London is no longer the most expensive European city to build in, according to the latest International Construction Cost report published by Arcadis, the leading global design & consultancy firm for natural and built assets.
The British capital falls two places since last year and is leapfrogged by Geneva. The near future holds uncertainty for the European construction market’s performance , such as the upcoming election in a number of EU countries and the negotiations for and the aftermath of Brexit. Nevertheless, no less than 7 European cities populate the global Top 10 of most expensive cities to build.
There are significant cost difference for construction in Eurozone cities, with Lisbon and Athens at an almost 50% discount from Paris or Frankfurt. Vienna, Brussels, Milan and Amsterdam are positioned near the middle of the ranking. Upcoming elections in France, Germany, Italy, The Netherlands add short term uncertainty to the construction activities in Europe. Despite austerity and strict budgetary rules imposed by the European Commission, there is strong activity within infrastructure which will continue to drive cost due to rising demand for labor and materials.
The top ten most expensive European cities to build are outlined below, with changes from 2016 and their global position in brackets.
1. (3) Geneva (+1)
2. (4) London (-2)
3. (6)Copenhagen ( - )
4. (7)Stockholm ( - )
5. (8)Frankfurt ( - )
6. (9)Paris ( - )
7. (10)Vienna (+1)
8. (12)Brussels (+1)
9. (16)Milan (-2)
10. (20)Amsterdam ( - )
London has fallen two places since last year due to the Pound sterling’s devaluation after the Brexit referendum. Development activity in infrastructure is strong, but key commercial sectors including offices and prime residential projects have seen a slowdown due to Brexit related uncertainty impacting some developers’ investment decisions.
German real estate experts expect Frankfurt, with its large banking industry, to be on the winning side after Brexit. They foresee a rise in speculative property purchases and construction activities due to relocation of companies from London to Frankfurt. Increased purchase power for potential home buyers and a rising rental demand for residential property in the cities bode well for the German construction market in 2017.
Paris is undergoing the greatest infrastructural metamorphosis since the second half of the 19th century. Government backed investments include the largest infrastructure project in Europe, the “Grand Paris Express”” public transport initiative. 200 kilometers of new metro lines will have capacity to carry an additional two million passengers. The city government’s “Reinventing Paris” urban competition awarded 22 sites for development, including the “Mille Arbres” building, which is sure to become an iconic addition to Paris’ urban landscape.
“The Eurozone’s recovery remained weak in 2016, and the combination of political uncertainty and Brexit could knock future forecasts backwards,” said , at Arcadis. Current forecasts estimate an increase of construction activities to 2,6% per year, with most growth coming from the largest six countries, including Spain and Poland. Despite the risks and uncertainties, there are hopeful signs that the European construction market is recovering from the decline in activity during the financial crisis.“
The comparative cost assessment of 44 cities is based on a survey of constructions costs undertaken by Arcadis covering 13 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. Construction costs are current as of Q4 2016.
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