Construction demand is more buoyant in times of positive economic growth and, despite the headwinds of Brexit, last year was a good year for the UK construction industry. GDP grew by 1.4% in 2018 and is similarly forecast to rise another 1.4% in 2019. However, with the economy providing fresh uncertainties and opportunities, the construction market increasingly needs predictability and certainty of outcome to ensure long-term success.
Tightening of finance and ongoing capacity constraints – both of materials and labour – all pose a threat to construction demand. There is a risk that the rate of growth will slow unless investors, owners and operators can make significant improvements in productivity to help reduce costs and increase efficiency.
The Arcadis International Construction Costs report is a leading reference point for the relative cost of construction in 100 cities around the world. Apart from providing a comparative index of costs, the report also provides market insights and recommendations on the factor’s clients should be considering in order to continue being successful in the future.
London is among the world’s top ten most expensive cities to build in, according to our 2019 International Construction Costs report. Ranking in 6th place globally, it is beaten only by international mega cities like New York (1st), San Francisco (2nd) and Hong Kong (3rd). In contrast, the 10 least expensive cities for construction are situated predominantly in Asia.
Of the twelve UK and Ireland cities studied in the report, London unsurprisingly ranks at the top of the list.
In contrast, many of our key regional cities represent much better value for money. Manchester and Birmingham, in 22nd and 23rd place respectively for construction costs globally, are both examples of thriving regional economies where increased activity across sectors including offices, hotels, retail, education and student housing are all indications of a booming local construction market.
Meanwhile, Edinburgh’s position in 29th place globally places it well outside the UK’s top five most expensive cities but cements its place as a global powerhouse for attracting investment.
Belfast ranks as the least expensive UK city in the index for construction, and with significant investment being made in delivering transformation projects like the Belfast Transport Hub, is well on the way to achieving its vision as a modern European city.
Edel Christie, UK Managing Director for Buildings at Arcadis, advises:
“In 2019 and beyond, smart investment in three key areas is going to be crucial for future success. Technological innovation and digitization present an opportunity for construction companies to increase efficiency, lower costs and raise productivity, while simultaneously improving the end product for customers and communities alike. Secondly, in order to create long term value there needs to be a much stronger focus on how the buildings we construct can work for and meet the changing requirements of the people who actually live in or use them.
“Finally, constructing and operating buildings has a significant impact on the environment, in terms of water and energy use, carbon emissions and waste. As a consequence, clients are looking to incorporate resiliency and sustainability into building design and use as part of their business and growth strategy. These key areas all require the whole supply chain to collaborate more deeply to deliver the potential value in the investments being made.”
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