Sydney has again been deemed Australia’s most expensive city for construction, according to the International Construction Costs 2020 report by design and consultancy organisation, Arcadis.
The 2020 Arcadis International Construction Cost Index covers 100 of the world’s large cities across six continents. This year, the coverage was extended to cities in Eastern Europe including Poland, Serbia and Montenegro.
London emerged as the most expensive construction location in the world in 2020, followed by New York City, Hong Kong, Geneva and San Francisco. The 10 least expensive cities are in Asia with the majority of those found in China.
Sydney climbed four places from last year and is now ranked in 30th place. Once again, it was found to be the most expensive of the five Australian cities in the rankings.
Brisbane (38), Melbourne (41) and Perth (50) all came in within the top 50 most expensive cities for construction, with only Adelaide falling slightly outside at 56.
According to the report, the cost of construction in Australian cities was heavily impacted by the slowing economy and the steady decline in construction work over the last three years, particularly within the residential sector in Sydney and Melbourne. However, this was countered by an increase in demand for non-residential and infrastructure projects in other cities.
The construction cost comparison was developed covering 20 building functions, based on a survey of construction costs, review of market conditions and the professional judgement from a global team of experts.
Arcadis’ National Director for Cost and Commercial Management, Australia Pacific, Matthew Mackey, said that despite construction levels falling over the last few years, construction costs have continued to rise in the majority of Australian cities.
“The impact of the COVID-19 pandemic on local construction costs is expected to be significant – although it is extremely difficult to predict to what extent and for how long,” said Mr Mackey.
“Unlike the last global downturn following the events in 2008, the impact of COVID-19 is not about the availability of cash. Rather, it is about our inherent ability to physically go to work and maintain cash flow. Therefore, when our economy starts returning to some semblance of normal, there will likely be a spike of ‘super inflation’ in some markets. This spike will be caused by numerous projects either starting or re-starting over a short period due to an abundance of cash but with little immediate resource availability to deliver the work.”
“The limited availability of resources at all levels of the supply chain, which has been an almost continuous feature of the Australian market over the last few years, is expected to worsen as job losses continue to hit,” he stated.
This year’s report addresses two challenges: the unfolding effects of the COVID-19 pandemic, and the unchanged need for the industry to focus on rethinking resilience amid climate change while plotting a course towards a carbon-neutral future.
Construction processes alone are responsible for nearly 12 per cent of global, energy-related CO2 emissions and heating and cooling buildings is one of the biggest single causes of global warming.
To read the full ‘International Construction Costs 2020’ report, please click here.
10 most expensive cities:
- London
- New York City
- Hong Kong
- Geneva
- San Francisco
- Copenhagen
- Tokyo
- Zurich
- Dublin
- Edinburgh
10 least expensive cities:
- Bengaluru
- New Delhi
- Mumbai
- Kuala Lumpur
- Shenzhen
- Wuhan
- Guangzhou
- Chengdu
- Bangkok
- Hangzhou