The price inflation in the UK and the US comes at a cost, with the viability of important commercial and public sector schemes put at risk in these cities as prices continue to soar. Furthermore, rising costs and the falling value of currencies could restrict demand from emerging market investors in these areas, potentially triggering a shift in interest to alternative lower-cost cities in the longer term.
Meanwhile, throughout 2015, every construction market in the world saw the overall level of cost inflation restricted due to the well-publicized drops commodity prices. Particularly when it comes to oil, growing uncertainty over prices will inevitably have a long-term impact on the global construction industry.
“The European urban construction market is poised for growth due to the combination of several factors. Economic recovery, a relatively cheap Euro, EU investment plans all contribute to an interesting investment climate for international financial institutions looking for opportunities beyond traditional high cost inflation cities such as New York, London and Hong Kong,” states John Atkins, European Leader Buildings at Arcadis
. “A city such as Amsterdam is likely to see costs rising steadily towards pre-crisis levels within three years. Frankfurt is supported by encouraging levels of growth in 2015. As mentioned before, it is interesting to see that the upwards construction cost trend is robust and predominantly urban, with some spin-off in the region.”
International Cost Comparison 2nd Quarter 2015
1. New York
3. Hong Kong
24. Sao Paulo
40. Ho Chi Minh
41. Kuala Lumpur
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