lease note that pricing shown is indicative of construction costs in Santiago. Costs associated with mining and
P
country-wide infrastructure projects vary due to remoteness and altitude factors.

Tendering: lukewarm

Around the globe
China – Beijing
Difficult time for property as government calls time on easy credit
China’s authorities have introduced strict monetary As a result of the policy measures, China’s property
policy measures to combat the rampant growth of easy developers are raising capital from international markets
credit, which pushed the construction and property to finance their projects. Now that the real estate market
sectors to unsustainable highs. So far their efforts seem has slowed down in the region, many of these companies
to be successful, resulting in much slower credit growth, are on the verge of defaulting on their debts.
lower unregulated lending and a gradual transition to
Future outlook
consumption-driven growth.
The cost of construction is increasing at a moderate pace
We are likely to see more of the same throughout 2015 with due to rising labour costs, despite a fall in material prices.
further moderation of growth, housing market adjustment, Average construction costs are also rising as clients demand
decelerating credit growth and an advancement of difficult higher quality, and more projects seek environmental
structural reforms in areas such as local government debt certification such as LEED (Leadership in Energy &
management, anti-corruption and interest rate liberalisation. Environmental Design).
GDP growth is likely to moderate to seven percent in 2015
Both commercial and residential sectors are expected to
from an estimated 7.3 percent in 2014.
remain weak for the remainder of 2015, while construction
activity in infrastructure and public sectors is rising.
USD
per m2 of internal area, in 2015 RMB rate: 6.15)
Airports
Car parks
Commercial
Education
Hospitals
Regional hospital 5,400 880
General hospital (eg city teaching hospital) 6,000 980
Hotels
5 star luxury 15,500 2,520
Industrial
High-tech factory/laboratory 6,000 980
Residential
Retail
Neighbourhood including supermarket 4,000 650
Prestige car showroom 4,500 730

USD
(exchange
China – international building costs RMB rate: 6.15)

Reinforcement in beams (tonne) 4,800 780
Labour costs
Site foreman 35 6
Material costs
Plant
Market: cooler
Tendering: lukewarm
Cost escalation 2014–15: -5.0%
Preliminaries: 8.0%

Around the globe
Germany – Munich
Optimism abounds, but construction costs still reasonable
Economic overview With improving business conditions, companies are taking
While the economy in most parts of Europe remains on new employees and optimism about the next year is
depressed, Germany bucks the trend. The euro is undervalued high. However, construction cost escalation is moderate,
against the strength of the German economy, keeping with labour and material costs increasing only in line with
its exports very competitive. A new quantitative easing general inflation. This has helped improve contractor margins
plan from the European Central Bank is expected to boost and is one of the reasons behind the recent increase in
confidence and increase investment activity across the region. construction activity.
Construction markets and trends Future outlook

In 2014, the construction industry grew by four percent, Construction costs appear attractive compared with other
with housing particularly strong and a total turnover of European capitals, although they are likely to trend upwards
EUR35.3bn, an increase of 4.5 percent over 2013. German due to the increase in activity and a drive towards higher
construction companies signalled a broad-based upturn in quality. Businesses considering capital investment should
March 2015, with housing and commercial activity increasing find that construction costs remain moderate over the next
at record speeds and civil construction activity up after 12 months.
a long period of depression.
USD
per m2 of internal area, in 2015 EUR rate: 0.88)
Airports
Car parks
Multi-storey below ground 780 890
Commercial
Education
Hospitals
Hotels
Industrial
Large warehouse distribution centre 770 880
Residential
Retail

USD
(exchange
Germany – international building costs EUR rate: 0.88)

Single solid core door including frame and hardware (no) (50 door job) 885 1,007
Labour costs
Site foreman 42 48
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 842 958
Plant

Tendering: warm

Around the globe
Hong Kong
Strong construction market constrained by an ageing workforce
Economic overview projects, such as the seven rail projects worth HKD110bn
The Hong Kong economy remains strong, but has been that were announced in late 2014, keep coming.
impacted by its dependence on exports and the slowing
Real GDP is expected to be a relatively moderate 2–2.5
growth in China. Being pegged to USD, the rising currency
percent in 2015–16, indicating some slack in the economy
makes Hong Kong exports more expensive in global trade.
which will help push inflation down from four percent to
Construction market and trends three percent. This may ease some of the cost pressures
The construction market looks strong with numerous large on construction. However, construction costs in Hong Kong
projects planned and underway. However, some are taking are among the highest in the world.
longer than expected to deliver due to skills shortages
Future outlook
and an ageing construction workforce; half of Hong Kong’s
With construction expected to increase by 6.5 percent in real
240,000 workers are over 50.
terms during 2015, and some labour shortages, costs are
Projects including the Hong Kong Shenzen Huangshou likely to increase by as much as 7.5 percent over 2015–16,
high-speed rail link, the MTR’s West Island and South making Hong Kong one of the least affordable locations.
Island lines are all experiencing delays. However, new large
USD
per m2 of internal area, in 2015 HKD rate: 7.76)
Airports
Car parks
Multi-storey above ground 11,000 1,420
Multi-storey below ground 19,000 2,450
Commercial
Education
Hospitals
Hotels
5 star luxury 34,000 4,380
Industrial
Warehouse/factory units – basic 15,000 1,930
Large warehouse distribution centre 16,000 2,060
Residential
Retail

USD
(exchange
Hong Kong – international building costs HKD rate: 7.76)

Labour costs
Site foreman 172 22
Material costs
Plant
Market: warmer
Tendering: warm

Around the globe
India – Bangalore
New Government has ambitious plans for manufacturing and infrastructure
Economic overview over 500 cities costing over USD650bn. The new 'Make
Policy changes after India’s recent national elections have in India' initiative aims to establish the region as a global
impacted on its construction market, with some changes manufacturing hub, attracting investment into new industrial
having positive effects. cities, smart cities, manufacturing plants and ports. As part
of this programme India has eased sanctions on foreign
Construction market and trends
direct investment for the construction sector.
Construction cost escalation is close to seven percent due
to high general inflation and increasing demand from an Demand from the residential sector is also very strong with
improving market. Property developers, who have traditionally continued population growth and affordability. Interest rate
delivered construction works themselves, are now looking to cuts and urbanisation (as more people move to the cities)
outsource in order to focus on land acquisitions, development are also providing a boost to housing demand.
and sales. The result is a shortage in contractors and further
Future outlook
upward pressure on construction costs.
Some natural resource shortages and a high level of
Infrastructure, which accounts for over 50 percent of India’s overall price inflation in the Indian economy look set to
construction activity, looks set to strengthen further thanks keep pushing construction costs higher during 2015–16.
to a recently announced government programme to develop
USD
per m2 of internal area, in 2015 INR rate: 62.12)
Airports
Car parks
Commercial
CBD offices – high-rise prestige 48,420 780
Education
Hospitals
Hotels
5 star luxury 99,530 1,600
Industrial
Residential
Retail

USD
(exchange
India – international building costs INR rate: 62.12)

2 2
3,000 48
Labour costs
Group 1 tradesman eg plumber, electrician 90 1.4
Group 2 tradesman eg carpenter, bricklayer 85 1.4
Group 3 tradesman eg carpet layer, tiler, plasterer 75 1.2
General labourer 55 0.9
Site foreman 120 1.9
Material costs
Plant

Tendering: warm

Around the globe
Ireland – Dublin
A brighter outlook for construction, led by the private sector
Economic overview Construction employment is increasing steadily and there is
Sentiment has improved in Ireland, with the Irish press evidence of some strain in the supply chain as it struggles
talking of a return to better times, although not on quite the to meet the growing demand; this has been exacerbated
same scale as before the collapse in 2007. Manufacturing is by a skills shortage in the industry. Some key suppliers
increasing, hotel occupancy is strong and commercial rents are withdrawing from the smaller end of the market to focus
are rising. on larger contracts where margins are greater. There is
some upward pressure on tender prices.
The construction sector is looking more positive than it has Future outlook
for several years, though there is still some way to go. At Slow and steady improvement in the construction sector is
EUR11bn, construction is still only 7.5 percent of Gross set to continue in 2015–16. Construction costs may increase
National Profit (GNP), well below the long-run average of by five percent in 2015 generally, with pockets of skills
12 percent and a long way below the peak of 27 percent shortages in specialised sectors adding further to costs.
in 2007. Growth in construction is likely to come from the
private sector as the public sector budget is still under
pressure. Residential, commercial, hotels, data-centres,
pharmaceuticals will be the main activity areas.
USD
Airports
Car parks
Multi-storey below ground 950 1,080
Commercial
Education
Hospitals
Hotels
Industrial
Large warehouse distribution centre 950 1,080
Residential
Retail

USD
(exchange
Ireland – international building costs EUR rate: 0.88)

Reinforcement in beams (tonne) 980 1,115
Single solid core door including frame and hardware (no) (50 door job) 765 871
Labour costs
Site foreman 29 33
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 820 933
Plant
Market: warmer
Tendering: warm
Preliminaries: 9.0%

Around the globe
Japan – Tokyo
Efforts to grow economy through infrastructure set to bear fruit
Economic overview There is moderate upward pressure on construction costs,
Japan is pumping trillions of yen into its economy through with a limited supply of skilled labour thanks to an ageing
asset purchases and low interest rates. Outside Tokyo workforce and the tsunami reconstruction, which is still
sentiment is still pessimistic, with two-thirds of businesses underway. Costs for imported materials are also under
expecting conditions to get worse. The rate of growth in upward pressure from the falling yen.
construction orders is still quite modest.
Future outlook
Construction markets and trends The consumption tax increase (from five percent to eight
The new Chuo Shinkansen high-speed railway line between percent) in 2014, which dampened construction activity prior
Tokyo and Nagoya, and eventually to Osaka, will be essential to implementation, now appears to be priced in. A further
to construction growth. Other planned projects include increase planned for October 2015 (eight percent to ten
the 2020 Olympics village, and in Greater Tokyo, up to percent) has been postponed to before April 2017. Tokyo’s
173 residential towers. market looks set to heat up in 2015–16, however there is
sufficient excess capacity to prevent significant construction
Other new Shinkansen projects will boost business by opening
cost increases from occurring to any major extent just yet.
up land for commercial development. These include Nagano
Higher costs may occur later as construction for the 2020
to Kanazawa and Kanazawa to Tsuraga, where large new
Olympics gets into full swing.
station complexes will provide well-connected accommodation
for business at costs much lower than Tokyo. USD
(exchange
International building costs per m2 of internal area, in 2015 JPY rate: 118.82)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 651,000 5,480
Industrial
Residential
Retail

USD
(exchange
Japan – international building costs JPY rate: 118.82)

Curtain wall glazing including support system (m2) (1,000m2 job) 130,000 1,094
Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 3,950 33
Labour costs
Material costs
Plant

Tendering: hot

Around the globe
Kazakhstan – Atyrau
While oil exports fall, foreign investment is set to rise
In 2010 the Kazakhstan economy was growing at close to Given the fall in government revenues from oil, infrastructure
ten percent year-on-year; by early 2015 this has fallen to budgets are being cut. Meanwhile construction cost increases
2.2 percent due to the lower oil prices. This reflects the fact remain some of the highest in the survey with 7.5 percent
that seven percent of export volume is oil-related. Inflation cost growth in 2014 and another 7.5 percent forecast in 2015,
remains quite high although consumer spending, consumer thanks to the country’s high levels of inflation.
credit and confidence are under downward pressure, which
Future outlook
will ease inflation.
The fall in oil revenues and the ongoing weakness in Russia
The rouble has fallen against the tenge, adversely will continue to affect Kazakhstan prospects, potentially
affecting exports to Russia. Meanwhile the tenge itself forcing a further devaluation of the currency. However, over
fell strongly against the US dollar making imports more the medium term Kazakhstan’s strong oil reserves will keep
expensive. On the flip side, this should help encourage the outlook for construction growth positive. High inflation
inbound foreign investment. is likely to feed through to higher construction costs.
USD
per m2 of internal area, in 2015 KZT rate: 185.00)
Airports
Car parks
Commercial
Offices – business park – –
CBD offices – high-rise prestige – –
Education
Hospitals
Day centre (including basic surgeries) – –
Regional hospital – –
General hospital (eg city teaching hospital) – –
Hotels
5 star luxury 354,110 1,910
Resort style – –
Industrial
High-tech factory/laboratory – –
Residential
Retail
Large shopping centre including mall – –
Neighbourhood including supermarket – –
Prestige car showroom – –

USD
(exchange
Kazakhstan – international building costs KZT rate: 185.00)

Labour costs
Material costs
Plant
Market: cooler
Tendering: lukewarm
Preliminaries: 7.0%

Around the globe
Kenya – Nairobi
Strong construction market set for more growth
Economic overview though the Kenyan shilling has not fallen as much as its peers,
Kenya is one of the better performing construction markets reflecting its relative strength. However, neither of these
in Africa, with strong population growth and improved should have a material impact on the construction sector.
domestic consumption due to lower oil prices providing some
The market is warm and getting warmer. The combination of
stimulus to the economy.
local supplies of concrete and sufficient construction capacity
Construction markets and trends is preventing construction costs from rising at present even
The number of building permits doubled during 2014, though inflation has started to pick up to around seven
indicating strong growth in 2015. New Private Public percent year-on-year.
Partnership legislation should help boost the infrastructure
Future outlook
sector and a 2.7 percent population growth and the
Construction is set to keep growing, with infrastructure
strengthening economy should keep construction growing
becoming more important. Construction cost increases
quite strongly.
are likely to be modest in 2015–16, but could start to rise
There are two headwinds. First, the security situation at more quickly if growth remains strong. Costs are attractive
the beginning of 2015 has temporarily dented tourism. in global terms and the legal system is becoming more
Second, the higher US dollar has added to import costs, supportive of investment.
USD
per m2 of internal area, in 2015 KSH rate: 92.00)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 118,400 1,290
Industrial
Residential
Retail

USD
(exchange
Kenya – international building costs KSH rate: 92.00)

Lighting installation (m2) (5,000m2+ job) – –
Copper pipe 15mm to wall (m) (1,000m+ job) – –
Fire sprinklers (per m2) (5,000m2 job) – –
Air conditioning including main plant (m2) (5,000m2+ job) – –
Labour costs
Site foreman 305 3
Material costs
Plant
Market: warmer
Tendering: warm
Preliminaries: 5.0%

Around the globe
Malaysia – Kuala Lumpur

Low construction costs and a favourable exchange rate
Economic overview Expressway with RM34bn allocated to LRT2 light rail.
Activity in Malaysia’s buoyant construction industry is set to A Singapore to Kuala Lumpur high-speed rail line is also
grow by 11.6 percent in 2015, contributing to overall GDP under consideration.
growth of 5.6 percent. Investment by the public sector in
Malaysia appears to offer excellent value for money with
transport and energy infrastructure is strong.
moderate wages and some of the lowest construction costs
However, there’s a cloud on the horizon, as falling oil prices of any developed economy. Materials prices have stayed low
will affect government funding revenues. On the other and labour rates are lower compared with Singapore.
hand, much of the work is likely to be financed by Private
Future outlook
Public Partnerships.
Economic growth of around five percent should add some
Construction market and trends moderate cost pressures due to weaker tender price
The 2015 budget includes RM76bn for road and rail projects, competition. With construction cost starting from a low base,
including the Klang Valley MRT railway extension and phase a rise of five percent is expected in 2015. Overseas investors
two of the 1,663km Pan Borneo highway. A further RM15bn would also benefit from the lower exchange rate.
is earmarked for major highways including the West Coast
USD
per m2 of internal area, in 2015 MYR rate: 3.62)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
Industrial
Residential
Retail

USD
(exchange
Malaysia – international building costs MYR rate: 3.62)

Labour costs
Site foreman 56 15
Material costs
Plant
Market: cooler
Tendering: warm

Around the globe
Netherlands – Amsterdam
Upswing in housing signals construction revival
Economic overview Infrastructure construction is strong, especially transportation
The outlook for the construction sector in the Netherlands is and utilities, with long-term projects likely to ensure activity
reasonably positive. While its economy is weaker than those levels remain high. Residential construction, depressed
of other Northern European countries such as Germany and since the global financial crisis, has rallied strongly with
the UK, it is ahead of southern European economies. 21,100 transactions in the first two months of 2015, up
12 percent compared to the same period in 2014. In the
non-residential sector, activity is decreasing.
Confidence has improved significantly over 2014 and
construction activity across all sectors is forecast to increase Future outlook
by close to two percent in 2015. Positive influencers are the Overall cost increases are likely to be moderate, with plenty
improved economic situation domestically and internationally, of excess capacity in the construction sector. However, the
falling mortgage rates, rising sales of new homes and good upswing in the housing sector is likely to continue, eventually
affordability. These are expected to outweigh restraining adding some pressure to construction trade costs.
factors such as the residual debt problem, scaling back
of stimulus measures and credit restrictions.
USD
Airports
Car parks
Commercial
Education
Hospitals
Hotels
Industrial
Large warehouse distribution centre 869 990
Residential
Retail

USD
(exchange
Netherlands – international building costs EUR rate: 0.88)

Single solid core door including frame and hardware (no) (50 door job) 1,134 1,291
Labour costs
Site foreman 40 46
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 970 1,104
Plant
Market: warmer
Tendering: lukewarm

Around the globe
Poland – Warsaw
Bruised construction industry wants to avoid pain of the past
Economic overview European contractors and investors bruised. Lowest priced
Low interest rates, four percent nominal wage growth and a tendering has now been abandoned for public projects.
fall in unemployment from 14 percent in 2014 to 11 percent in
More roads are planned. Poland is the largest net
early 2015 are driving demand for new homes. While housing
beneficiary of EU funds and the new 2014–20 budget will
comprises only 13 percent of the total construction sector,
supply EUR24.3bn towards infrastructure, which will be
it is a bright spot that will help improve confidence among
supplemented by internal funds for the construction of
financial institutions.
1770km of new roads and 35 ring roads. The peak will be
Construction market and trends 2016–18, with some risk of repeating the previous problems
The period before the UEFA Euro 2012 Football Championship of high materials prices.
caused significant problems for the Polish construction
Future outlook
industry, with a high number of insolvencies due to
Currently construction cost escalation is low with around one
insufficient capital, and rising materials costs. Major road
percent per annum increases in costs. The market in 2015
building projects, intended to modernise the road system,
will remain lukewarm. Some gradual stabilisation, followed
were plagued by problems of higher materials costs, inflexible
by improvement, is likely over the medium term, mostly due
contracts and low margins. The experience left local and other
to large projects now planned for construction in 2016.
USD
per m2 of internal area, in 2015 PLN rate: 3.70)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
Industrial
Residential
Retail

USD
(exchange
Poland – international building costs PLN rate: 3.70)

Labour costs
Site foreman 45 12
Material costs
Plant

Tendering: lukewarm

Around the globe
Qatar – Doha
A raft of mega-projects, but cost rises remain modest
Economic overview The cost of improving working conditions for a labour
Despite the fall in oil prices, Qatar’s economy is set to grow force which comes from less-developed nations has had
strongly with the Ministry of Developmental Planning and minimal effect on tender prices. Specialist labour services
Statistics forecasting real GDP growth of 7.7 percent for are sourced from Europe or Asia and availability is subject
2015. Its construction market remains volatile and is subject to their local markets.
to both internal and external pressures of meeting the 2022
Future outlook
World Cup deadlines, as well as the external pressure of
Construction inflation remains at a reasonable 3.7 percent,
oil prices.
similar to inflation for 2014 and is rising steadily, rather
Construction markets and trends than violently as expected. The Qatar National Vision
Qatar is investing significantly in construction: a new city 2030 forms the backbone of construction activity, and as
at Lusail; a new 126km metro network around Doha; a long as this remains unaltered construction activity will
new long-distance passenger and freight railway linking keep growing.
Saudi Arabia and Bahrain; football stadia; a second phase
to Hamad International Airport; major road improvements
including an Orbital Motorway; and several malls, hotels and
other iconic buildings.
USD
per m2 of internal area, in 2015 QAR rate: 3.64)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 11,750 3,220
Industrial
Residential
Aged care/affordable units – –
Retail

USD
(exchange
Qatar – international building costs QAR rate: 3.64)

Labour costs
Site foreman 50 14
Material costs
Plant
Market: warmer
Tendering: warm

Around the globe
Russia – Moscow
Sanctions hit hard as works for 2018 World Cup continue
Economic overview Works to build the infrastructure to host the 2018 FIFA
Construction activity has slowed in Russia, along with the World Cup continue, despite some calls to boycott the event.
general economy, due to Western sanctions imposed in However, Russia has announced several cuts to the spending
response to the Ukraine tensions, and the fall in oil prices. programme totaling RUB27bn (EUR440m), reducing the total
spend to RUB637.6bn (EUR10.5bn).
As a result of the economic crisis, commercial vacancy rates As a result of the ruble’s collapse against the dollar, Russian
in Moscow hit almost 45 percent in the first part of 2015. construction costs in US dollars have fallen significantly
Commercial construction completions, at a record high compared to our last survey. Costs are also affected by
in 2014 and expected to be high in 2015, only add to the high general inflation levels.
oversupply. Commercial developers who had been financed
Future outlook
in dollars have fallen on hard times.
The ongoing geopolitical situation makes it more difficult to
Housing completions are forecast to fall by six percent make accurate predictions and projections for the immediate
this year, according to Russia’s Ministry for Construction, future. However, the overall clear trend is one of a weaker
Housing and Utilities, having reached a record high for the economy and construction market.
post-Soviet era of 80 million square metres.
USD
per m2 of internal area, in 2015 RUB rate: 62.37)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 103,000 1,650
Industrial
Residential
Retail

USD
(exchange
Russia – international building costs RUB rate: 62.37)

2 2
2,750 44
Labour costs
Site foreman 950 15
Material costs
Plant
Market: cooler
Tendering: cold
Preliminaries: 8.0%

Around the globe
Singapore
Still a leader, but construction is cooling
Economic overview However, the Changi Airport Terminal 5 expansion project
The government has attempted to rein in the overpriced will add to the private construction workload.
housing sector by tightening monetary policy to reduce
Around 60 percent of the SGD35bn projects expected
the danger of households getting into debt. This is putting
in Singapore in 2015 are coming from the public sector’s
a lid on prices and new developments. Because of housing’s
pipeline of public, civil and institutional projects. Sengkang
dominance in the consumer price index (CPI) weightings,
General Hospital, Tampines Town Hub and extensions to
inflation has now become negative, although core inflation
the East Coast MRT are driving some of the public sector
for other goods is still positive.
construction. Public housing construction is flattening off,
Construction markets and trends in line with demand.
Overall the construction market looks set to cool a little in
Future outlook
2015, especially in the private sector. There is some caution
Singapore will remain a construction leader in Asia, but
among developers in the private housing sector linked to the
2015–16 looks set to be a more moderate period and hence
slowdown in China’s economic growth, and local concerns
construction costs should remain quite stable.
about the sustainability of global trade.
USD
per m2 of internal area, in 2015 SGD rate: 1.36)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
Industrial
Residential
Retail

USD
(exchange
Singapore – international building costs SGD rate: 1.36)

Curtain wall glazing including support system (m2) (1,000m2 job) 1,365 1,005
Labour costs
Site foreman 26 19
Material costs
Concrete block (400x200) per 1,000 (>10,000 block job) 700 516
Plant
Market: cooler
Tendering: lukewarm
Preliminaries: 8.0%

Around the globe
South Africa – Johannesburg

Plagued by problems, the outlook for construction is weak
Economic overview persistent delays due to changing economic fundamentals.
The South African economy weakened further over 2014 However, these projects seem inevitable given South Africa’s
with only 1.5 percent real GDP growth. Policy reforms requirement for infrastructure, utilities, telecommunications
and investment in infrastructure are required to turn and social housing. Consumer price inflation is at its
the economy around, but government and delays in key lowest in four years. Material costs are benign, but wage
project implementation are seen as a major barrier to settlements continue to afford above-inflation wage and
this happening. salary increases. The fall in the rand will increase the cost
of imported materials and equipment.
Construction is still well behind 2010 FIFA World Cup activity, Future outlook
however the sector has strengthened over the last year. The Overall the outlook is weak for the economy and for the
industry remains plagued by power outages and insufficient construction industry and there are significant regional
power infrastructure to support new development. Labour variances. Business confidence in the private sector in South
disputes remain a constant challenge in certain markets. Africa is depressed as a result of a combination of factors.
Though government infrastructure projects are expected
The weakness in commodity prices and the slowdown in the
to boost construction activity, they may not begin in the
resources industry have resulted in a lower appetite for new
next year. Regardless of this, construction cost escalation
projects in the mining industry. Several large infrastructure
is expected to remain above inflation targets.
programmes announced by the government are facing
USD
per m2 of internal area, in 2015 ZAR rate: 11.66)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 13,300 1,140
Industrial
Residential
Retail

USD
(exchange
South Africa – international building costs ZAR rate: 11.66)

Labour costs
Site foreman 108 9
Material costs
Plant

Tendering: lukewarm

Around the globe
South Korea – Seoul

With moderate construction costs, it’s a good time to enter the market
Economic overview announced in 2013. In the private sector, notable projects
In South Korea’s trade exposed economy, headwinds are include the 556m tall Lotte World Tower, which will be the
coming from a weak housing sector, slowing population tallest building on the Korean peninsula when complete.
growth and weaker exports, particularly to its biggest
In the longer term, the infrastructure sector can expect
trading partner, China.
a boost from the government’s plans to develop nuclear
The government introduced efforts to stimulate the housing energy. It is proposing to construct 18 new nuclear power
sector in 2014, including higher loan-to-value ratios, plants by 2030, increasing nuclear power’s share of energy
which should help push up prices and stimulate consumer capacity to nearly 60 percent.
spending. However, lingering concerns regarding China and
Future outlook
the global economy are damaging business confidence and
The South Korean economy is likely to experience only
keeping growth rates low.
lukewarm growth in the medium term. Weak consumer and
Construction market and trends business sentiment is stifling demand. Construction costs
The government has plans to develop South Korea’s are likely to be very stable, and increase by only two percent
infrastructure, with a KRW124trn (USD108.6bn) plan in 2015, providing an opportunity for external players to
to improve transport infrastructure across the country enter the South Korean market.
USD
per m2 of internal area, in 2015 KRW rate: 1,105.23)
Airports
Car parks
Commercial
Offices – business park 1,167,000 1,060
CBD offices – up to 20 floors medium (A-Grade) 1,432,000 1,300
Education
Primary and secondary schools 1,060,000 960
University 1,443,000 1,310
Hospitals
Day centre (including basic surgeries) 1,167,000 1,060
Regional hospital 1,697,000 1,540
General hospital (eg city teaching hospital) 1,803,000 1,630
Hotels
3 star travellers 1,560,000 1,410
5 star luxury 3,329,000 3,010
Resort style 2,132,600 1,930
Industrial
High-tech factory/laboratory 2,704,000 2,450
Residential
Individual detached or terrace style house medium standard 1,196,000 1,080
Individual detached house prestige 1,768,500 1,600
Townhouses medium standard 1,414,800 1,280
Apartments low-rise medium standard 1,144,000 1,040
Apartments high-rise 1,456,000 1,320
Aged care/affordable units 1,248,000 1,130
Retail
Large shopping centre including mall 1,767,000 1,600
Prestige car showroom 1,945,000 1,760

USD
(exchange
South Korea – international building costs KRW rate: 1,105.23)

Labour costs
Material costs
Structural steel beams (tonne) (100 tonne+ job) 1,176,000 1,064
Plant

Tendering: lukewarm

Around the globe
UAE
Stable and resilient construction market
Economic overview Costs for commercial and education projects have increased
The UAE’s economy is exhibiting real signs of stability, marginally but the residential, hospitality and retail sectors
projected to grow at a modest level in 2015. As with are stable.
all Middle East countries the economy is reliant upon
With the economy recovering, the expatriate population in
oil prices, but it appears to be less affected than other
the country has started to increase again, and with it the
countries by the recent fall.
demand for medium and high-quality residential property.
Construction costs generally have remained stable over the last
The construction sector is showing signs of increased
12 months. Material prices have reduced slightly due to global
activity. Much of this has not yet translated into actual
demand while labour rates have generally remained constant.
construction activity, but the outlook for both infrastructure
and building construction looks more positive. Future outlook
Government investment in large infrastructure projects will
Tender prices are neither increasing nor reducing but
be the primary driver of construction activity in the region.
contractors are being more selective choosing to work for
Construction cost escalation is likely to continue along its
the major clients.
stable trajectory.
USD
per m2 of internal area, in 2015 AED rate: 3.67)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
5 star luxury 12,320 3,350
Industrial
Residential
Aged care/affordable units – –
Retail

USD
(exchange
UAE – international building costs AED rate: 3.67)

Labour costs
Site foreman 50 14
Material costs
Plant
Market: warmer
Tendering: lukewarm

Around the globe
Uganda – Kampala
Government investment boosts infrastructure sector
Economic overview Construction market and trends
Uganda’s domestic economy is steadily growing at 5.6 The depreciation of the shilling has hindered private sector
percent GDP. However, the Ugandan shilling has fallen by development. There is speculation that inflation might rise
13 percent against the US dollar in the last six months due to spending pressures as the 2016 elections approach.
as a result of reduced direct foreign investment and high
Uganda’s economy should be further boosted in 2018
dependence on imports.
when oil production is scheduled to begin, following the
Government investment in infrastructure and public facilities construction of the country’s first USD3bn refinery in Hoima.
including roads, energy, schools and hospitals continues Russian state corporation Rostec is the preferred bidder on
to grow. With the help of foreign investment, particularly the Public Private Partnership deal.
from China, several high-profile construction projects have
Future outlook
recently been announced including the USD1.4bn Karuma
Public infrastructure investment is likely to be strong in
hydropower dam across the River Nile, expansion of Entebbe
the 2015/2016 financial year, with further growth expected
International Airport, and a new railway line between Kenya
in the agriculture, power and oil and gas sectors.
and Rwanda, running through Uganda.
USD
per m2 of internal area, in 2015 UGX rate: 3,150)
Airports
Car parks
Multi-storey above ground 1,291,500 410
Multi-storey below ground 1,638,000 520
Commercial
Offices – business park 2,709,000 860
CBD offices – up to 20 floors medium (A-Grade) 2,866,500 910
Education
University 2,205,000 700
Hospitals
Day centre (including basic surgeries) 2,709,000 860
Hotels
5 star luxury 4,788,000 1,520
Resort style 10,080,000 3,200
Industrial
Warehouse/factory units – basic 1,102,500 350
Large warehouse distribution centre 1,606,500 510
High-tech factory/laboratory 4,788,000 1,520
Residential
Individual detached or terrace style house medium standard 1,260,000 400
Individual detached house prestige 2,079,000 660
Townhouses medium standard 1,764,000 560
Apartments low-rise medium standard 2,079,000 660
Apartments high-rise 2,394,000 760
Aged care/affordable units 1,795,500 570
Retail
Large shopping centre including mall 3,811,500 1,210
Neighbourhood including supermarket 2,551,500 810
Prestige car showroom 2,520,000 800

USD
(exchange
Uganda – international building costs UGX rate: 3,150)

Single solid core door including frame and hardware (no) (50 door job) 1,269,450 403
Labour costs
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 3,339,000 1,060
Concrete block (400x200) per 1,000 (>10,000 block job) 4,006,800 1,272
Plant
Hire 50t mobile crane + operator (day) 4,315,500 1,370
Market: Cooler
Tendering: lukewarm
Preliminaries: 8.0%
PPP coefficient: 2,157

Around the globe
UK – London
Recovery continues with London steaming ahead
The UK’s economic recovery remains on track with an With the construction sector in London very heated and
increase in GDP of 2.8 percent over 2014. However, the main demand outstripping supply, contractors are being very
risk to sustained growth is considerable: the stability of the selective about the projects they take on. Wage inflation,
European Union and Greece’s tenuous bailout. May’s General strong demand, higher costs of getting materials and
Election delayed some investment decisions as businesses equipment to constrained sites, and margin clawback are likely
waited for clarity on policies. to push construction costs higher over the next 12 months.
Construction market and trends Tender pricing is likely to remain volatile and outperform
London is leading the UK construction sector with annualised the UK average as over capacity continues to cause stress
growth in the fourth quarter of 2014 37 percent higher than in the contracting market. In London, clients should be
output seen in the midst of recession during 2008. This prepared for the unexpected – some tender returns could
growth in London is largely due to the new-build housing be significantly over pre-tender estimates for certain trades,
sector, with the prime high-end residential market particularly which are at stretched capacity. Securing early advice on
hot. Labour costs are rising across the region as the market market appetite, appropriate use of contract terms and
continues to experience growth and capacity is stretched. conditions, and packaging work and risk intelligently will
be key mitigation measures for construction purchasers
in an overheating market. USD
per m2 of internal area, in 2015 GBP rate: 0.68)
Airports
Car parks
Commercial
Education
Hospitals
Hotels
Industrial
Warehouse/factory units – basic 800 1,180
Large warehouse distribution centre 950 1,400
Residential
Retail

USD
(exchange
UK – international building costs GBP rate: 0.68)

Single solid core door including frame and hardware (no) (50 door job) 750 1,103
Labour costs
Site foreman 50 74
Material costs
Reinforcement bar 16mm (tonne) (120 tonne job) 860 1,265
Concrete block (400x200) per 1,000 (>10,000 block job) 850 1,250
Plant
Market: warmer
Tendering: hot

Around the globe
UK – other regions
Outside the capital, regional hotspots exist with other markets growing at a more modest pace
Construction market and trends Market conditions in Scotland vary between regions, with
In the south of the UK, tender prices are increasing at a greater Aberdeen ahead, despite certain oil projects being put on
pace than elsewhere as contractors select opportunities based on hold. As the market improves, sub-contractors are being
risk. Labour is migrating to London, forcing local labour costs up. selective over what they will price, sometimes preferring
Cambridge stands out as a bubble in the UK regions with central Scotland to the north or the islands.
tender prices escalating at similar rate to the London, Northern Ireland’s slow recovery in construction lags behind
driven by intensive capital investment in the life sciences, other UK regions with pressure on the Government to resurrect
technology, education and residential sectors and a stretched delayed public projects. Tenders remain highly competitive.
local supply chain. If workloads do increase, labour scarcity could cause problems.
There’s a knock-on effect in central England, with retention of Future outlook
sub-contractors becoming problematic as they are attracted to All regional construction markets should continue to improve
bigger, lower-risk projects in London and the south east. Some during 2015–16, with the south leading and Belfast at the
skills shortages among trades and professionals are emerging. rear. Gradually, trade skills shortages are likely, contractors
In the north of England, the residential sector is leading will cherry-pick which projects they bid for and construction
growth. A lack of capacity is fuelling price inflation in the costs will increase, rippling out from the south east.
north west with a shift to two-stage tendering, although
competition remains fierce in other areas.
Northern
International building costs Central North Ireland Scotland South
per m2 of internal area, in 2015 GBP GBP GBP GBP GBP
Airports
Domestic terminal, full service 2,900 2,860 2,800 2,900 3,200
Low-cost carrier terminal, basic service 2,250 2,250 2,200 2,250 2,350
Car parks
Multi-storey above ground 550 550 500 550 610
Multi-storey below ground 750 750 720 750 960
Commercial
Offices – business park 1,500 1,500 1,370 1,450 1,750
CBD offices – up to 20 floors medium (A-Grade) 1,650 1,650 1,550 1,650 1,825
CBD offices – high-rise prestige 2,160 2,160 2,030 2,100 2,400
Education
Primary and secondary schools 1,500 1,550 1,300 1,550 1,650
University 2,000 2,000 1,820 2,050 2,250
Hospitals
Day centre (including basic surgeries) 1,400 1,400 1,430 1,500 1,750
Regional hospital 2,300 2,400 2,200 2,400 2,450
General hospital (eg city teaching hospital) 2,850 2,850 2,600 2,850 3,000
Hotels
3 star travellers 1,600 1,575 1,400 1,575 1,750
5 star luxury 2,550 2,550 2,450 2,500 2,600
Resort style 2,000 2,050 2,050 2,100 2,300
Industrial
Warehouse/factory units – basic 650 650 600 650 700
Large warehouse distribution centre 770 775 700 775 840
High-tech factory/laboratory 1,500 1,500 1,450 1,500 1,700
Residential
Individual detached or terrace style house medium standard 1,260 1,265 1,060 1,200 1,350
Individual detached house prestige 1,600 1,550 1,450 1,600 2,300
Townhouses medium standard 1,400 1,400 1,390 1,400 1,900
Apartments low-rise medium standard 1,500 1,560 1,370 1,500 1,850
Apartments high-rise 1,900 1,900 1,770 1,850 2,150
Aged care/affordable units 1,500 1,500 1,300 1,500 1,650
Retail
Large shopping centre including mall 1,600 1,600 1,500 1,600 1,725
Neighbourhood including supermarket 1,100 1,100 1,000 1,100 1,200
Prestige car showroom 1,400 1,400 1,300 1,400 1,475

Northern
Central North Ireland Scotland South
UK – international building costs GBP GBP GBP GBP GBP

Excavate basement (m3) (1,800m3 job) 10 10 5 12 14
Excavate footings (m) 15 16 12 16 18
Concrete in slab (m3) (1,500m3 job) 143 143 86 140 144
Reinforcement in beams (tonne) 980 980 750 980 990
Formwork to soffit of slab (m2) 33 32 31 33 41
Blockwork in wall (m2) (10,000m2 block job) 34 30 20 30 41
Structural steel beams (tonne) 1,650 1,650 1,400 1,650 1,755
Pre-cast concrete wall (m2) 84 84 70 84 86
Curtain wall glazing including support system (m2) 480 480 432 500 550
(1,000m2 job)
Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 30 30 30 35 41
Single solid core door including frame and hardware (no) 620 619 600 650 675
(50 door job)
Painting to walls primer + 2 coats (m2) 6 6 4 6 7
Ceramic tiling (m2) (1,000m2 job) 43 44 41 43 50
Vinyl flooring to wet areas (m2) (500m2 job) 27 27 17 27 28
Carpet medium tufted (m2) (4,500m2 job) 25 26 21 25 27
Lighting installation (m2) (5,000m2+ job) 53 52 50 45 65
Copper pipe 15mm to wall (m) (1,000m+ job) 25 25 24 25 36
Fire sprinklers (per m2) (5,000m2 job) 36 33 35 35 41
Air conditioning including main plant (m2) (5,000m2+ job) 100 100 86 100 108
Labour costs
Group 1 tradesman eg plumber, electrician 26 26 22 26 34
Group 2 tradesman eg carpenter, bricklayer 24 24 19 25 31
Group 3 tradesman eg carpet layer, tiler, plasterer 23 22 17 22 30
General labourer 19 19 15 19 20
Site foreman 31 31 25 30 36
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 83 85 70 84 90
Reinforcement bar 16mm (tonne) (120 tonne job) 750 750 660 750 817
Concrete block (400x200) per 1,000 (>10,000 block job) 630 625 410 750 808
Standard brick per 1,000 380 380 320 350 409
Structural steel beams (tonne) (100 tonne+ job) 1,350 1,350 1,100 1,400 1,568
Glass pane 10mm tempered (m2) 94 94 100 100 95
Softwood timber for framing 100mm x 50mm (m) 3 3 2 3 3
13 mm plasterboard (m2) 4 4 4 4 4
Emulsion paint (litre) 3 4 4 3 4
Copper pipe 15 mm (metre) (1,000m+ job) 4 4 6 5 6
Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 2 2 2 3
Plant
Hire 50t mobile crane + operator (day) 900 900 600 900 1,100
Central North Northern Scotland South

Ireland
Market: warmer warmer warmer warmer warmer

Tendering: warm warm lukewarm warm hot
Cost escalation 2014–15: 2.5% 3.0% 2.0% 3.0% 4.0%
Cost escalation 2015–16: 3.0% 3.0% 3.0% 4.5% 4.0%
Contractors’ margin: 3.5% 4.0% 2.5% 3.5% 4.0%
Preliminaries: 12.0% 12.0% 11.0% 13.0% 13.0%
Location factor (USD): 74 75 59 75 85
PPP coefficient: 0.81 0.81 0.68 0.81 0.91

Around the globe
USA – New York City

New York’s economy poised to lead global growth
Economic overview to the active residential apartment market; in 2014 $11.9bn

With an economy that is growing above three percent was spent on super-high-rise luxury apartments around
year-on-year and core inflation well under two percent, the Central Park alone.
USA can finally be deemed to have achieved sustainable
Activity in non-residential sectors is growing too with
economic growth. Cheaper oil prices are boosting the US
construction of mass transit, schools, office developments,
economy with an expected knock-on effect for consumer
hotels, retail and sporting venues all underway. As a result,
finances and business confidence.
construction costs are among the highest in the world. The
There are question marks over what will happen when the price of labour, including wages and benefits, is higher than
Federal Reserve’s quantitative easing programme changes, anywhere else including other US cities.
and whether the housing market can reach pre-2008 levels.
Future outlook
Bearing these risk factors, the USA seems poised to be the
Costs are increasing at five percent per annum and the market
engine of global growth in 2015–16.
looks set to grow over the next 12 months and for several
Construction markets and trends more years beyond that. Construction costs and cost escalation
The New York construction market is buoyant with $100bn in New York are likely to be above national average due to the
of new construction forecast in 2015–17, much of this is due strong union presence, higher wages and difficult site locations.
USD
Metric US Standard
International building costs per m2 and ft2 of internal area, in 2015 (m2) (ft2)
Airports
Domestic terminal, full service 6,000 558
Low-cost carrier terminal, basic service 3,400 316
Car parks
Commercial
CBD offices – high-rise prestige 5,500 512
Education
Hospitals
Hotels
5 star luxury 4,800 446
Resort style 3,280 305
Industrial
Residential
Retail

USD
USA – international building costs Metric US Standard

Excavate basement (m3) (1,800m3 job) 24 0.68
Excavate footings (m) 37 11.28
Concrete in slab (m3) (1,500m3 job) 295 8.36
Formwork to soffit of slab (m2) 86 7.99
Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 86 7.99
Painting to walls primer + 2 coats (m2) 20 1.86
Vinyl flooring to wet areas (m2) (500m2 job) 86 7.99
Carpet medium tufted (m2) (4,500m2 job) 60 5.58
Fire sprinklers (per m2) (5,000m2 job) 38 3.54
Air conditioning including main plant (m ) (5,000m + job)
2 2
431 40
Labour costs
Site foreman 125 125
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 137 3.88
Softwood timber for framing 100mm x 50mm (m) 5 1.53
13 mm plasterboard (m2) 10 0.93
Copper pipe 15 mm (metre) (1,000m+ job) 12 3.66
Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 6 1.83
Plant
Market: warmer
Tendering: hot

Around the globe
USA – Houston and Seattle

Seattle chases New York, while Houston’s pace remains on the rise
Construction markets and trends Future outlook

Focusing on two major US regions, Houston has a dynamic Skills shortages pushed up the prices of housing construction
construction sector but the oil price slump is affecting its in Houston, with construction costs generally rising by three
jobs and economy. In 2014 the residential and commercial percent in 2014. In 2015–16, despite impacts in the oil and gas
construction sectors were very strong, though as the sector, construction is still on the rise, largely driven by education
economy slows a little, there is potential for oversupply. and healthcare. Construction costs are likely to increase by
Petrochemical majors are still investing in gas-based 2.5 percent, above inflation but lower than other regions.
liquefaction and ethylene crackers along the Texas coast.
In Seattle, high workloads for subcontractors and an ageing
There were record levels of development in Seattle during workforce are pushing up construction costs which increased
2014 with up to $3.2bn worth of projects under construction. by five percent in 2014 and are forecast to rise by six percent
Technology businesses account for 20 percent of office space in 2015. In 2015–16, the office sector will remain buoyant,
take-up. Residential construction is strong accounting for 65 although the residential sector is likely to peak as higher
percent with 32 apartment buildings underway at the end of construction costs raise prices and the market
2014, though this will fall by up to ten percent in 2015, indicating approaches oversupply.
a maturing of the residential cycle. Hotel developments are
buoyant with four major hotels under construction.
Houston Seattle
USD USD
International building costs per m2 and ft2
of internal area, in 2015 Metric US Standard Metric US Standard
Airports
Domestic terminal, full service 4,500 419 5,000 465
Low-cost carrier terminal, basic service 2,500 233 3,000 279
Car parks
Multi-storey above ground 570 53 770 72
Multi-storey below ground 1,100 103 1,800 168
Commercial
Offices – business park 1,150 107 1,500 140
CBD offices – up to 20 floors medium (A-Grade) 2,040 190 2,260 210
CBD offices – high-rise prestige 3,910 364 4,100 381
Education
Primary and secondary schools 2,110 197 2,150 200
University 2,570 239 2,700 251
Hospitals
Day centre (including basic surgeries) 2,040 190 2,160 201
Regional hospital 3,340 311 4,030 375
General hospital (eg city teaching hospital) 2,910 271 3,600 335
Hotels
3 star travellers 1,820 170 2,420 225
5 star luxury 3,490 325 3,800 354
Resort style 2,010 187 2,300 214
Industrial
Warehouse/factory units – basic 700 66 740 69
Large warehouse distribution centre 860 80 960 90
High-tech factory/laboratory 3,560 331 4,000 372
Residential
Individual detached or terrace style house 1,800 168 2,150 200
medium standard
Individual detached house prestige 2,900 270 3,230 301
Townhouses medium standard 1,100 103 1,500 140
Apartments low-rise medium standard 1,250 117 1,700 158
Apartments high-rise 1,500 140 1,770 165
Aged care/affordable units 1,100 103 1,450 135
Retail
Large shopping centre including mall 2,500 233 3,000 279
Neighbourhood including supermarket 1,100 103 1,200 112
Prestige car showroom 2,490 232 2,550 237

Houston Seattle
USD USD
USA – international building costs Metric US Standard Metric US Standard

Excavate basement (m3) (1,800m3 job) 12 0.34 15 0.43
Excavate footings (m) 16 4.88 19 5.80
Concrete in slab (m3) (1,500m3 job) 264 7.48 270 7.65
Reinforcement in beams (tonne) 1,529 1,366 1,800 1,608
Formwork to soffit of slab (m2) 55 5.11 73 6.79
Blockwork in wall (m2) (10,000m2 block job) 97 9.02 108 10
Structural steel beams (tonne) 4,901 4,376 5,226 4,666
Pre-cast concrete wall (m2) 215 20 237 22
Curtain wall glazing including support system (m2) 1,010 94 1,087 101
(1,000m2 job)
Plasterboard 13mm thick to stud wall (m2) 54 5.02 65 6.04
(3,000m2 job)
Single solid core door including frame and 1,110 1,110 1,200 1,200
hardware (no) (50 door job)
Painting to walls primer + 2 coats (m2) 14 1.28 16 1.51
Ceramic tiling (m2) (1,000m2 job) 90 8.37 101 9.39
Vinyl flooring to wet areas (m2) (500m2 job) 57 5.30 65 6.04
Carpet medium tufted (m2) (4,500m2 job) 53 4.97 59 5.48
Lighting installation (m2) (5,000m2+ job) 136 13 140 13
Copper pipe 15mm to wall (m) (1,000m+ job) 35 11 43 13
Fire sprinklers (per m2) (5,000m2 job) 32 2.98 35 3.26
Air conditioning including main plant (m2) 269 25 377 35
(5,000m2+ job)
Labour costs
Group 1 tradesman eg plumber, electrician 57 57 77 77
Group 2 tradesman eg carpenter, bricklayer 49 49 59 59
Group 3 tradesman eg carpet layer, tiler, plasterer 44 44 60 60
General labourer 39 39 49 49
Site foreman 120 120 100 100
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 135 3.83 131 3.71
Reinforcement bar 16mm (tonne) (120 tonne job) 960 858 980 875
Concrete block (400x200) per 1,000 (>10,000 1,000 1,000 1,000 1,000
block job)
Standard brick per 1,000 440 440 440 440
Structural steel beams (tonne) (100 tonne+ job) 1,960 1,750 2,090 1,866
Glass pane 10mm tempered (m2) 230 21 232 22
Softwood timber for framing 100mm x 50mm (m) 4 1.22 4 1.22
13 mm plasterboard (m2) 9 0.84 9 0.84
Emulsion paint (litre) 6 23 6 23
Copper pipe 15 mm (metre) (1,000m+ job) 10 3.05 10 3.05
Copper cable (metre) (3C + E, 2.5mm PVC) 5 1.53 5 1.53
(100,000m+ job)
Plant
Hire 50t mobile crane + operator (day) 2,000 2,000 2,500 2,500
Houston Seattle
Market: warmer warmer

Tendering: warm hot
Cost escalation 2014–15: 3.0% 5.0%
Cost escalation 2015–16: 2.5% 6.0%
Contractors’ margin: 5.0% 5.0%
Preliminaries: 10.6% 10.0%
Location factor (USD): 88 109
PPP coefficient: 1.56 1.78

Around the globe
Vietnam – Ho Chi Minh City

Growing economy and government policy attracts foreign investors

Vietnam’s Government remains committed to its millennium Credit availability has improved, which will boost the
development goals of improving the country’s infrastructure construction sector and housing demand. Foreign
and economy. And with 5.8 percent GDP growth in 2014, the investment is increasing due to the brighter economic
economy does now appear to be recovering. conditions and a recent relaxation of foreign investment
rules in the property sector. There are significant levels of
Construction market and trends
activity in the infrastructure and affordable housing sectors.
Though construction cost inflation and growth have been
subdued for most of 2014, similar to 2013, the market seems With strong economic growth, improving monetary policy
to have bottomed out and started to recover from mid-2014. conditions, relaxing foreign investment rules and a strong
The start to 2015 has been strong, with over 8,000 real government commitment towards infrastructure, the outlook
estate transactions in the first quarter, more than triple the for the construction sector in Vietnam looks very positive.
same period last year. However, there is still sufficient spare capacity in the market
to deal with the increased demand and there should not be
any pressing cost pressures in the immediate future.
USD
per m2 of internal area, in 2015 VND rate: 21,770.00)
Airports
Car parks
Multi-storey above ground 8,054,900 370
Multi-storey below ground 16,980,600 780
Commercial
Offices – business park 14,585,900 670
CBD offices – up to 20 floors medium (A-Grade) 18,069,100 830
CBD offices – high-rise prestige 20,246,100 930
Education
University 14,585,900 670
Hospitals
Day centre (including basic surgeries) 15,456,700 710
Hotels
5 star luxury 38,315,200 1,835
Resort style 32,872,700 1,510
Industrial
Warehouse/factory units – basic 9,578,800 440
Large warehouse distribution centre 9,796,500 450
High-tech factory/laboratory 16,980,600 780
Residential
Individual detached or terrace style house medium standard 14,585,900 670
Individual detached house prestige 15,674,400 720
Townhouses medium standard 11,973,500 560
Apartments low-rise medium standard 15,674,400 720
Apartments high-rise 18,069,100 830
Aged care/affordable units 11,973,500 560
Retail
Large shopping centre including mall 15,674,400 745
Neighbourhood including supermarket 11,973,500 560
Prestige car showroom 13,279,700 610

USD
(exchange
Vietnam – international building costs VND rate: 21,770.00)

Concrete in slab (m3) (1,500m3 job) 1,610,980 74
Pre-cast concrete wall (m2) 1,001,420 46
Curtain wall glazing including support system (m2) (1,000m2 job) 10,057,740 463
Single solid core door including frame and hardware (no) (50 door job) 5,856,130 270
Labour costs
Material costs
Concrete 30 MPa (m3) (1,500m3 job) 1,240,890 57
Reinforcement bar 16mm (tonne) (120 tonne job) 19,070,520 878
Concrete block (400x200) per 1,000 (>10,000 block job) 6,313,300 291
Standard brick per 1,000 1,589,210 74
Glass pane 10mm tempered (m2) 1,806,910 83
Plant
Hire 50t mobile crane + operator (day) 25,906,300 1,200

Tendering: lukewarm
PPP coefficient: 11,672.23

What is PPP?
In short, it’s a better way to compare construction costs To compare PPP costs divide the $/m2 rate in local currency
between countries. Purchasing Power Parity (PPP) is a by the PPP coefficient for that country.
technique that compares construction costs with the cost
Building costs per m2 (sometimes referred to as direct
of living (purchasing power) in each country.
costs, as opposed to indirect costs) are for construction of
The PPP methodology removes the impact of exchange rates the building including preliminaries (or general conditions)
which are notoriously volatile. costs and substructure, columns, upper floors, staircases,
roof, external walls, external doors, internal walls,
Often costs are converted to USD (or any other currency)
internal doors, wall finishes, floor finishes, ceiling finishes,
in order to compare costs between countries. Because
fitments, plumbing, HVAC, fire protection, electrical and
exchange rates have fluctuated so much in recent times, this
communication systems and transportation systems.
can give a false impression of how a country’s construction
costs compare with others. A high exchange rate will make It is assumed that building costs are based on the typical
local costs look high against the comparison country. A low building standards and building methods for the region.
exchange rate will do the opposite.
Exclusions from building costs
To gain a better indication of whether a country’s External works, landscaping, professional fees, demolition,
construction is expensive we use PPP. A standard basket of loose furniture, fittings and equipment, developer's internal
goods is priced in each country in the local currency. This costs and finance, local authority fees and headworks
basket includes quantities of labour, plant and materials charges, land, legal, finance and holding costs, GST or
common to all forms of construction. Then we compare the sales taxes, site investigation and test bores, removal of
cost of the basket of goods with the cost of construction in significant obstructions in the ground, abnormal footings.
the country to obtain a purchasing power parity cost. Allowance for underground or onsite car parking is also
excluded from the building cost unless stated otherwise.
The higher the PPP cost, the higher the cost of construction
in local cost-of-living terms. PPP costs can, therefore, be Labour costs are the all-inclusive cost to the employer,
used to better compare the relative costs of building from which includes the basic hourly wage, allowances, taxes,
country to country. annual leave cost, and where paid by the employer, workers’
compensation and health insurance, pensions and travel
Though such indexes are used in some branches of
costs and fares. It excludes overheads, margins, and
economics, it has not often been used to compare
overtime and bonuses.
construction costs. We have developed this methodology
with Bond University’s Institute of Sustainable Development Composite trade rates are the fully installed rates charged
in Queensland, Australia, using their CitiBloc method for by the subcontractor to cover labour, materials, delivery,
calculation of basket item costs. plant, overheads and margins and sales tax.
References and further reading KPMG (2014) Skills to Build www.kpmg.com/UK/en/

American Society of Civil Engineers (2013), Failure IssuesAndInsights/ArticlesPublications/Documents/PDF/
to act economic impact summary report www.asce. Market%20Sector/Building%20and%20Construction/skills-
org/uploadedFiles/Issues_and_Advocacy/Our_Initiatives/ to-build-report.pdf – accessed on 19.06.15
Infrastructure/Content_Pieces/failure-to-act-economic- Metropolitan Transportation Authority web.mta.info/
impact-summary-report.pdf – accessed on 19.06.15 mta/network.htm – accessed on 19.06.15
BIS Shrapnell (2015) Residential Property Prospects New York Building Congress (2014) NYC construction
2015–2018 www.bis.com.au/reports/res_prop_prospects_r. almost fully back to boom era, according to New York
html – accessed on 19.06.15 Building Congress report www.buildingcongress.com/
BN Americas (2014) Rousseff reelection could usher press/2014-10-23.html – accessed on 19.06.15
in tender reforms www.bnamericas.com www.bnamericas. PanAm Post (2014) Bachelet Puts US$28 Billion on the
com/en/news/infrastructure/rousseff-reelection-to-usher-in- Table for Chile Infrastructure panampost.com/panam-
tender-reforms/ – accessed on 19.06.15 staff/2014/07/04/bachelet-puts-us28-billion-on-the-table-
Focus Economics (2015) Brazil Economic Outlook www. for-chile-infrastructure/ – accessed on 19.06.15
focus-economics.com/countries/brazil – accessed on 19.06.15 Pinsent Masons (2015) www.out-law.com/en/
Focus Economics (2015) Economic growth speeds up articles/2015/january/china-agrees-to-boost-infrastructure-
in Q1 on the back of consumption www.focus-economics. investment-in-kenya/ – accessed on 19.06.15
com/news/chile/gdp/economic-growth-speeds-q1-back- Reportlinker (2014) Construction in South Korea – Key
consumption – accessed on 19.06.15 Trends and Opportunities to 2018 www.reportlinker.com/
International Monetary Fund (2015) Uneven Global p01634371-summary/Construction-in-South-Korea-Key-
Recovery, Complex Underlying Currents www.imf. Trends-and-Opportunities-to.html – accessed on 19.06.15
org/external/pubs/ft/survey/so/2015/NEW041415A.htm – Transport for London (2014) The Mayor of London’s
accessed on 19.06.15 Capital Spending Plan for 2015-16 www.london.gov.uk/
Jones Laing Lasalle (2014) High-technology Office sites/default/files/2015-16MayorsCapitalSpendingPlan.pdf –
Outlook, www.us.jll.com/united-states/en-us/Documents/ accessed on 19.06.15
technology-trends/US_high_technology_office_outlook_
Sept2014_JLL.pdf – accessed on 19.06.15

In this report, trade, labour and material prices and prices per m2 are
indicative, and should not be relied on without first obtaining advice
from a qualified professional person. Costs are dependent on building
design, inclusions, exclusions, and site conditions. Cost comparisons
between countries are subject to different interpretations, building
methods, and standards for costing, measurement and construction.
Costs may vary substantially between regions within countries. Turner
& Townsend plc and its subsidiaries, the authors and contributors
expressly disclaim all and any liability and responsibility to any person
in respect of anything done or omitted to be done in reliance wholly
or in part upon the whole of the contents of this publication.
We value your feedback, please get in touch at

gary.emmett@turntown.com
www.turnerandtownsend.com

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International

There are 11 markets classed as warm by our local experts.

International construction market survey 2015 1

Figure 2: Predicted construction market in next 12 months

2 Turner & Townsend

International construction market survey 2015 3

Figure 4: Average cost of six building types in USD

4 Turner & Townsend

International construction market survey 2015 5

Figure 7: Strong competition is keeping tenders competitive in the majority of markets

6 Turner & Townsend

Preliminaries Ho Chi Minh City

In figure 8, typical preliminaries for an office building Sydney

International construction market survey 2015 7

Margins Figure 9: Typical contractors margin on medium

8 Turner & Townsend

New York City

São Paulo UAE

Very high cost

International construction market survey 2015 9

global growth forecast in 2015 The USA: a slow recovery

growth forecast in 2016

Though the world’s second largest economy has slowed,

International construction market survey 2015 11

A straight comparison of indicative outturn costs shows

The same but different

Both cities have major transport programmes underway,

That difference feeds through to wage costs, with average

The contracting marketplace also differs widely between the

*average of labour wages

International construction market survey 2015 13

*average of labour wages

14 Turner & Townsend

It is important to compare construction costs between

if a particular currency is strong compared to the base

of construction between countries

New York City

Method two: Purchasing Power Parity (PPP) Advantages

16 Turner & Townsend

to the same disadvantages as method one

Location factor London = 100

International construction market survey 2015 17

18 Turner & Townsend

Composite trade rates

Brisbane Melbourne Perth Sydney

Market: warmer staying the same cooler warmer

International construction market survey 2015 19

Brazil – São Paulo

20 Turner & Townsend

Composite trade rates

International construction market survey 2015 21

22 Turner & Townsend

Composite trade rates

Market: staying the same

International construction market survey 2015 23

24 Turner & Townsend

Composite trade rates

Market: staying the same

International construction market survey 2015 25

26 Turner & Townsend

Composite trade rates

International construction market survey 2015 27

Construction markets and trends Future outlook