Asia’s megacities remain some of the world’s cheapest places for new construction, according to the International Construction Costs 2019 report published by Arcadis, the leading global Design & Consultancy for natural and built assets. Only four cities in Asia rank inside the global top 50 for the cost of construction while nearly all cities in China, India and Southeast Asia are ranked among the cheapest.
Hong Kong ranks 1st in Asia for construction costs, followed by Macau and Tokyo, and ranks 3rd in the world. Singapore ranks 4th in Asia but only 48th in the world, due to a slowdown in public sector construction, nervous financial markets, and also an increased number of cities in the rankings.
The annual report, Arcadis’ International Construction Cost 2019, details and ranks the relative cost of construction in the world’s major cities, helping guide companies towards a higher long-term return on investment for construction projects. Arcadis has also expanded the report for 2019, summarizing the costs in 100 cities, including 18 in Asia, up from the 50 covered in 2018.
The report found that the majority of Asian cities are significantly cheaper with relative construction costs affected by currency fluctuations, commodity prices and increasing demand for development in some growing economies. These changes have seen the relative cost of building in Asia markets decrease significantly compared to other regions. Significant factors for the reduced costs include lower wages, more accessible construction materials, and more land available at lower costs. In China, however, despite being a relatively cheaper market for new construction, Arcadis expects that higher interest rates and increases in material and labor costs will likely lead to a rise in construction costs over 2019.
According to the report, this year’s cooling off across the global economy will also have an impact on construction markets. These include a tightening of financial conditions, a volatile supply of materials and costs, and downside risks on construction demand. Construction companies and their clients will need to make smart decisions focusing on innovation, benefits to citizens and sustainability in order to consolidate long-term success.
Glenn J. Lutz, CEO Arcadis Asia, commented: “Every city in Asia presents its own opportunities to increase productivity and lower construction costs. In Hong Kong for instance, the importance of digital transformation is becoming more widely accepted with increased investment from the government in innovation to address the skills gap and aging workforce. Singapore, meanwhile, has been relatively quick to adopt new technologies that will allow greater efficiencies and sustainability in the built environment.
“Many developers are keenly aware of the pressing need to improve productivity, but they often lack the information or confidence necessary to make smart decisions, for instance investing in digitalization, which drives improved performance. From our experience, engaging strategic partners who can support them in these efforts provides substantial returns. We have seen these investments help make money go further, create a competitive advantage and, ultimately, light a path towards long-term value creation.”
The Asian cities ranking in Arcadis’ International Construction Costs 2019 are below:
The full report can be downloaded here.
Note to editors
The comparative cost assessment of 100 cities is based on a survey of constructions costs undertaken by Arcadis covering 20 building types. Costs are representative of the local specification used to meet market needs. The building solutions adopted in each location are broadly similar and, as a result, the cost differential reported represents differences in specification as well as the cost of labor and materials.
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Arcadis is the leading global Design & Consultancy for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We are 27,000 people, active in over 70 countries that generate €3.3 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. www.arcadis.com
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