Sydney continues to hold the title of Australia’s most expensive city for construction, according to the 2024 International Construction Costs report by Arcadis.
The report, covering 100 large cities worldwide, compares construction costs across various building types and is based on a survey of construction costs, market conditions, and expert judgments.
Despite Sydney’s high ranking, the city dropped to 48th place globally, down 12 spots from the previous year.
Other Australian cities also experienced declines, with Brisbane at 51st, Melbourne at 54th, Perth at 62nd, and Adelaide at 67th.
Arcadis’ Executive Director of Cost & Commercial Management, Matthew Mackey, attributed the decline in rankings to rising inflation levels above 5 per cent across Australia’s cities and a weaker Australian dollar.
These factors have led to increased construction costs, reducing margins for project viability and causing projects to stall.
Mackey noted: “Rising insolvencies and diminishing capacity has fuelled further construction cost escalation, and while this has not been at the peak of 2022, it has continued to damage and reduce the margins for project viability.”
He also mentioned the industry’s challenges with higher construction costs and stalled projects amid damaging confidence levels.
However, Mackey expressed optimism, as he stated: “2024 presents the Australian construction industry with an opportunity to reset and collaborate more closely to bring about an improved approach to project delivery.”
Globally, the report highlighted London as the most expensive city for construction, followed by Geneva, Zurich, Munich, New York City, and San Francisco.
The rapid acceleration of investment in the advanced manufacturing and technology sector, including data centres, has driven up prices, particularly in cities like Munich, which surpassed major US cities in relative cost to build.
Arcadis’ Global Director for Industrial Manufacturing, Martijn Karrenbeld, emphasised the need for productivity-led design, procurement, and construction to deliver projects at scale, especially in a resource-constrained market.
He highlighted the importance of adapting project teams to meet evolving demands.
The report also outlined a five-point framework for delivering fast, complex programs, emphasising the need for better data utilisation, stakeholder management, and risk management in the evolving construction market.
For more details, the full report can be accessed here.