International Construction Costs 2022
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London has recovered from the pandemic, with new build workload now above pre-pandemic levels. Bidding for projects is still brisk, so inflation during 2022 was held back slightly by competitive pressure. UK Sterling held steady against US Dollar, which also supports the ranking. Infrastructure investment is driving growth, with the pace of HS2 construction accelerating in 2022. The Greater London Authority introduced stricter guidelines on embodied carbon levels for large development in London in 2021, providing a strong impetus for low-carbon design in the city. Prospects for 2022 are positive with inflation of at least 5% expected during the year.
Construction markets in Switzerland were stable in 2021, but such is the premium cost of building here that Geneva only fell to 2nd place in the ICC rankings. At a macro-level, development in Geneva was affected by the dramatic reduction in global business activity and a slowing commercial development cycle. In contrast the housing market picked up after many years of low house price growth. Growth is expected to return in 2022, at about 3%, and with a persistent labor shortage, inflation is likely to increase from the sub 2% levels seen in 2021.
Oslo’s construction sector has benefited from a booming housing market and large-scale infrastructure investment aimed at supporting the long-term growth of the city. Output in Norway has increased by around 4% since the beginning of the pandemic and this triggered double-digit inflation in 2021. Large hospital investments together with road and rail projects will sustain workload in the Oslo City region for the immediate future. Oslo stands out as a sustainability leader. The city has pledged that all construction sites should be carbon-free by 2030 and this has triggered a market in heavy electric-powered construction plant. Alongside developments in multi-storey timber construction, Norway is clearly leading the push for low carbon construction.
New York’s construction market was tough in 2021. Output volumes did not grow, and a shrinking workforce and very high materials inflation triggered inflation at 15% and over for many building types. As a result, New York moved up to 4th position in the ICC rankings. A slowdown in commercial and high-end residential development coincided with increased infrastructure spending and a very hot residential market in the city suburbs. Looking ahead, New York City and the wider state of New York expect to be major beneficiaries of the $1 trillion Infrastructure
Bill, with funding of up to $170 billion, including $58 billion in
Relatively low inflation and a 5% devaluation of the Danish Krone against the US Dollar means that Copenhagen has fallen two places to 5th in the ICC rankings. Healthy rates of growth in housing and infrastructure development have sustained investment in industry capacity. Looking forward, there is an increasing volume of work associated with the low-carbon renovation of existing residential housing. In a controversial move, the first stages of the development of Lynetteholm, an artificial island which will eventually be home for 35,000 families, commenced with the
initial phases of embankment works.
San Francisco saw a significant uptick in activity in 2021. Typical construction inflation at around 15% resulted in the city moving above Zurich to place 6th in the ICC rankings. Over 7 million sq. ft. of construction is underway in the Bay Area, with Life Sciences investment being a particularly hot market. Residential development is also picking up after some lean years, with demand underpinned by strong job creation. San Francisco is also at the leading edge of low-carbon development. Building codes have recently been changed to permit timber building development up to 18 storeys high.
Construction markets in Switzerland were stable in 2021, but such is the premium cost of building here that Zurich only fell to 7th in the ICC rankings. Zurich has been exposed to the effects of some office oversupply and is seeing the slowing of a commercial development cycle. Looking forward, construction in the Zurich region is set to benefit from the €4bn investment in the University District and multi-billion road investments. Growth in 2022 will be about 3%, and with a persistent labor shortage, inflation is likely to increase from the sub 2% levels seen in 2021.
Munich is a new entrant into the ICC top 10, rising seven places to 8th in the ranking. Germany’s construction sector grew throughout the pandemic and although there was little bounce back in 2021, 2% growth was enough to trigger significant inflation. However, Germany has little spare capacity and local markets were exposed to some of the highest inflation in the ICC survey. Future workload is promising with major investments planned for the city’s metro and tram networks, as well as extensive commercial development at the Airport.
Hong Kong saw relatively low levels of price inflation during 2021, and as a result, fell to 9th in the ICC rankings. The construction sector cooled in the first half of 2021, mainly as a result of fewer building approvals. With the resumption of a normal approvals process, the outlook for new orders has been improving, particularly in the public sector. However, the prospects for both ongoing and new projects is still challenging and as activity levels increase again, Hong Kong is likely to see a resumption of building cost inflation in 2022.
Macau’s economy has continued to be hit by a decline in tourism caused by the pandemic. However the construction industry, which is more diversified, has not been so badly affected. Output grew by 1% in 2021, supported by a particular focus on low-income residential development and some large-scale transport infrastructure projects. Public sector investment will contribute
to a projected recovery of the construction sector over the next
2-3 years, and inflation is expected to increase from the 2.5%
seen in 2021.
Inflation in Amsterdam in 2022 was a moderate 6.9%. A stronger dollar and rapid inflation in the US meant that relative costs did not increase as fast as in other cities. Amsterdam fell by 8 points to 51 in the ICC ranking. Current workload is very high, supported in part by a U-turn on measures to control nitrogen pollution which had delayed much development in 2019 and 2020. Sustainability and net-zero are at the top of the agenda across all building typologies.