Most expensive place to build
Construction costs in Switzerland are more than 25% higher than anywhere else in the world, according to the annual International Construction Cost Comparison Report released today by built asset consultancy EC Harris.
The annual report, which benchmarks the construction costs in 55 countries across the globe using UK prices as a baseline, found that Europe continues to be the most expensive continent in which to build, providing eight of the top ten entrants in the final league table.
According to the report, the price of construction in Switzerland is 71% higher than in the UK where costs are now more than 20% below their peak price in the middle of 2008. Overall, the UK is now tied with Bahrain as the twelfth most expensive place in the world to build, up four places from 2010 where it finished in sixteenth place.
However, this has been largely due to falling costs in other countries rather than rising prices in the UK where construction costs have continued to drop over the last twelve months, with contractors prepared to work for ever slimmer profit margins to try and secure work in an increasingly competitive arena.
Denmark retained its position as the second most expensive place to build, closely followed by its Scandinavian neighbor Sweden. Australia and Canada were the only non-European markets to make it into the top ten although Bahrain just missed out, finishing in twelfth place overall alongside the UK. India and Sri Lanka were tied as the cheapest countries in which to build with construction costs estimated to be 72% cheaper than the UK baseline.
Construction costs are remarkably consistent amongst the largest European Union countries with Ireland, Germany, France, Austria, Italy, Belgium and the Netherlands all within a range of 20% of UK costs. Eastern European prices are generally cheaper, with differences ranging from 30% lower in Poland to 45 to 50% lower in the cheapest countries like Bosnia, Macedonia and Bulgaria. Costs are likely to drop further in those countries that received a bailout from the IMF, as a demand for construction services will inevitably fall due to an absence of available capital.
Following the boom and bust of 2009, the Middle East is continuing to exhibit slow signs of recovery with significant programmes of work planned in many countries for projects covering affordable housing, education, health and transportation. Overall, costs are broadly similar to the UK with Bahrain, Qatar, the UAE and Oman all within 10% of the UK baseline. Saudi Arabia emerges as the exception here with costs around 40% cheaper than the UK market.
Overall, construction prices across the region show huge variations. Whilst Australia is an expensive place to build, cheap labor mean that construction costs across most of the region are substantially lower than the level in the UK. Singapore and Hong Kong are both deemed to be 10% cheaper than the UK although this figure is likely to close over the coming year.
Average construction costs in the United States are around 10% lower than in the UK although as the economic recovery progresses these costs are likely to rise. Costs in Canada have dropped since 2010 and are now on a par with the UK.