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MAY 08, 2019 | Press Release

Report: New York and San Francisco are the most expensive cities on Earth for construction

Investments in innovation, end-user benefits and sustainability are necessary for the future of the construction sector

Highlands Ranch, Colorado — May 8, 2019 — New York City and San Francisco are the world’s most expensive cities for construction, according to the 2019 International Construction Cost Comparison published by Arcadis (EURONEXT: ARCAD), the leading global design and consultancy organization for natural and built assets. Boston is the only other North American city in the top 10.

The report shows that New York and San Francisco face unique challenges in construction.

“New York’s high insurance costs, coupled with strict building codes and significant access and logistics challenges factor into soaring construction costs,” said David Hudd, cost and commercial director for Arcadis.

In San Francisco, the technology sector contributes to labor shortages and other market forces that drive up the cost of construction. Local building and energy codes are also a factor.

There are common factors that impact construction costs in cities across the U.S.

“Uncertainty surrounding tariffs and financing, as well as a shortage of skilled labor, are major contributors to consistently high construction costs in the U.S.,” said Hudd. “Our best bet to limit rising costs here and globally is to keep citizens at the heart of projects with a focus on data-enabled productivity and cost reduction.”

The report indicates that construction companies and their clients will need to make smart investments to sustain long-term success.

“In 2019 and beyond, smart investment in three key areas is crucial for the future success of construction companies and the sector in general,” said Andrew Beard, global leader cost management at Arcadis.

Those three areas, according to Beard, are:

    1. Innovation and digitization: This presents an opportunity for construction companies to increase efficiency, lower costs and increase productivity while improving the end product.
    2. Focus on end-user benefits: New buildings increasingly need to be part of the urban mobility ecosystem to create long-term value.
    3. Resiliency and sustainability: Constructing and operating buildings impacts the environment in terms of water and energy use, carbon emissions and waste.

Factors that influence a city’s position in the index include cost of living, labor and materials; overall productivity of the industry in that city; and the complexity of projects in that city.

Hong Kong comes in third on the list, followed by Copenhagen and Geneva.

10 most expensive cities for construction 10 least expensive cities for construction
1. New York City 100. Bengaluru
2. San Francisco 99. New Delhi
3. Hong Kong 98. Mumbai
4. Copenhagen 97. Kuala Lumpur
5. Geneva 96. Ho Chi Minh
6. London 95. Wuhan
7. Macau 94. Guangzhou/Shenzhen
8. Zurich 93. Chengdu
9. Tokyo 92. Jakarta
10. Boston 91. Belgrade

The 2019 International Construction Costs Comparison is a leading reference point in relative comparison of global construction costs. This year’s report covers 100 major cities. Apart from providing a comparative indexation of construction costs around the world, the report also provides insights and recommendations for the industry to prepare for the future.

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