Four out of the biggest projects in 2017 are located in Asia, four in Europe / US and 2 in the Middle East.
World cities, including New York and Hong Kong, continue to be some of the most expensive locations in the world in which to build, but a slowdown in the global economy led by China and in resource economies, such as Brazil and Saudi Arabia, points to wider changes affecting the world’s construction markets, according to the International Construction Costs Index published recently by Arcadis, a global Design & Consultancy firm for natural and built assets.
The annual Arcadis index, which analyzes the relative cost of construction across 44 major cities, finds that Singapore remains the third most expensive Asian city to build in, after Hong Kong and Macau,. However, Singapore moved down 5 positions on the global ranking from last year, making it the 15th most expensive city in the world to build in.
Singapore’s construction market has seen continuous correction since 2014, caused by oversupply and a slowing economy. This year’s output forecast is currently estimated to be between USD27 bil and USD32 bil, representing a stable market after a steep correction. Sustained workload in the public sector, such as public housing and civil engineering, has supported the industry during the correction. As a result, prices have remained broadly stable.
Tim Risbridger, Country Head for Singapore says: “With Singapore government’s continued investment in infrastructure through projects such as Changi East Development, PUB’s Deep Tunnel Sewerage System (DTSS) and Singapore to Kuala Lumpur High Speed Rail, the construction industry in Singapore will remain positive with a forecast output of 2% increment per year. However, it is not without challenges. Among them, a shortage in both labour and expertise could potentially hinder productivity if not being addressed effectively. We believe investment in technology and initiatives which will increase industry productivity, are essential in order to meet the challenges in the coming years.”
Whilst economic growth levels in emerging Asian economies such as Malaysia, Indonesia and Philippines are way in excess of the developed world, growth rates in established hubs such as Hong Kong and Singapore are similar to those in North America and European cities. Growth rates in many Asian construction markets have eased significantly over the past 18 months mainly due to the peak in commercial and residential development rates. Looking forward, expansion at around 5%-7% per year is the best prospect for many construction markets in Asia.
Alan Hearn, Head of Buildings Solutions, Asia says: “The future of the construction industry in Asia is looking optimistic. However, we believe that the construction industry drivers for the future will change. Four out of 10 highest value construction projects in 2017 are located in Asia. Among them are One Belt, One Road (OBOR) initiatives and the Delhi Mumbai Industrial Corridor. Mega projects like these are mainly funded by public-private partnership (PPP) and will continue to fuel the development of the construction industry in Asia.”