Sydney has just been deemed Australia’s most expensive city for construction, according to a new global research report by leading design and consultancy firm for natural and built assets, Arcadis.
Each year Arcadis’ International Construction Costs report is developed based on industry-leading market knowledge and analysis.
The report details the relative cost of construction in 100 of the world’s leading cities.
Fifty new cities were added to the 2019 report, including Perth, making it the largest comparison of its kind.
This year New York topped the rankings as the world’s most expensive city for construction, followed by San Francisco and Hong Kong.
At number 34, Sydney was the most expensive Australian city, followed by Brisbane (56), Melbourne (61) and Perth (62).
According to the report, the cost of construction in Australian cities was heavily impacted by the economy, which continues to lose momentum since the latter half of last year, with GDP growth expected to be around 2.6 per cent per year for the next two years.
Arcadis’ National Director for Cost and Commercial Management, Australia Pacific, Matthew Mackey, said that in November 2018 construction activity levels fell at their fastest rate in nearly four years.
“This was largely driven by an even steeper decline in the residential sector – although this was largely concentrated in Sydney and Melbourne. However, the total value of non-residential construction is expected to increase in 2019,” he commented.
Mr Mackey said that despite the slowdown in residential construction, the industry is particularly buoyant across the Eastern Seaboard – although this is again confined predominantly to Sydney and Melbourne.
“Cost pressures remain high industry-wide across Australia. This is due to several factors including a robust demand for construction materials, a lack of market competition, skills shortages, increasing energy and labour costs and elevated supplier prices due to strengthening commodity prices.”
“The gap between value and cost continues to reduce and this demonstrates that profit margins will remain tight for both contractors and developers across the construction industry,” he detailed.
Mr Mackey further said that while construction activity in apartments and housing has stalled recently, activity in other sectors such as commercial, transportation and social infrastructure means that this decline is unlikely to be a precursor to an economic downturn.
“The cycle of infrastructure construction is continuing to fuel price increases whilst also creating a significant demand for tradesmen to meet the current and upcoming workload.”
“This demand will continue to put further pressure on both trade pricing and margins. Tender pricing will, therefore, continue to increase over the short term,” he concluded.
Top 10 most expensive cities for construction:
1. New York City
2. San Francisco
3. Hong Kong
5 cities close to Sydney on rankings:
10 cities near other Australian cities on the rankings: