International Construction Costs: Top Cities
Geneva
1
0%
50%
100%
150%
200%
250%
Construction costs more/less compared to baseline (Amsterdam)
Geneva returned to first place in this year’s 2023 ICC rankings, swapping with the previous top-spot holder London. Both new orders and order backlog in Switzerland are at very high levels according to the latest index from Credit Suisse. The public sector building segment is set to be boosted by the recent award of the construction permit for the CHF 837m upgrade of the UN’s European headquarters in Geneva. Construction of industrial and logistics hubs and data centers are likely to see positive momentum in 2023.
Geneva
Up from 2 last year
London
2
London is the UK’s number one construction hot spot, with the market remaining resilient in 2022 despite economic headwinds. Infrastructure continues to drive growth, with work on Thames Tideway Tunnel and various High Speed 2 rail projects continuing. In the residential sector, the recent mandate from the Greater London Authority to include second escape staircases in any building over 30m high could potentially cause a delay in the development pipeline in the first half of the year.
Down 1 from last year
London
New York City
3
San Francisco
4
Munich
5
Like many cities around the world, development in New York City has been affected by rising costs and inflation rates, labor shortages, and supply chain constraints. New York City is ranked third in this year’s index, boosted by a strong US Dollar. With unprecedented federal funding committed towards infrastructure and climate investments, agencies like the Metropolitan Transportation Authority and Amtrak have billions of dollars of capital projects to deliver. Long stalled but game-changing projects like the Gateway program’s Hudson River Rail Tunnel now have political support and financial commitments from the Biden administration that will enable them to proceed.
Up 1 from last year
New York City
A strong US$ exchange rate has seen San Francisco climb two places to fourth in the ICC this year. The dominance of the residential sector in the construction market looks set to continue in 2023 as the city looks to rezone large areas of the west side to accommodate 82,000 homes. Several major mixed-use developments are planned, such as the US$2bn Stonestown project which will have 13 residential buildings. Some key infrastructure projects may finally proceed, supported by Biden’s Infrastructure Act funding. An upgrade to the Golden Gate Bridge and extensions to the SMART rail transit line to Healdsburg and Cloverdale may feature.
Up 2 from last year
San Francisco
Having been a new entrant in the ICC Top 10 in 2022, Munich has risen another three places to 5th this year. Building costs in Germany in Q3 22 were up 9.6% year-on-year, while tender price inflation was about 16% in Munich in 2022 but is forecast to fall to nearer 3% for 2023. Last year saw construction work commence on the 8.4ha Hochmuttinger Strasse ecological residential quarter, which is due to open in late 2025. Work is also underway on the 10km core rail route in the city, linking Laim Station and Leuchtenbergring Station. This 2nd S-Bahn core route is Munich’s largest transportation construction project now and will feature a 7km tunnel when the line opens in 2028.
Up 2 from last year
Munich
Zurich ranks 6th in the ICC for 2023, a rise of one place from the previous year. The Swiss construction industry experienced surging energy prices, high inflation and interest rates, and labor shortages during 2022. Transport projects should boost the sector in 2023, with work progressing on a replacement docking building at Zurich airport and an additional tunnel for the city’s northern bypass. Elsewhere, the 100m-tall Rocket & Tigerli tower in the north east of the city is set to become the world’s tallest residential building with a load-bearing wooden structure when it opens in 2026.
Up 1 from last year
Zurich
Copenhagen fell two places to 7th in this year’s ICC rankings, in part due to devaluation of the Danish Krone against the US Dollar. Tender price inflation reached 12% in 2022 but is due to fall back sharply in 2023. This year sees Denmark become the first country to introduce embodied carbon limits into building regulations, with a threshold limit value of 12kg CO2-eq/m2/year coming into force for new buildings bigger than 1,000m2. Key projects include the €346m Nordhavn Tunnel, which will run for 2.1km in total, a third of which will be under the harbour.
Down 2 from last year
Copenhagen
Hong Kong has risen one place to 8th in the 2023 ICC rankings, due mainly to strong currency appreciation by the US$, to which the Hong Kong Dollar is pegged. In view of the enormous amount of funding approved for capital works in the past two years, the industry can expect that the public works sector will remain vibrant in the coming years. The implementation of infrastructure works relating to land, housing and transportation within the Northern Metropolis will also create significant opportunities for the sector. However, project delivery will remain constrained by a shrinking construction workforce.
Up 1 from last year
Hong Kong
High inflation in 2022 has not tempered Boston’s construction market, which is viewed as being ‘hot’ despite very high construction prices. The city has entered the ICC Top 10 this year, rising from 13th to 9th position. Boston saw tender price inflation of about 7% in 2022 and this is forecast to drop slightly to 5% in 2023. The year ahead will likely see a decrease in new office starts offset by continued demand for housing. Boston is a key city in the US life-sciences industry and biotech companies are looking to increase capacity quickly to tap into the demand for more vaccines.
Up 4 from last year
Boston
Philadelphia has risen five places to 10th in this year’s ICC, with the rise in part due to a strong US Dollar exchange rate. Tender price inflation was 5% in 2022 and should be around 4% this coming year, at current forecasts. The Philadelphia Metro region continues to be busy, boosted by strong activity in healthcare, science and technology and higher education. Residential projects underway include the 1,100-apartment project at 1001 South Broad Street and a 1,200-unit scheme at Market Street in West Philadelphia. A series of low-cost housing projects are also underway, forming part of the ‘Turn the Key’ scheme to develop 1,000 units on city-owned vacant lots.
Up 5 from last year
Philadelphia
Zurich
6
Copenhagen
7
Boston
9
Hong Kong
8
Philadelphia
10
Amsterdam fell to 62 in the ICC rankings for 2023, down from 51 in 2022. With just 1.6% inflation compared with the previous year, the city was one of fewer than 10 locations reporting a figure below 5% in the last twelve months. Affordability is currently key and under heavy pressure, with many projects halting or reducing in scope.
Down 11 from last year
Amsterdam
Amsterdam
62
We have identified five key prompts to help clients interrogate their current approach to asset management. These prompts will help clients to identify whether they are considering and acting on all relevant issues that affect long-term returns and asset value.
Protecting property value – a five-step action plan to invest in the longevity of property portfolios
1
Plan ahead for regulation and governance
2
Identify and quantify the full range of risks
3
Track and adapt to changes in user demand
4
Identify repositioning opportunities
5
Build and measure a benefits case
Map the local timeline for developments in building design regulation, financial markets and reporting standards, including known changes and likely direction of travel.
Identify changes that will have a material impact on leasing, refinancing or asset valuation – e.g., new carbon intensity standards for loan portfolios.
Build mitigation steps into the long-term renew / reinvest / disposal asset management plan.
•
•
•
Screen across a wider range of risk types and timescales – e.g., climate change, health and well-being, and business risks. Consider risks to 2050 and beyond to account for long-term asset value implications.
Size the big risks – even if they are far in the future. Use the 80:20 rule to focus effort. Identify the mitigation steps that could be taken now with little impact.
Identify no-regret actions that can be taken as a part of planned investment programs to improve risk resilience – e.g., energy efficiency measures to reduce sky-high running costs.
•
•
•
Anticipate and follow market trends. Invest in understanding how tenant and user expectations are evolving. Build closer relationships with occupiers using flexible leasing models and opportunities for collaboration.
Use digital technologies to enhance the connection with your occupiers and investors – from BIM and digital twins to apps and virtual environments, use adaptable digital solutions to increase the attractiveness, flexibility, and value of your assets.
Understand how your buildings are used. Develop building intelligence capability including predictive analytics to track and anticipate building performance and user behaviors in real time.
•
•
•
Maximize the value of the location and the site. How will the location develop in the future? Could a change of use enhance value? Can the potential of a site be enhanced through a new approach?
Exploit the strengths of the existing asset – identify opportunities to reuse and extend the existing fabric. Maximize reuse of the fabric to minimize embodied carbon.
Exploit the power of digital modeling to understand all the opportunities over the asset lifecycle. Model the implications of new proposals for future adaptability.
•
•
•
Develop a dashboard of asset performance metrics that support the business case for investment. Combine specification benchmarks and in-use KPIs.
Measure the wider social and environmental value of the asset in its current and future uses. Align to the targets of partners including users and funders.
Acknowledge the value of longevity by highlighting enhancements to asset resilience.
•
•
•
Plan ahead for regulation and governance
Identify and quantify the full range of risks
Track and adapt to changes is user demand
Identify repositioning opportunities
Build and measure a benefits case
Geneva returned to first place in this year’s 2023 ICC rankings, swapping with the previous top-spot holder London. Both new orders and order backlog in Switzerland are at very high levels according to the latest index from Credit Suisse. The public sector building segment is set to be boosted by the recent award of the construction permit for the CHF 837m upgrade of the UN’s European headquarters in Geneva. Construction of industrial and logistics hubs and data centers are likely to see positive momentum in 2023.
Up from 2 last year
Geneva
London
Click through this year's top cities to read more about how they ranked. To find out where your city features, download our full report.
5
Build and measure a benefits case
4
Identify repositioning opportunities
3
Track and adapt to changes in user demand
2
Identify and quantify the full range of risks
5
Build and measure a benefits case
4
Identify repositioning opportunities
3
Track and adapt to changes in user demand
2
Identify and quantify the full range of risks
1
Plan ahead for regulation and governance
Map the local timeline for developments in building design regulation, financial markets and reporting standards, including known changes and likely direction of travel.
Identify changes that will have a material impact on leasing, refinancing or asset valuation – e.g., new carbon intensity standards for loan portfolios.
Build mitigation steps into the long-term renew/reinvest/disposal asset management plan.
•
•
•
Plan ahead for regulation and governance
Screen across a wider range of risk types and timescales – e.g., climate change, health and well-being, and business risks. Consider risks to 2050 and beyond to account for long-term asset value implications.
Size the big risks – even if they are far in the future. Use the 80:20 rule to focus effort. Identify the mitigation steps that could be taken now with little impact.
Identify no-regret actions that can be taken as a part of planned investment programs to improve risk resilience – e.g., energy efficiency measures to reduce sky-high running costs.
•
•
•
Anticipate and follow market trends. Invest in understanding how tenant and user expectations are evolving. Build closer relationships with occupiers using flexible leasing models and opportunities for collaboration.
Use digital technologies to enhance the connection with your occupiers and investors – from BIM and digital twins to apps and virtual environments, use adaptable digital solutions to increase the attractiveness, flexibility, and value of your assets.
Understand how your buildings are used. Develop building intelligence capability including predictive analytics to track and anticipate building performance and user behaviors in real time.
•
•
•
Maximize the value of the location and the site. How will the location develop in the future? Could a change of use enhance value? Can the potential of a site be enhanced through a new approach?
Exploit the strengths of the existing asset – identify opportunities to reuse and extend the existing fabric. Maximize reuse of the fabric to minimize embodied carbon.
Exploit the power of digital modeling to understand all the opportunities over the asset lifecycle. Model the implications of new proposals for future adaptability.
•
•
•
Develop a dashboard of asset performance metrics that support the business case for investment. Combine specification benchmarks and in-use KPIs.
Measure the wider social and environmental value of the asset in its current and future uses. Align to the targets of partners including users and funders.
Acknowledge the value of longevity by highlighting enhancements to asset resilience.
•
•
•
5
Build and measure a benefits case
4
Identify repositioning opportunities
3
Track and adapt to changes in user demand
2
Identify and quantify the full range of risks
5
Build and measure a benefits case
4
Identify repositioning opportunities
3
Track and adapt to changes in user demand
2
Identify and quantify the full range of risks
1
Plan ahead for regulation and governance
•
•
•
Map the local timeline for developments in building design regulation, financial markets and reporting standards, including known changes and likely direction of travel.
Identify changes that will have a material impact on leasing, refinancing or asset valuation – e.g., new carbon intensity standards for loan portfolios.
Build mitigation steps into the long-term renew / reinvest / disposal asset management plan.
Screen across a wider range of risk types and timescales – e.g., climate change, health and well-being, and business risks. Consider risks to 2050 and beyond to account for long-term asset value implications.
Size the big risks – even if they are far in the future. Use the 80:20 rule to focus effort. Identify the mitigation steps that could be taken now with little impact.
Identify no-regret actions that can be taken as a part of planned investment programs to improve risk resilience – e.g., energy efficiency measures to reduce sky-high running costs.
•
•
•
Anticipate and follow market trends. Invest in understanding how tenant and user expectations are evolving. Build closer relationships with occupiers using flexible leasing models and opportunities for collaboration.
Use digital technologies to enhance the connection with your occupiers and investors – from BIM and digital twins to apps and virtual environments, use adaptable digital solutions to increase the attractiveness, flexibility, and value of your assets.
Understand how your buildings are used. Develop building intelligence capability including predictive analytics to track and anticipate building performance and user behaviors in real time.
•
•
•
Maximize the value of the location and the site. How will the location develop in the future? Could a change of use enhance value? Can the potential of a site be enhanced through a new approach?
Exploit the strengths of the existing asset – identify opportunities to reuse and extend the existing fabric. Maximize reuse of the fabric to minimize embodied carbon.
Exploit the power of digital modeling to understand all the opportunities over the asset lifecycle. Model the implications of new proposals for future adaptability.
•
•
•
Develop a dashboard of asset performance metrics that support the business case for investment. Combine specification benchmarks and in-use KPIs.
Measure the wider social and environmental value of the asset in its current and future uses. Align to the targets of partners including users and funders.
Acknowledge the value of longevity by highlighting enhancements to asset resilience.
•
•
•
Click through this year's top cities to read more about how they ranked. To find out where your city features, download our full report.
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Click through this year's top cities to read more about how they ranked. To find out where your city features, download our full report.
Plan ahead for regulation and governance
Plan ahead for regulation and governance
Track and adapt to changes in user demand
Identify repositioning opportunities
Build and measure a benefits case