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New York and San Francisco rank as most expensive cities for construction

A comparison study reports that the cities face unique challenges and, overall, the construction sector and its clients must invest in areas such as digitalisation and resiliency.

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The tech sector contributes to San Francisco's labour costs and other market forces
The tech sector contributes to San Francisco's labour costs and other market forces

New York City and San Francisco are the world’s most expensive cities for construction while Bengaluru and New Delhi are the cheapest. Hong Kong comes in third on the most expensive list, followed by Copenhagen and Geneva.


The 2019 International Construction Cost Comparison by Arcadis, the global design and consultancy organisation for natural and built assets, also reports that construction companies and clients must invest in a number of areas to sustain long-term success, including digitalisation and resiliency.


Unique challenges


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


The report reveals that New York and San Francisco faces unique challenges when it comes to 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 labour shortages and other market forces that drive up the cost of construction. Local building and energy codes are also a factor.

“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"

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


“Uncertainty surrounding tariffs and financing, as well as a shortage of skilled labour, are major contributors to consistently high construction costs in the US,” 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.

 

According to Beard, the three areas are:

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

The 10 most expensive cities for construction:

 

1. New York City
2. San Francisco
3. Hong Kong
4. Copenhagen
5. Geneva
6. London
7. Macau
8. Zurich
9. Tokyo
10. Boston

 

The 10 least expensive cities for construction:

 

100. Bengalaru
99. New Dehli
98. Mumbai
97. Kuala Lumpur
96. Ho Chi Minh
95. Wuhan
94. Guangzhou/Shenzhen
93. Chengdu
92. Jakarta
91. Belgrade

 

The comparison study 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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