International construction market survey 2015...International construction market survey 2015 1 Our...

International construction market survey 2015Global rebalancing: a changing landscape

Turner &

Town

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The global construction industry is finally showing strong signs of recovery. However, while the picture is largely positive, it’s a changing landscape, with some markets seeing significant increases in activity, while others, which were booming, have fallen back. Several cities are poised to grow led by overseas investors, but for many it remains an uneven climb back to the levels of activity enjoyed before 2008.

For investors and developers with global expansion plans, there are locations where favourable exchange rates and reasonable construction costs make them an attractive proposition.

Our 2015 international construction market survey draws on cost data gathered from major programmes and projects in 35 markets around the world. Our team of economists has worked with our local offices in those markets to analyse the data, helping inform construction investment decisions, whether in home countries or overseas.

We also look in more depth at New York and London, two of the world’s most active construction markets, and explore how their different approaches are impacting on outturn costs. We provide a breakdown of regional data for the UK and the USA to give context on the significant regional variations created by the climb from recession.

Though all the local construction costs have been converted into US dollars to allow easy comparison between markets, our economists continue to seek new ways to determine the relative value of different currencies, taking into account factors such as labour productivity and market heat. Over the past 12 months, our economists have developed a location factors approach, adding to the Purchasing Power Parity (PPP) methodology, both of which we compare on pages 16–17 of this report.

Please contact us if you require any more information about this survey, or if you need data or advice that can help inform decision-making for your project or programme.

Vincent Clancy

Chief Executive Officer

WelcomeOverview Global rebalancing: a changing landscape 1Economic overview 11A tale of two cities 13Comparing construction costs 16Markets Australia 18Brazil 20Canada 22Chile 24China 26Germany 28Hong Kong 30India 32Ireland 34Japan 36Kazakhstan 38Kenya 40Malaysia 42Netherlands 44Poland 46Qatar 48Russia 50Singapore 52South Africa 54South Korea 56UAE 58Uganda 60UK 62USA 66Vietnam 70What is PPP? 72

1 International construction market survey 2015

Our survey of construction markets around the world shows that activity is increasing in many as economies improve, with that trend set to continue over the next 12 months. Recovery is patchy, however, varying at both regional and national levels.

In our assessment of current market conditions, the survey reveals five hot locations out of the 35 markets surveyed (see figure 1). In a hot market there are plenty of construction projects around with little tender price competition. Trades skills shortages, increasing margins and higher input costs are causing construction costs to rise strongly.

London, the south of the UK, New York, Seattle and Tokyo are hot, benefitting from increased activity in residential and commercial property. However there are hotspots elsewhere for particular sectors. For example, while the overall construction market in Toronto and Sydney is only lukewarm, they have particularly strong levels of residential construction underway.

There are 11 markets classed as warm by our local experts. In these locations contractors are finding they can pick and choose which jobs they bid for, with more projects starting up. On the other hand the majority of markets are described as lukewarm, meaning there is still eager bidding to win jobs and price rises will be moderate.

This year there is just one cold location, Moscow. This compares to three cold spots in our last survey. Following a substantial fall in the oil price in Russia, investment activity has slowed significantly, so there is strong competition for fewer contracts. However whilst construction activity levels are falling, construction costs have risen strongly as a result of high inflation, higher import costs and the deflation of the ruble.

Seattle is boosted by its status as a tech city, with hi-tech firms accounting for 40 percent of total office leasing activity in the area (JLL, 2014). Other cities, such as Bangalore, are also seeing increasing demand for both office and residential space as hi-tech businesses locate there. Locations such as Dublin and Singapore are also attracting technology sector companies looking to set up regional hubs.

Meanwhile, markets which had benefitted from the boom in natural resources, such as Perth, São Paulo, Atyrau and Santiago, are becoming less active. Those countries hit by the natural resources slump are looking to invest in other traditional sectors, since the strength of the US dollar is boosting exports, making trade-exposed industries more competitive.

Our experts predict that construction activity will increase in 17 of the markets surveyed, with less competition for tenders and rising construction costs (see figure 2). Ten markets will enjoy unchanged levels of activity; and eight will see a decrease in the number of construction projects, greater competition on bids and, generally, lower rates of construction cost rises.

With improving economic conditions there is some danger of the hot locations overheating over coming year. This could manifest in the form of lack of trade skills, delays in project delivery and rapidly increasing tender prices.

Many countries have significant plans to invest in infrastructure. However with public sector budgets constrained and public private funding partnerships not yet sufficiently mature, there are fewer projects in delivery. For markets such as the USA and Europe which have ageing infrastructure, investing at this point in the cycle offers low risk of construction cost escalation and the chance to further boost their economies.

Figure 1: Current construction market

Cold Lukewarm Warm Hot

Moscow Amsterdam Bangalore LondonAtyrau Doha New YorkBeijing Dublin SeattleBrisbane Hong Kong TokyoHo Chi Minh City

Houston UK – South

Johannesburg Kuala LumpurKampala MunichMelbourne NairobiPerth UK – CentralSantiago UK – NorthSão Paulo UK – ScotlandSeoulSingaporeSydneyTorontoUAEUK – Northern IrelandWarsaw

Global rebalancing: a changing landscapeWhile mining and oil and gas programmes have been reduced over the past 12 months, the number of property projects has grown. Our 2015 international construction market survey shows that on balance, global construction activity is increasing – though tender prices generally remain competitive.

Overview

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Cooler

Australia – PerthBrazilChinaKazakhstanMalaysiaRussiaSingaporeUganda

Staying the sameAustralia – MelbourneCanadaChileGermanyIndiaJapanPolandSouth AfricaSouth KoreaVietnam

Warmer

Australia – BrisbaneAustralia – SydneyDohaHong KongIrelandKenyaNetherlandsUAEUK – CentralUK – LondonUK – NorthUK – Northern IrelandUK – ScotlandUK – SouthUSA – HoustonUSA – New York CityUSA – Seattle

Figure 2: Predicted construction market in next 12 months


The impact of currencySince our last report in 2013, the USD and the British pound (GBP) have strengthened considerably (see figure 3), offering opportunities for overseas investment at a reduced cost for both countries. Conversely, the strong currencies push both countries to the top of the global league tables when it comes to construction costs.

Those economies experiencing a weakening currency are gaining from increased interest from foreign investors. For example, overseas investors would find Malaysian construction costs especially attractive. While materials rates are broadly in line with those in Singapore, the cost of labour is lower and overall construction costs are some of the most favourable in the world, especially given the high standard of infrastructure.

Other markets whose currencies have fallen against the USD and GBP, hence offering opportunities for UK and USA investors, are Singapore, São Paulo, Santiago, Warsaw, Beijing and Bangalore. However, investors should be aware

that though they look like good value, many are set for significant construction cost rises.

Comparing construction costs between countries and markets is vital for companies with global expansion programmes and can help highlight areas for improvement. Currency issues can sometimes muddy the waters if comparisons are made solely in one exchange (for our survey, we use USD), which is why we introduced the PPP methodology in 2013. (For an explanation of how we developed the PPP method with Bond University see page 72).

Expanding on this, we have also developed a further comparison methodology, location factors, which aims to progress the PPP method by adding in factors including tender heat, productivity and local margins. A location factor is a total project calculation that can be used to compare the cost of similarly specified building projects between one location and another. On pages 16–17 we lay out the advantages and disadvantages of comparing costs by different means.

Figure 3: The impact of USD and GBP on local currencies since January 2014

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Overview

Recovering economies, rising costsOverall, construction costs are increasing but are by no means out of control (see figure 5). On average, they will be higher in the next 12 months compared to the last 12 months, with an average predicted cost increase across all markets of 4.2 percent compared to 3.6 percent last year (see figure 6).

Most warming markets will see increased construction costs while cooling markets will see a decrease, though there are some exceptions. Moscow will see less construction as economic sanctions and lower oil prices impact adversely on foreign investment and consumer confidence, however construction costs are expected to rise by 15 percent in 2015–2016.

Also bucking the trend, Atyrau in Kazakhstan is cooling, with less construction activity as oil prices fall, but it is expecting around seven percent cost increases in 2015–16. Similarly, construction activity is expected to decrease in São Paulo and Kampala, while costs are expected to increase by 7.5 percent. Johannesburg expects the market to stay the same, but costs to rise by 7.5 percent. Rising construction

costs, despite falling activity, can indicate that there are few contractors with the relevant capabilities to tackle major projects and programmes.

For building costs in more depth, the data for each market is set out on pages 18 to 71. We have included output costs (cost per square metre) and input costs (labour, materials and plant) for each type of building, shown in the local currency, and in USD.

The data comes from current construction programmes and reflects prices at the beginning of 2015. All costs exclude applicable taxes.

We compared the average build cost in USD of six different types of construction (see figure 4), which included:

■ apartments high-rise ■ office block prestige ■ large warehouse distribution centre ■ general hospital ■ primary and secondary school ■ shopping centre including mall.

Figure 4: Average cost of six building types in USD

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Figure 5: Percentage increase (in nominal terms) of construction costs in the last 12 months

Figure 6: Expected percentage increase (in nominal terms) of construction costs in the next 12 months

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Overview

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Intense competition, not much work, prices lowMoscow

Strong competition, moderate tender pricesAmsterdamAtyrauBeijingBrisbaneHo Chi Minh CityJohannesburgKampalaMelbourne PerthSantiagoSão PauloSeoulSingaporeSydneyTorontoUAEUK – Northern IrelandWarsaw

Moderate competition, moderate tender pricesBangaloreDohaDublinHong KongHoustonKuala LumpurMunichNairobiUK – CentralUK – NorthUK – Scotland

Low competition, lots of work, prices high

London New YorkSeattleTokyoUK – South

Figure 7: Strong competition is keeping tenders competitive in the majority of markets

Tender price outlookAbout half of the markets surveyed, including European, Canadian, Australian and most Asian cities, are expecting only moderate tender price increases of around three percent in the next 12 months.

Above this level, London expects five percent, Dublin five percent, New York five percent and Seattle six percent. Latin America, Johannesburg, Kampala, Hong Kong, Atyrau, Bangalore and Moscow are expecting the highest rises.

In Hong Kong, Seattle and New York, high tender price increases are forecast even though inflation is low. In other cases both inflation and tender price increases are high: in Moscow, Johannesburg, Bangalore and São Paulo.

PreliminariesPreliminaries – or general conditions – are the set-up costs for a project: site offices, approvals, scaffolding, shop drawings, site security, construction plant, power and consumables.

Typically hot markets tend to have higher preliminaries due to requirements for higher safety standards and levels of supervision. Space restrictions, for example in congested central business district locations, will also add to preliminaries. London and Hong Kong have the highest level of preliminaries at 15 percent.

The way subcontractor packages are procured also has an impact since, in some markets, more preliminary costs are included in subcontractor packages. Higher cost locations such as Singapore, Toronto and Dublin have lower preliminary costs than might be expected at eight or nine percent.

In figure 8, typical preliminaries for an office building with a gross floor area of 5,000m2 are shown.

Figure 8: Typical preliminaries (same job) for an office building (5,000m2 gross floor area) as a percentage of total costs

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Overview

MarginsLower margins tend to indicate that there is little construction activity and high levels of competition for what projects there are. Seoul and Northern Ireland, for example, have margins of three percent and 2.5 percent respectively.

However, in some regions contractors typically achieve higher margins. In the Middle East, Latin America and some African markets, margins tend to be higher. Where there are fewer contractors with the skills and experience required to deliver major projects or programmes, higher margins can be achieved.

In the Asian regions, margins are mid-range whereas in European and Australian cities they are at the lower end of the scale.

WagesLabour costs include the basic hourly wage, allowances, taxes, annual leave cost, and where paid by the employer, workers’ compensation and health insurance, pensions and travel costs and fares. It excludes overheads, margins, overtime and bonuses.

Countries with higher input costs are introducing methods to increase productivity. This will reduce the unit cost of construction and counter inflation pressures.

There are huge variations between regions in the USA. New York City pays the highest wages, 65 percent higher than Houston for example, due to New York’s heavily unionised workforce.

The UK also has a high degree of variation with London labour costs around 65 percent higher than Northern Ireland.

Bangalore, Nairobi, Kampala, Beijing and Johannesburg have the lowest wages in USD. However, the fall of Indian and African currencies against the USD makes their labour costs look even lower.

Figure 9: Typical contractors margin on medium commercial job (5,000m2 ground floor area)

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Figure 10: The cost of labour


Global picture

3.4%global growth in 2014

3.5%global growth forecast in 2015

3.85%global growth forecast in 2016

According to the International Monetary Fund (IMF), the rate at which global economies are growing is increasing, particularly in the West (2015). The UK and USA are stronger than they were last year and, in most regions, property markets are recovering with resulting increases in construction activity. With property prices at or above pre-2008 levels in New York, London and Sydney, there are concerns that these markets may overheat again. In other places, there is still a fair distance to go before the end of the current cycle.

There is a change in mood in many locations, as governments seek to stimulate their economies by cancelling austerity policies and beginning to invest.

China’s influence

7.4%growth in 2014

6.8%growth forecast in 2015


Though the world’s second largest economy has slowed, seven percent growth is still significant. China is responsible for nearly 50 percent of the world’s consumption of key commodities such as cement, coal, steel and base metals. The focus of Chinese investment is shifting away from infrastructure and property to consumer goods. This will keep global commodity prices down and discourage construction of further natural resources projects worldwide.

Though China’s growth has slowed, its influence continues to be felt around the world. The booms in London, New York and Sydney are being strongly assisted by Chinese investment. Africa is another beneficiary. For example, Kenya looks set to benefit from more infrastructure investment from China following a recent extension of the two countries’ industrialisation partnership (Pinsent Masons, 2013).

The USA: a slow recovery

2.4%growth in 2014



The good news is that the USA’s economy is growing, property values are rising, and jobs are being created. But the rebound is not as strong as expected following recession; wage growth is minimal and confidence remains weak.

Property values are rising, but growth is patchy and concentrated in certain locations. While rising share markets demonstrate confidence among businesses this has failed to feed through to consumers, most of whom continue to save rather than spend. The recent fall in oil prices failed to stimulate retail spending as expected.

The American Society of Civil Engineers has estimated that the USA needs to invest an additional $157bn per year through to 2020 in order to replace and repair ageing and unreliable infrastructure (2013). Were this investment to go ahead, it would be the largest construction programme in the world.

Economic overview


$103.8bnconstruction spend forecast in next three years

23,000households predicted to be built per annum

$13.6bnannual spend by Metropolitan Transportation Authority

$78per hour wages*

In New York and in London construction is booming, with high-end residential and commercial development in particular looking hot in both cities. On the face of it, these two markets are similar. The financial services sector, back to strength, leads the economies of both cities, while the busy construction sector in each face the same challenges of constrained sites, competition for supply chain resource and heavy regulation.

A straight comparison of indicative outturn costs shows parity too. In most categories, London and New York look similar in dollars per square metre. However, our location factor approach (see page 17), which takes into account labour and materials costs and an adjustment for labour productivity, tender competition, skills shortages, preliminaries and margins, tells us that New York’s input costs are 35 percent higher than London’s. So why isn’t there the same disparity between outturn costs?

The same but differentWhether it’s the busy streets of Manhattan or central London, contractors delivering high-rise offices and residential apartments must cope with similar constraints: the need to limit the impact of deliveries on the transport network, consideration for neighbouring businesses and residences, environmental controls, stringent codes and a lack of storage space.

Both cities have major transport programmes underway, adding to congestion and pressure on resources. New York’s Metropolitan Transport Authority is spending $13.6bn annually while Transport for London's annual budget is £9bn ($13.7bn).

One significant difference between the two construction markets is the labour force. In New York, labour is heavily unionised on large projects, with the unions currently enjoying a resurgence of strength given the volume of work. In London, a ready supply of EU workers has helped to limit wage increases.

That difference feeds through to wage costs, with average hourly rates in New York 70 percent higher than those in London. Since wage costs account for around 40 percent, we might expect this to lead to higher outturn costs in New York.

The contracting marketplace also differs widely between the two locations. In New York, the number of major contractors able to handle large-scale projects has shrunk further recently, to around six. New York contractors are under watch by law enforcement, and over recent years a number of large firms have shut their doors or lost market share.

A tale of two citiesLondon and New York are amongst the hottest markets in the world. On the face of it, their stories are similar, but look deeper into the figures and there’s a different tale to be told.

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*average of labour wages

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£62.1bnon construction spend forecast in next three years

21,000households to be built per annum

£9bnannual budget from Transport for London

£32per hour wages*

In London, there’s a wider choice of smaller contractors, who are achieving margins of five percent in the property sector on average, compared to their New York peers who command six percent or more.

There’s also an interesting difference in procurement routes. While in London, two-stage design and build currently dominates in the property sector, New York developers tend to favour a traditional tender route where contractors bid competitively on drawings and specifications with lump-sum pricing or a construction management-type arrangement where a contractor is brought on board for pre-construction services and then negotiates a guaranteed maximum price, often with incentives for early delivery.

Though design and build is often lauded for its speed of delivery, allowing ground to be broken before all packages are designed, it seems that in New York the more traditional procurement methods are delivering better value for money. New York contractors are driven by volume and speed to market, so that they can quickly move their labour to new projects. Additionally, contractors will take on the risk of buying schedules, and then drive their labour and supply chain to deliver.

One theory for this could be that the whole supply chain – including designers and architects – are more integrated, so there is less inefficiency in the design and construction process. Consequently, the whole show runs like clockwork.

The use of BIM (building information modelling) as part of this well-oiled New York machine will have a part to play. Though only in use at a less mature level as a design tool, as many as 75 percent of high-rise projects in New York could be employing it. In London, that proportion is between 20 and 40 percent.

New York’s contractors have a more efficient approach to logistics. However, London projects do have additional headaches including:

■ heritage buildings that must be protected and monitored ■ archaeological digs required – or at least a watching brief – on many sites

■ listed buildings and conservation issues ■ limitations on working hours.

London

In New York, weekend working on Saturdays is commonplace and Sundays are often worked too, which, though it adds to labour costs due to premium mark-ups, reduces programme time and overheads as transportation and general logistics ease on weekends.

Bright futureWith New York expecting around $35bn worth of construction annually for the next couple of years, and London set for around $30bn a year, the construction markets in these cities can only get hotter. In New York, the unions will push for higher wages; in the UK, London’s contractors' will aspire to reach the margins of their US counterparts. We predict that cost inflation in both locations will be comparable, at around five percent.

The challenge for London will be to reduce the unit cost for construction by increasing industrialisation and productivity during delivery. This will be a challenge due to:

■ the fragmentation of the market ■ the lack of investment in innovation ■ particular logistics and geographic factors.

Figure 11: Cost comparison between London and New York

Category London New YorkLabour costs (average) USD 47 78Location factor 100 132Margins 5% 6%Prelims 15% 12.5%Cost increase forecast 5% 5%Past cost increase 5% 5%Cost apartments USD 3,970 2,950Cost CBD office USD 4,410 5,500Cost warehouse USD 1,400 1,400Cost hospital USD 5,000 5,330Cost school USD 2,570 2,250Cost mall USD 2,790 3,500Average cost USD 3,357 3,488

*average of labour wages


It is important to compare construction costs between countries to inform expansion decisions. It can also allow productivity comparisons to be made, highlighting how different practices and tools, such as BIM, can improve design and delivery. Opportunities to improve the efficiency of the construction sector and reduce costs are also opportunities to grow the global economy faster.

Here we look at the advantages and disadvantages of three methods to compare construction costs using an example building type, Central Business District (CBD) offices – high-rise prestige.

Method two: Purchasing Power Parity (PPP) The PPP shows costs in relation to cost of living in the country. It indicates the construction cost per square metre in the local currency, relative to the costs of a basket of construction materials and labour. The PPP cost of a particular building type is calculated by dividing the cost in m2 in local currency by the PPP coefficient. A lower PPP cost generally indicates more efficient construction (see page 72 for more detail).

Advantages ■ Leaves exchange rate out of the equation ■ Useful for governments, policy-makers and researchers to compare costs and efficiency with other countries

Disadvantages ■ For a global firm looking to build overseas, it can be more convenient to look at cost in its home currency

■ The cost of the basket of goods ignores contractors’ margins, labour productivity and preliminaries

Figure 12: CBD offices – high-rise prestige using a single currency average (USD)

Method one: convert to a single currency such as USD or EurosThis is the most common means of comparison, useful for a multinational organisation paying for projects in its home currency.

Advantages ■ Easy to understand and visualise ■ Gives the cost of typical building in each country

Disadvantages ■ A change in the exchange rate makes a huge difference: if a particular currency is strong compared to the base currency, the cost of construction looks expensive

■ Is not a reliable indicator of relative costs and efficiency of construction between countries

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Figure 13: CBD offices – high-rise prestige using PPP

Figure 14: CBD offices – high-rise prestige using location factors (USD)

Method three: location factorsLocation factors extends the basket of goods approach used in method two (PPP) by adding labour, productivity, market conditions, contractors’ preliminaries and margins.

A similarly specified building constructed for USD100m in London (location factor 100) should cost USD96m in Toronto (location factor 96) at the exchange rate as of the first quarter of 2015.

Advantages ■ Useful for a company considering a complex investment in several locations and wanting to know the cost in a single currency

■ Will show the difference in cost between countries of buildings built with similar specifications and inclusions

Disadvantages ■ As this method uses a common currency, it is subject to the same disadvantages as method one

■ In practice, local building codes, methods and specifications are different between regions countries

Location factor London = 100

In conclusion, it may be necessary to consider each of the three comparison methods above in order to make a fair assessment of whether a country is a cheap or expensive location to build. For each market in this survey, we have calculated the associated costs using these three methods.

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Australia With the resources boom over, it’s a good time to build

Economic overviewEconomic growth is slowing in Australia and interest rates are at a record low. As the natural resources boom comes to an end, projects in that sector are complete or completing with few new projects in the pipeline. A falling exchange rate will help balance the economy, benefitting industries such as tourism, education and agriculture.

Construction markets and trendsThe residential property sector is making a comeback with Sydney leading the way due to cuts in interest rates in early 2015 and other states are set to follow. There are major infrastructure projects underway and planned such as the Sydney Metro Northwest, Sydney Metro City & Southwest and the Melbourne Rail Link. However, tight government budgets are a constraint for this sector.

Future outlookWith the exception of Sydney’s apartment market, the cost of construction is flat and the outlook moderate over the medium term. Labour availability has improved significantly. Wages are forecast to be flat in real terms or even falling in locations such as Western Australia. Materials prices are also forecast to be flat or falling. Overall, this is a good time to build. Construction costs should remain fairly stable although some residential construction trades may become increasingly difficult to source, adding pressure to costs.

Around the globe

International building costs per m2 of internal area, in 2015

BrisbaneAUD

Melbourne AUD

PerthAUD

SydneyAUD

Sydney USD(exchange rate: 1.28)

Airports

Domestic terminal, full service 5,000 4,900 4,900 5,000 3,900 Low-cost carrier terminal, basic service 3,900 3,880 3,880 4,000 3,120

Car parks

Multi-storey above ground 820 820 820 840 660 Multi-storey below ground 1,500 1,550 1,800 1,700 1,330

Commercial

Offices – business park 1,500 1,600 1,600 1,700 1,330 CBD offices – up to 20 floors medium (A-Grade) 3,000 2,950 3,100 3,200 2,500 CBD offices – high-rise prestige 3,400 4,000 4,500 5,000 3,900

Education

Primary and secondary schools 1,600 1,940 1,500 2,000 1,560 University 3,200 3,140 3,140 3,200 2,500

Hospitals

Day centre (including basic surgeries) 3,000 2,960 2,960 3,000 2,340 Regional hospital 3,450 3,500 3,500 3,500 2,730 General hospital (eg city teaching hospital) 5,400 5,600 5,800 5,800 4,520

Hotels

3 star travellers 2,400 2,350 2,350 2,400 1,870 5 star luxury 4,000 4,200 4,200 5,100 3,980 Resort style 3,600 3,600 3,600 3,700 2,890

Industrial

Warehouse/factory units – basic 800 750 770 750 580 Large warehouse distribution centre 1,000 950 950 1,000 780 High-tech factory/laboratory 3,300 3,600 4,000 3,500 2,730

Residential

Individual detached or terrace style house medium standard 1,650 1,600 1,650 1,750 1,360 Individual detached house prestige 3,000 2,700 3,000 2,850 2,220 Townhouses medium standard 1,700 1,750 1,850 1,900 1,480 Apartments low-rise medium standard 1,800 1,960 1,900 2,100 1,640 Apartments high-rise 2,500 2,700 2,900 2,700 2,110 Aged care/affordable units 2,400 2,350 2,600 2,500 1,950

Retail

Large shopping centre including mall 2,500 2,240 2,240 2,640 2,060 Neighbourhood including supermarket 1,700 1,800 1,800 2,000 1,560 Prestige car showroom 2,700 2,500 2,500 2,700 2,110


Brisbane Melbourne Perth Sydney

Market: warmer staying the same cooler warmerTendering: lukewarm lukewarm lukewarm lukewarmCost escalation 2014–15: 1.5% 1.0% 1.0% 3.0%Cost escalation 2015–16: 2.0% 1.0% 1.5% 4.0%Contractors’ margin: 3.5% 4.0% 5.0% 4.0%Preliminaries: 12.0% 10.0% 12.0% 12.0%Location factor (USD): 77 76 86 89PPP coefficient: 1.69 1.69 1.87 1.79

Australia – international building costsBrisbane

AUDMelbourne

AUDPerthAUD

SydneyAUD

Sydney USD(exchange rate: 1.28)

Composite trade rates

Excavate basement (m3) (1,800m3 job) 25 22 12 23 18 Excavate footings (m) 35 36 40 37 29 Concrete in slab (m3) (1,500m3 job) 290 297 314 310 242 Reinforcement in beams (tonne) 2,100 2,076 2,100 2,138 1,667 Formwork to soffit of slab (m2) 125 122 130 126 98 Blockwork in wall (m2) (10,000m2 block job) 135 134 136 138 108 Structural steel beams (tonne) 5,000 5,250 4,900 5,500 4,289 Pre-cast concrete wall (m2) 420 398 425 418 326 Curtain wall glazing including support system (m2) (1,000m2 job)

1,200 1,200 1,200 1,300 1,014

Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 35 35 35 36 28 Single solid core door including frame and hardware (no) (50 door job)

800 773 775 796 621

Painting to walls primer + 2 coats (m2) 16 14 15 14 11 Ceramic tiling (m2) (1,000m2 job) 115 110 120 110 86 Vinyl flooring to wet areas (m2) (500m2 job) 65 70 52 54 42 Carpet medium tufted (m2) (4,500m2 job) 65 60 50 60 47 Lighting installation (m2) (5,000m2+ job) 85 82 125 84 66 Copper pipe 15mm to wall (m) (1,000m+ job) 61 61 61 62 48 Fire sprinklers (per m2) (5,000m2 job) 46 46 45 48 37 Air conditioning including main plant (m2) (5,000m2+ job) 250 250 450 250 195

Labour costs

Group 1 tradesman eg plumber, electrician 68 66 95 70 55 Group 2 tradesman eg carpenter, bricklayer 61 59 70 62 48 Group 3 tradesman eg carpet layer, tiler, plasterer 54 52 60 55 43 General labourer 39 38 45 40 31 Site foreman 77 72 105 79 62

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 150 155 178 205 160 Reinforcement bar 16mm (tonne) (120 tonne job) 1,125 1,250 1,200 1,300 1,014 Concrete block (400x200) per 1,000 (>10,000 block job) 3,400 3,500 4,000 3,150 2,456 Standard brick per 1,000 510 520 755 590 460 Structural steel beams (tonne) (100 tonne+ job) 2,000 2,000 2,000 2,050 1,599 Glass pane 10mm tempered (m2) 250 250 250 250 195 Softwood timber for framing 100mm x 50mm (m) 4 4 4 4 3 13 mm plasterboard (m2) 8 8 8 8 6 Emulsion paint (litre) 12 12 12 12 9 Copper pipe 15 mm (metre) (1,000m+ job) 12 12 12 12 9 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 4 4 4 4 3

Plant

Hire 50t mobile crane + operator (day) 2,100 2,100 2,100 2,100 1,640


Brazil – São PauloGovernment looks to private investors to boost infrastructure development

International building costs per m22of internal area, in 2015 BRL

USD(exchange rate: 2.85)

Airports

Domestic terminal, full service – –Low-cost carrier terminal, basic service – –

Car parks

Multi-storey above ground 1,766 620 Multi-storey below ground 2,300 810

Commercial

Offices – business park 2,800 980 CBD offices – up to 20 floors medium (A-Grade) 2,800 980 CBD offices – high-rise prestige 6,000 2,110

Education

Primary and secondary schools 2,119 740 University 2,825 990

Hospitals

Day centre (including basic surgeries) 2,825 990 Regional hospital 4,200 1,470 General hospital (eg city teaching hospital) 6,125 2,150

Hotels

3 star travellers 2,793 980 5 star luxury 3,713 1,300 Resort style 3,360 1,180

Industrial

Warehouse/factory units – basic 2,050 720 Large warehouse distribution centre 1,600 560 High-tech factory/laboratory 8,000 2,810

Residential

Individual detached or terrace style house medium standard 1,704 600 Individual detached house prestige 1,800 630 Townhouses medium standard 2,500 880 Apartments low-rise medium standard 2,300 810 Apartments high-rise 2,200 770 Aged care/affordable units 1,100 390

Retail

Large shopping centre including mall 2,000 700 Neighbourhood including supermarket 3,400 1,190 Prestige car showroom 4,100 1,440

Economic overviewThese are difficult times for Brazil. Cuts in public investment to compensate for overspending, and a lack of structural reforms are slowing economic growth. Business confidence is very low and consumer spending is weakening. Brazil’s economy is expected to contract by one percent in 2015, and grow by 1.1 percent in 2016.

Construction markets and trendsConstruction activity is also slowing. Major construction projects related to the 2014 FIFA World Cup have completed and residential construction has declined. Despite this, construction costs remain high.

Future growth will depend on the successful implementation of an economic recovery plan that maintains investment levels while government spending is reduced. Tax rises must also be avoided as the current level of taxation is putting

a strain on the economy, leading to reduced investment from the private sector.

The government underlined its commitment to public-private investment in June when Brazil’s president announced a package of infrastructure concessions worth almost R$200bn. This sum includes R$66bn for the construction and operation of almost 7,000km of roads, R$9bn on airports at Salvador, Florianópolis, Fortaleza and Porto Alegre, R$37bn for ports and R$86bn for railways.

Future outlookDespite the resources slowdown, construction of the Olympic stadia and infrastructure is likely to put pressure on construction trades. Inflation has been rising and this may lead to strong wage increases, which will further add to construction costs.

Around the globe


Brazil – international building costs REAL



Excavate basement (m3) (1,800m3 job) 15 5 Excavate footings (m) 25 9 Concrete in slab (m3) (1,500m3 job) 300 105 Reinforcement in beams (tonne) 5,000 1,755 Formwork to soffit of slab (m2) 80 28 Blockwork in wall (m2) (10,000m2 block job) 80 28 Structural steel beams (tonne) 7,000 2,457 Pre-cast concrete wall (m2) 300 105 Curtain wall glazing including support system (m2) (1,000m2 job) 1,500 527 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 60 21 Single solid core door including frame and hardware (no) (50 door job) 1,300 456 Painting to walls primer + 2 coats (m2) 30 11 Ceramic tiling (m2) (1,000m2 job) 100 35 Vinyl flooring to wet areas (m2) (500m2 job) 150 53 Carpet medium tufted (m2) (4,500m2 job) 150 53 Lighting installation (m2) (5,000m2+ job) 230 81 Copper pipe 15mm to wall (m) (1,000m+ job) 130 46 Fire sprinklers (per m2) (5,000m2 job) 45 16 Air conditioning including main plant (m2) (5,000m2+ job) 200 70

Labour costs

Group 1 tradesman eg plumber, electrician 40 14Group 2 tradesman eg carpenter, bricklayer 40 14Group 3 tradesman eg carpet layer, tiler, plasterer 35 12General labourer 25 9Site foreman 65 23

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 350 123 Reinforcement bar 16mm (tonne) (120 tonne job) 1,750 614 Concrete block (400x200) per 1,000 (>10,000 block job) 1,500 527 Standard brick per 1,000 945 332 Structural steel beams (tonne) (100 tonne+ job) 5,400 1,895 Glass pane 10mm tempered (m2) 580 204 Softwood timber for framing 100mm x 50mm (m) 8 3 13 mm plasterboard (m2) 20 7 Emulsion paint (litre) 17 6 Copper pipe 15 mm (metre) (1,000m+ job) 20 7 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 1

Plant

Hire 50t mobile crane + operator (day) 1,000 350

Market: coolerTendering: lukewarmCost escalation 2014–15: 6.95%Cost escalation 2015–16: 7.50%Contractors’ margin: 7.0%Preliminaries: 11.0%Location factor (USD): 56PPP coefficient: 2.33


Canada – TorontoTide turns from resources to traditional industries

International building costs per m2 of internal area, in 2015 CAD


Airports

Domestic terminal, full service 5,870 4,710 Low-cost carrier terminal, basic service 4,100 3,290

Car parks

Multi-storey above ground 830 670 Multi-storey below ground 1,130 910

Commercial

Offices – business park 1,740 1,400 CBD offices – up to 20 floors medium (A-Grade) 2,370 1,900 CBD offices – high-rise prestige 3,230 2,590

Education

Primary and secondary schools 1,950 1,560 University 4,000 3,210

Hospitals

Day centre (including basic surgeries) 3,800 3,050 Regional hospital 5,870 4,710 General hospital (eg city teaching hospital) 7,000 5,620

Hotels

3 star travellers 1,440 1,160 5 star luxury 3,015 2,420 Resort style 2,880 2,310

Industrial

Warehouse/factory units – basic 930 750 Large warehouse distribution centre 1,030 830 High-tech factory/laboratory 2,150 1,720

Residential Individual detached or terrace style house medium standard 2,930 2,350 Individual detached house prestige 3,970 3,180 Townhouses medium standard 1,465 1,180 Apartments low-rise medium standard 1,960 1,570 Apartments high-rise 1,750 1,400 Aged care/affordable units 2,060 1,650

Retail

Large shopping centre including mall 2,450 1,970 Neighbourhood including supermarket 2,240 1,800 Prestige car showroom 2,650 2,130

Economic overviewIn recent years, Canada was typified by a strong divergence between the high-growth energy economies of Western Canada and the slower-growth manufacturing-based economies of central Canada. The sudden decline in the price of oil cooled growth in the west, but it also lowered the Canadian dollar, which strengthened central Canada’s export competitiveness. The national economy is now poised for moderate and even growth.

The Canadian dollar’s fall against the USD should assist export-oriented sectors including forestry, manufacturing, agriculture and tourism. While the oil and gas sector remains important to the national economy, other industries are set to re-emerge as growth leaders.

Construction markets and trendsNatural resource companies scaled back their expenditure plans, in response to the lower price of oil. Oil producers

cut investment plans. Proposals for LNG export terminals on Canada’s Pacific coast may be delayed or cancelled.

Non-residential construction is declining, overall, due to major cutbacks from the energy sector. These declines are partially offset by ongoing investment in infrastructure and industrial construction.

Residential construction is strong across Canada, fed by continuing population growth, economic growth and low interest rates. Recent developments include a softening of the market in Alberta, and a shift towards the construction of rental units in the Toronto area.

Future outlookIn Canada’s stable but growing economy, construction costs are set to remain flat in the short term but expected to register a modest growth in the medium term.

Around the globe


Canada – international building costs CAD



Excavate basement (m3) (1,800m3 job) 16 12 Excavate footings (m) 22 18 Concrete in slab (m3) (1,500m3 job) 195 156 Reinforcement in beams (tonne) 1,955 1,568 Formwork to soffit of slab (m2) 125 100 Blockwork in wall (m2) (10,000m2 block job) 108 87 Structural steel beams (tonne) 3,350 2,687 Pre-cast concrete wall (m2) 175 140 Curtain wall glazing including support system (m2) (1,000m2 job) 950 762 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 45 36 Single solid core door including frame and hardware (no) (50 door job) 1,120 898 Painting to walls primer + 2 coats (m2) 10 8 Ceramic tiling (m2) (1,000m2 job) 88 71 Vinyl flooring to wet areas (m2) (500m2 job) 58 47 Carpet medium tufted (m2) (4,500m2 job) 58 47 Lighting installation (m2) (5,000m2+ job) 75 60 Copper pipe 15mm to wall (m) (1,000m+ job) 68 55 Fire sprinklers (per m2) (5,000m2 job) 36 29 Air conditioning including main plant (m2) (5,000m2+ job) 215 172

Labour costs

Group 1 tradesman eg plumber, electrician 65 52 Group 2 tradesman eg carpenter, bricklayer 59 47 Group 3 tradesman eg carpet layer, tiler, plasterer 55 44 General labourer 50 40 Site foreman 80 64

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 175 140 Reinforcement bar 16mm (tonne) (120 tonne job) 1,450 1,163 Concrete block (400x200) per 1,000 (>10,000 block job) 1,500 1,203 Standard brick per 1,000 950 762 Structural steel beams (tonne) (100 tonne+ job) 2,300 1,845 Glass pane 10mm tempered (m2) 290 233 Softwood timber for framing 100mm x 50mm (m) 6 5 13 mm plasterboard (m2) 10 8 Emulsion paint (litre) 10 8 Copper pipe 15 mm (metre) (1,000m+ job) 10 8 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 8 6

Plant

Hire 50t mobile crane + operator (day) 1,840 1,480

Market: staying the sameTendering: lukewarmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 2.0%Contractors’ margin: 6.0%Preliminaries: 10.0%Location factor (USD): 96PPP coefficient: 1.93


Chile – SantiagoFalling copper prices wound economy – but infrastructure looks promising

International building costs per m2 of internal area, in 2015 CLP*

USD(exchange

rate: 618.55)

Airports

Domestic terminal, full service 1,244,880 2,010 Low-cost carrier terminal, basic service 1,018,540 1,650

Car parks


Commercial

Offices – business park 678,740 1,100 CBD offices – up to 20 floors medium (A-Grade) 967,940 1,560 CBD offices – high-rise prestige 1,392,890 2,250

Education

Primary and secondary schools 708,250 1,150 University 1,133,200 1,830

Hospitals


Hotels

3 star travellers 826,290 1,340 5 star luxury 1,487,320 2,400 Resort style 1,189,860 1,920

Industrial


Residential

Individual detached or terrace style house medium standard 590,210 950 Individual detached house prestige 688,580 1,110 Townhouses medium standard 541,020 870 Apartments low-rise medium standard 368,880 600 Apartments high-rise 541,020 870 Aged care/affordable units 639,390 1,030

Retail

Large shopping centre including mall 885,310 1,430 Neighbourhood including supermarket 725,960 1,170 Prestige car showroom 1,159,760 1,870

Economic overviewChile’s economy slowed further during 2014, due to falling investment, particularly in the mining sector, and a deceleration in private consumption. However, in the first quarter of 2015, there were more positive signs; the economy grew 2.4 percent, credited to a growth in private consumption and small increase in government spending.

The recent fall in the price of copper, which accounts for 54 percent of Chile’s exports, has impacted heavily on revenues from export. While the depreciation of the peso goes some way to counterbalance this, business and consumer confidence have been weak.

Construction markets and trendsOverall construction activity levels have fallen with weak growth in infrastructure and residential construction. However, the outlook for infrastructure looks strong. In 2014, the Government announced a seven-year plan that would see USD18bn spent on improving road infrastructure and USD9.9bn on roads to be operated by concessionaires.

Future outlookChile’s dependence on resources exports and lower commodity prices will negatively affect construction activity. However, some persistent inflation will add to wage and materials costs, causing construction costs overall to keep rising sharply.

Around the globe


Chile – international building costs CLP

USD(exchange

rate: 618.55)


Excavate basement (m3) (1,800m3 job) 7,840 13 Excavate footings (m) 10,400 17 Concrete in slab (m3) (1,500m3 job) 121,940 197 Reinforcement in beams (tonne) 1,027,824 1,662 Formwork to soffit of slab (m2) 53,010 86 Blockwork in wall (m2) (10,000m2 block job) 46,170 75 Structural steel beams (tonne) 1,032,840 1,670 Pre-cast concrete wall (m2) 64,638 104 Curtain wall glazing including support system (m2) (1,000m2 job) 165,000 267 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 22,516 36 Single solid core door including frame and hardware (no) (50 door job) 470,900 761 Painting to walls primer + 2 coats (m2) 5,920 10 Ceramic tiling (m2) (1,000m2 job) 15,200 25 Vinyl flooring to wet areas (m2) (500m2 job) 14,187 23 Carpet medium tufted (m2) (4,500m2 job) 6,500 11 Lighting installation (m2) (5,000m2+ job) 35,340 57 Copper pipe 15mm to wall (m) (1,000m+ job) 6,270 10 Fire sprinklers (per m2) (5,000m2 job) 11,900 19 Air conditioning including main plant (m2) (5,000m2+ job) 61,500 99

Labour costs

Group 1 tradesman eg plumber, electrician 15,960 26 Group 2 tradesman eg carpenter, bricklayer 14,360 23 Group 3 tradesman eg carpet layer, tiler, plasterer 12,770 21 General labourer 9,580 15 Site foreman 22,340 36

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 87,100 141 Reinforcement bar 16mm (tonne) (120 tonne job) 642,390 1,039 Concrete block (400x200) per 1,000 (>10,000 block job) 950,000 1,536 Standard brick per 1,000 125,000 202 Structural steel beams (tonne) (100 tonne+ job) 588,300 951 Glass pane 10mm tempered (m2) 55,000 89 Softwood timber for framing 100mm x 50mm (m) 1,500 2 13 mm plasterboard (m2) 4,514 7 Emulsion paint (litre) 2,632 4 Copper pipe 15 mm (metre) (1,000m+ job) 2,190 4 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 1,710 3

Plant

Hire 50t mobile crane + operator (day) 600,000 970* Please note that pricing shown is indicative of construction costs in Santiago. Costs associated with mining and country-wide infrastructure projects vary due to remoteness and altitude factors.



China – BeijingDifficult time for property as government calls time on easy credit

International building costs per m2 of internal area, in 2015 RMB


Airports


Car parks


Commercial

Offices – business park 4,600 750 CBD offices – up to 20 floors medium (A-Grade) 7,000 1,140 CBD offices – high-rise prestige 9,000 1,460

Education


Hospitals

Day centre (including basic surgeries) 4,500 730 Regional hospital 5,400 880 General hospital (eg city teaching hospital) 6,000 980

Hotels


Industrial

Warehouse/factory units – basic 2,500 410 Large warehouse distribution centre 2,900 470 High-tech factory/laboratory 6,000 980

Residential


Retail

Large shopping centre including mall 6,000 980 Neighbourhood including supermarket 4,000 650 Prestige car showroom 4,500 730

Economic overviewChina’s authorities have introduced strict monetary policy measures to combat the rampant growth of easy credit, which pushed the construction and property sectors to unsustainable highs. So far their efforts seem to be successful, resulting in much slower credit growth, lower unregulated lending and a gradual transition to consumption-driven growth.

We are likely to see more of the same throughout 2015 with further moderation of growth, housing market adjustment, decelerating credit growth and an advancement of difficult structural reforms in areas such as local government debt management, anti-corruption and interest rate liberalisation. GDP growth is likely to moderate to seven percent in 2015 from an estimated 7.3 percent in 2014.

Construction markets and trendsAs a result of the policy measures, China’s property developers are raising capital from international markets to finance their projects. Now that the real estate market has slowed down in the region, many of these companies are on the verge of defaulting on their debts.

Future outlookThe cost of construction is increasing at a moderate pace due to rising labour costs, despite a fall in material prices. Average construction costs are also rising as clients demand higher quality, and more projects seek environmental certification such as LEED (Leadership in Energy & Environmental Design).

Both commercial and residential sectors are expected to remain weak for the remainder of 2015, while construction activity in infrastructure and public sectors is rising.

Around the globe


China – international building costs RMB



Excavate basement (m3) (1,800m3 job) 34 6 Excavate footings (m) 54 9 Concrete in slab (m3) (1,500m3 job) 540 88 Reinforcement in beams (tonne) 4,800 780 Formwork to soffit of slab (m2) 90 15 Blockwork in wall (m2) (10,000m2 block job) 160 26 Structural steel beams (tonne) 8,500 1,381 Pre-cast concrete wall (m2) 210 34 Curtain wall glazing including support system (m2) (1,000m2 job) 1,600 260 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 280 46 Single solid core door including frame and hardware (no) (50 door job) 2,700 439 Painting to walls primer + 2 coats (m2) 48 8 Ceramic tiling (m2) (1,000m2 job) 210 34 Vinyl flooring to wet areas (m2) (500m2 job) 385 63 Carpet medium tufted (m2) (4,500m2 job) 390 63 Lighting installation (m2) (5,000m2+ job) 320 52 Copper pipe 15mm to wall (m) (1,000m+ job) 70 11 Fire sprinklers (per m2) (5,000m2 job) 200 33 Air conditioning including main plant (m2) (5,000m2+ job) 510 83

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 390 63 Reinforcement bar 16mm (tonne) (120 tonne job) 3,600 585 Concrete block (400x200) per 1,000 (>10,000 block job) 3,360 546 Standard brick per 1,000 580 94 Structural steel beams (tonne) (100 tonne+ job) 7,000 1,138 Glass pane 10mm tempered (m2) 600 98 Softwood timber for framing 100mm x 50mm (m) 30 5 13 mm plasterboard (m2) 30 5 Emulsion paint (litre) 65 11 Copper pipe 15 mm (metre) (1,000m+ job) 50 8 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 16 3

Plant


Market: coolerTendering: lukewarmCost escalation 2014–15: -5.0%Cost escalation 2015–16: 3.0%Contractors’ margin: 6.0%Preliminaries: 8.0%Location factor (USD): 36PPP coefficient: 3.49


Germany – MunichOptimism abounds, but construction costs still reasonable

International building costs per m2 of internal area, in 2015 EUR


Airports


Car parks

Multi-storey above ground 620 710 Multi-storey below ground 780 890

Commercial


Education


Hospitals


Hotels


Industrial

Warehouse/factory units – basic 640 730 Large warehouse distribution centre 770 880 High-tech factory/laboratory 1,800 2,050

Residential

Individual detached or terrace style house medium standard 1,150 1,310 Individual detached house prestige 1,650 1,880 Townhouses medium standard 1,150 1,310 Apartments low-rise medium standard 1,250 1,420 Apartments high-rise 1,850 2,110 Aged care/affordable units 1,460 1,660

Retail


Economic overviewWhile the economy in most parts of Europe remains depressed, Germany bucks the trend. The euro is undervalued against the strength of the German economy, keeping its exports very competitive. A new quantitative easing plan from the European Central Bank is expected to boost confidence and increase investment activity across the region.

Construction markets and trendsIn 2014, the construction industry grew by four percent, with housing particularly strong and a total turnover of EUR35.3bn, an increase of 4.5 percent over 2013. German construction companies signalled a broad-based upturn in March 2015, with housing and commercial activity increasing at record speeds and civil construction activity up after a long period of depression.

With improving business conditions, companies are taking on new employees and optimism about the next year is high. However, construction cost escalation is moderate, with labour and material costs increasing only in line with general inflation. This has helped improve contractor margins and is one of the reasons behind the recent increase in construction activity.

Future outlookConstruction costs appear attractive compared with other European capitals, although they are likely to trend upwards due to the increase in activity and a drive towards higher quality. Businesses considering capital investment should find that construction costs remain moderate over the next 12 months.

Around the globe


Germany – international building costs EUR



Excavate basement (m3) (1,800m3 job) 14 16 Excavate footings (m) 26 30 Concrete in slab (m3) (1,500m3 job) 135 154 Reinforcement in beams (tonne) 1,373 1,562 Formwork to soffit of slab (m2) 42 48 Blockwork in wall (m2) (10,000m2 block job) 70 79 Structural steel beams (tonne) 3,699 4,210 Pre-cast concrete wall (m2) 103 118 Curtain wall glazing including support system (m2) (1,000m2 job) 628 715 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 50 57 Single solid core door including frame and hardware (no) (50 door job) 885 1,007 Painting to walls primer + 2 coats (m2) 7 8 Ceramic tiling (m2) (1,000m2 job) 54 61 Vinyl flooring to wet areas (m2) (500m2 job) 30 34 Carpet medium tufted (m2) (4,500m2 job) 25 28 Lighting installation (m2) (5,000m2+ job) 57 65 Copper pipe 15mm to wall (m) (1,000m+ job) 31 35 Fire sprinklers (per m2) (5,000m2 job) 81 92 Air conditioning including main plant (m2) (5,000m2+ job) 92 105

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 110 126 Reinforcement bar 16mm (tonne) (120 tonne job) 842 958 Concrete block (400x200) per 1,000 (>10,000 block job) 3,000 3,414 Standard brick per 1,000 688 783 Structural steel beams (tonne) (100 tonne+ job) 1,841 2,095 Glass pane 10mm tempered (m2) 102 116 Softwood timber for framing 100mm x 50mm (m) 3 3 13 mm plasterboard (m2) 4 4 Emulsion paint (litre) 5 6 Copper pipe 15 mm (metre) (1,000m+ job) 8 9 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 4 5

Plant


Market: staying the sameTendering: warmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 2.8%Contractors’ margin: 5.0%Preliminaries: 11.0%Location factor (USD): 77PPP coefficient: 1.08


Hong KongStrong construction market constrained by an ageing workforce

International building costs per m2 of internal area, in 2015 HKD


Airports


Car parks

Multi-storey above ground 11,000 1,420 Multi-storey below ground 19,000 2,450

Commercial


Education


Hospitals


Hotels


Industrial

Warehouse/factory units – basic 15,000 1,930 Large warehouse distribution centre 16,000 2,060 High-tech factory/laboratory 27,000 3,480

Residential


Retail


Economic overviewThe Hong Kong economy remains strong, but has been impacted by its dependence on exports and the slowing growth in China. Being pegged to USD, the rising currency makes Hong Kong exports more expensive in global trade.

Construction market and trendsThe construction market looks strong with numerous large projects planned and underway. However, some are taking longer than expected to deliver due to skills shortages and an ageing construction workforce; half of Hong Kong’s 240,000 workers are over 50.

Projects including the Hong Kong Shenzen Huangshou high-speed rail link, the MTR’s West Island and South Island lines are all experiencing delays. However, new large

projects, such as the seven rail projects worth HKD110bn that were announced in late 2014, keep coming.

Real GDP is expected to be a relatively moderate 2–2.5 percent in 2015–16, indicating some slack in the economy which will help push inflation down from four percent to three percent. This may ease some of the cost pressures on construction. However, construction costs in Hong Kong are among the highest in the world.

Future outlookWith construction expected to increase by 6.5 percent in real terms during 2015, and some labour shortages, costs are likely to increase by as much as 7.5 percent over 2015–16, making Hong Kong one of the least affordable locations.

Around the globe


Hong Kong – international building costs HKD



Excavate basement (m3) (1,800m3 job) 130 17 Excavate footings (m) 140 18 Concrete in slab (m3) (1,500m3 job) 1,350 174 Reinforcement in beams (tonne) 11,720 1,511 Formwork to soffit of slab (m2) 320 41 Blockwork in wall (m2) (10,000m2 block job) 380 49 Structural steel beams (tonne) 40,310 5,196 Pre-cast concrete wall (m2) 1,290 166 Curtain wall glazing including support system (m2) (1,000m2 job) 5,420 699 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 480 62 Single solid core door including frame and hardware (no) (50 door job) 6,450 831 Painting to walls primer + 2 coats (m2) 130 17 Ceramic tiling (m2) (1,000m2 job) 700 90 Vinyl flooring to wet areas (m2) (500m2 job) 320 41 Carpet medium tufted (m2) (4,500m2 job) 520 67 Lighting installation (m2) (5,000m2+ job) 910 117 Copper pipe 15mm to wall (m) (1,000m+ job) 230 30 Fire sprinklers (per m2) (5,000m2 job) 560 72 Air conditioning including main plant (m2) (5,000m2+ job) 2,800 361

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 699 90 Reinforcement bar 16mm (tonne) (120 tonne job) 6,466 833 Concrete block (400x200) per 1,000 (>10,000 block job) 3,763 485 Standard brick per 1,000 2,096 270 Structural steel beams (tonne) (100 tonne+ job) 12,900 1,663 Glass pane 10mm tempered (m2) 2,021 261 Softwood timber for framing 100mm x 50mm (m) 70 9 13 mm plasterboard (m2) 86 11 Emulsion paint (litre) 59 8 Copper pipe 15 mm (metre) (1,000m+ job) 30 4 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 15 2

Plant


Market: warmerTendering: warmCost escalation 2014–15: 5.0%Cost escalation 2015–16: 7.5%Contractors’ margin: 6.0%Preliminaries: 15.0%Location factor (USD): 88PPP coefficient: 9.59


India – BangaloreNew Government has ambitious plans for manufacturing and infrastructure

International building costs per m2 of internal area, in 2015 INR

USD(exchange

rate: 62.12)

Airports


Car parks


Commercial

Offices – business park 39,000 630 CBD offices – up to 20 floors medium (A-Grade) 43,040 690 CBD offices – high-rise prestige 48,420 780

Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewPolicy changes after India’s recent national elections have impacted on its construction market, with some changes having positive effects.

Construction market and trendsConstruction cost escalation is close to seven percent due to high general inflation and increasing demand from an improving market. Property developers, who have traditionally delivered construction works themselves, are now looking to outsource in order to focus on land acquisitions, development and sales. The result is a shortage in contractors and further upward pressure on construction costs.

Infrastructure, which accounts for over 50 percent of India’s construction activity, looks set to strengthen further thanks to a recently announced government programme to develop

over 500 cities costing over USD650bn. The new 'Make in India' initiative aims to establish the region as a global manufacturing hub, attracting investment into new industrial cities, smart cities, manufacturing plants and ports. As part of this programme India has eased sanctions on foreign direct investment for the construction sector.

Demand from the residential sector is also very strong with continued population growth and affordability. Interest rate cuts and urbanisation (as more people move to the cities) are also providing a boost to housing demand.

Future outlookSome natural resource shortages and a high level of overall price inflation in the Indian economy look set to keep pushing construction costs higher during 2015–16.

Around the globe


India – international building costs INR

USD(exchange

rate: 62.12)


Excavate basement (m3) (1,800m3 job) 350 6 Excavate footings (m) 450 7 Concrete in slab (m3) (1,500m3 job) 8,200 132 Reinforcement in beams (tonne) 68,000 1,095 Formwork to soffit of slab (m2) 550 9 Blockwork in wall (m2) (10,000m2 block job) 1,300 21 Structural steel beams (tonne) 100,000 1,610 Pre-cast concrete wall (m2) 9,500 153 Curtain wall glazing including support system (m2) (1,000m2 job) 12,500 201 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 3,000 48 Single solid core door including frame and hardware (no) (50 door job) 40,000 644 Painting to walls primer + 2 coats (m2) 190 3 Ceramic tiling (m2) (1,000m2 job) 2,044 33 Vinyl flooring to wet areas (m2) (500m2 job) 2,152 35 Carpet medium tufted (m2) (4,500m2 job) 1,800 29 Lighting installation (m2) (5,000m2+ job) 500 8 Copper pipe 15mm to wall (m) (1,000m+ job) 650 10 Fire sprinklers (per m2) (5,000m2 job) 968 16 Air conditioning including main plant (m2) (5,000m2+ job) 4,842 78

Labour costs

Group 1 tradesman eg plumber, electrician 90 1.4 Group 2 tradesman eg carpenter, bricklayer 85 1.4 Group 3 tradesman eg carpet layer, tiler, plasterer 75 1.2 General labourer 55 0.9 Site foreman 120 1.9

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 5,500 89 Reinforcement bar 16mm (tonne) (120 tonne job) 50,000 805 Concrete block (400x200) per 1,000 (>10,000 block job) 43,000 692 Standard brick per 1,000 7,000 113 Structural steel beams (tonne) (100 tonne+ job) 56,000 901 Glass pane 10mm tempered (m2) 6,000 97 Softwood timber for framing 100mm x 50mm (m) 285 5 13 mm plasterboard (m2) 350 6 Emulsion paint (litre) 280 5 Copper pipe 15 mm (metre) (1,000m+ job) 570 9 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 135 2

Plant


Market: staying the sameTendering: warmCost escalation 2014–15: 10.0%Cost escalation 2015–16: 6.5%Contractors’ margin: 15.0%Preliminaries: 10.0%Location factor (USD): 43PPP coefficient: 36.86


Ireland – DublinA brighter outlook for construction, led by the private sector



Airports


Car parks

Multi-storey above ground 550 630 Multi-storey below ground 950 1,080

Commercial


Education


Hospitals


Hotels


Industrial

Warehouse/factory units – basic 650 740 Large warehouse distribution centre 950 1,080 High-tech factory/laboratory 1,750 1,990

Residential


Retail


Economic overviewSentiment has improved in Ireland, with the Irish press talking of a return to better times, although not on quite the same scale as before the collapse in 2007. Manufacturing is increasing, hotel occupancy is strong and commercial rents are rising.

Construction markets and trendsThe construction sector is looking more positive than it has for several years, though there is still some way to go. At EUR11bn, construction is still only 7.5 percent of Gross National Profit (GNP), well below the long-run average of 12 percent and a long way below the peak of 27 percent in 2007. Growth in construction is likely to come from the private sector as the public sector budget is still under pressure. Residential, commercial, hotels, data-centres, pharmaceuticals will be the main activity areas.

Construction employment is increasing steadily and there is evidence of some strain in the supply chain as it struggles to meet the growing demand; this has been exacerbated by a skills shortage in the industry. Some key suppliers are withdrawing from the smaller end of the market to focus on larger contracts where margins are greater. There is some upward pressure on tender prices.

Future outlookSlow and steady improvement in the construction sector is set to continue in 2015–16. Construction costs may increase by five percent in 2015 generally, with pockets of skills shortages in specialised sectors adding further to costs.

Around the globe


Ireland – international building costs EUR



Excavate basement (m3) (1,800m3 job) 11 13 Excavate footings (m) 20 23 Concrete in slab (m3) (1,500m3 job) 140 159 Reinforcement in beams (tonne) 980 1,115 Formwork to soffit of slab (m2) 32 36 Blockwork in wall (m2) (10,000m2 block job) 25 28 Structural steel beams (tonne) 1,900 2,162 Pre-cast concrete wall (m2) 90 102 Curtain wall glazing including support system (m2) (1,000m2 job) 475 541 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 55 63 Single solid core door including frame and hardware (no) (50 door job) 765 871 Painting to walls primer + 2 coats (m2) 8 9 Ceramic tiling (m2) (1,000m2 job) 65 74 Vinyl flooring to wet areas (m2) (500m2 job) 35 40 Carpet medium tufted (m2) (4,500m2 job) 32 36 Lighting installation (m2) (5,000m2+ job) 50 57 Copper pipe 15mm to wall (m) (1,000m+ job) 31 35 Fire sprinklers (per m2) (5,000m2 job) 80 91 Air conditioning including main plant (m2) (5,000m2+ job) 140 159

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 80 91 Reinforcement bar 16mm (tonne) (120 tonne job) 820 933 Concrete block (400x200) per 1,000 (>10,000 block job) 2,600 2,959 Standard brick per 1,000 475 541 Structural steel beams (tonne) (100 tonne+ job) 1,400 1,593 Glass pane 10mm tempered (m2) 195 222 Softwood timber for framing 100mm x 50mm (m) 4 4 13 mm plasterboard (m2) 4 5 Emulsion paint (litre) 4 5 Copper pipe 15 mm (metre) (1,000m+ job) 5 5 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 2

Plant




Japan – TokyoEfforts to grow economy through infrastructure set to bear fruit

International building costs per m2 of internal area, in 2015 JPY

USD(exchange

rate: 118.82)

Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewJapan is pumping trillions of yen into its economy through asset purchases and low interest rates. Outside Tokyo sentiment is still pessimistic, with two-thirds of businesses expecting conditions to get worse. The rate of growth in construction orders is still quite modest.

Construction markets and trendsThe new Chuo Shinkansen high-speed railway line between Tokyo and Nagoya, and eventually to Osaka, will be essential to construction growth. Other planned projects include the 2020 Olympics village, and in Greater Tokyo, up to 173 residential towers.

Other new Shinkansen projects will boost business by opening up land for commercial development. These include Nagano to Kanazawa and Kanazawa to Tsuraga, where large new station complexes will provide well-connected accommodation for business at costs much lower than Tokyo.

There is moderate upward pressure on construction costs, with a limited supply of skilled labour thanks to an ageing workforce and the tsunami reconstruction, which is still underway. Costs for imported materials are also under upward pressure from the falling yen.

Future outlookThe consumption tax increase (from five percent to eight percent) in 2014, which dampened construction activity prior to implementation, now appears to be priced in. A further increase planned for October 2015 (eight percent to ten percent) has been postponed to before April 2017. Tokyo’s market looks set to heat up in 2015–16, however there is sufficient excess capacity to prevent significant construction cost increases from occurring to any major extent just yet. Higher costs may occur later as construction for the 2020 Olympics gets into full swing.

Around the globe


Japan – international building costs JPY

USD(exchange

rate: 118.82)


Excavate basement (m3) (1,800m3 job) 520 4 Excavate footings (m) 600 5 Concrete in slab (m3) (1,500m3 job) 14,000 118 Reinforcement in beams (tonne) 130,000 1,094 Formwork to soffit of slab (m2) 5,400 45 Blockwork in wall (m2) (10,000m2 block job) 6,000 50 Structural steel beams (tonne) 143,000 1,204 Pre-cast concrete wall (m2) 17,000 143 Curtain wall glazing including support system (m2) (1,000m2 job) 130,000 1,094 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 3,950 33 Single solid core door including frame and hardware (no) (50 door job) 85,000 715 Painting to walls primer + 2 coats (m2) 950 8 Ceramic tiling (m2) (1,000m2 job) 6,320 53 Vinyl flooring to wet areas (m2) (500m2 job) 3,690 31 Carpet medium tufted (m2) (4,500m2 job) 4,700 40 Lighting installation (m2) (5,000m2+ job) 6,150 52 Copper pipe 15mm to wall (m) (1,000m+ job) 2,610 22 Fire sprinklers (per m2) (5,000m2 job) 5,200 44 Air conditioning including main plant (m2) (5,000m2+ job) 33,000 278

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 12,700 107 Reinforcement bar 16mm (tonne) (120 tonne job) 63,000 530 Concrete block (400x200) per 1,000 (>10,000 block job) 110,000 926 Standard brick per 1,000 97,500 821 Structural steel beams (tonne) (100 tonne+ job) 80,000 673 Glass pane 10mm tempered (m2) 17,300 146 Softwood timber for framing 100mm x 50mm (m) 1,630 14 13 mm plasterboard (m2) 560 5 Emulsion paint (litre) 350 3 Copper pipe 15 mm (metre) (1,000m+ job) 661 6 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 400 3

Plant


Market: staying the sameTendering: hotCost escalation 2014–15: 4.0%Cost escalation 2015–16: 2.0%Contractors’ margin: 7.0%Preliminaries: 12.0%Location factor (USD): 81PPP coefficient: 153.23


Kazakhstan – AtyrauWhile oil exports fall, foreign investment is set to rise

International building costs per m2 of internal area, in 2015 KZT

USD(exchange

rate: 185.00)

Airports


Car parks


Commercial

Offices – business park – –CBD offices – up to 20 floors medium (A-Grade) 312,010 1,690 CBD offices – high-rise prestige – –

Education

Primary and secondary schools 177,050 960 University 345,650 1,870

Hospitals

Day centre (including basic surgeries) – –Regional hospital – –General hospital (eg city teaching hospital) – –

Hotels

3 star travellers 255,740 1,380 5 star luxury 354,110 1,910 Resort style – –

Industrial

Warehouse/factory units – basic 196,730 1,060 Large warehouse distribution centre 255,740 1,380 High-tech factory/laboratory – –

Residential


Retail

Large shopping centre including mall – –Neighbourhood including supermarket – –Prestige car showroom – –

Economic overviewIn 2010 the Kazakhstan economy was growing at close to ten percent year-on-year; by early 2015 this has fallen to 2.2 percent due to the lower oil prices. This reflects the fact that seven percent of export volume is oil-related. Inflation remains quite high although consumer spending, consumer credit and confidence are under downward pressure, which will ease inflation.

The rouble has fallen against the tenge, adversely affecting exports to Russia. Meanwhile the tenge itself fell strongly against the US dollar making imports more expensive. On the flip side, this should help encourage inbound foreign investment.

Construction markets and trendsGiven the fall in government revenues from oil, infrastructure budgets are being cut. Meanwhile construction cost increases remain some of the highest in the survey with 7.5 percent cost growth in 2014 and another 7.5 percent forecast in 2015, thanks to the country’s high levels of inflation.

Future outlookThe fall in oil revenues and the ongoing weakness in Russia will continue to affect Kazakhstan prospects, potentially forcing a further devaluation of the currency. However, over the medium term Kazakhstan’s strong oil reserves will keep the outlook for construction growth positive. High inflation is likely to feed through to higher construction costs.

Around the globe


Kazakhstan – international building costs KZT

USD(exchange

rate: 185.00)


Excavate basement (m3) (1,800m3 job) 2,300 12 Excavate footings (m) 2,620 14 Concrete in slab (m3) (1,500m3 job) 4,170 23 Reinforcement in beams (tonne) 109,310 591 Formwork to soffit of slab (m2) 10,120 55 Blockwork in wall (m2) (10,000m2 block job) 4,590 25 Structural steel beams (tonne) 422,460 2,284 Pre-cast concrete wall (m2) 4,170 23 Curtain wall glazing including support system (m2) (1,000m2 job) 127,870 691 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 2,880 16 Single solid core door including frame and hardware (no) (50 door job) 139,350 753 Painting to walls primer + 2 coats (m2) 4,670 25 Ceramic tiling (m2) (1,000m2 job) 9,920 54 Vinyl flooring to wet areas (m2) (500m2 job) 4,530 24 Carpet medium tufted (m2) (4,500m2 job) 10,660 58 Lighting installation (m2) (5,000m2+ job) 6,300 34 Copper pipe 15mm to wall (m) (1,000m+ job) 2,950 16 Fire sprinklers (per m2) (5,000m2 job) 11,150 60 Air conditioning including main plant (m2) (5,000m2+ job) 59,020 319

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 34,260 185 Reinforcement bar 16mm (tonne) (120 tonne job) 115,810 626 Concrete block (400x200) per 1,000 (>10,000 block job) 20,750 112 Standard brick per 1,000 8,090 44 Structural steel beams (tonne) (100 tonne+ job) 154,420 835 Glass pane 10mm tempered (m2) 18,300 99 Softwood timber for framing 100mm x 50mm (m) 590 3 13 mm plasterboard (m2) 920 5 Emulsion paint (litre) 260 1 Copper pipe 15 mm (metre) (1,000m+ job) 1,080 6 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 450 2

Plant




Kenya – NairobiStrong construction market set for more growth

International building costs per m2 of internal area, in 2015 KSH

USD(exchange

rate: 92.00)

Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewKenya is one of the better performing construction markets in Africa, with strong population growth and improved domestic consumption due to lower oil prices providing some stimulus to the economy.

Construction markets and trendsThe number of building permits doubled during 2014, indicating strong growth in 2015. New Private Public Partnership legislation should help boost the infrastructure sector and a 2.7 percent population growth and the strengthening economy should keep construction growing quite strongly.

There are two headwinds. First, the security situation at the beginning of 2015 has temporarily dented tourism. Second, the higher US dollar has added to import costs,

though the Kenyan shilling has not fallen as much as its peers, reflecting its relative strength. However, neither of these should have a material impact on the construction sector.

The market is warm and getting warmer. The combination of local supplies of concrete and sufficient construction capacity is preventing construction costs from rising at present even though inflation has started to pick up to around seven percent year-on-year.

Future outlookConstruction is set to keep growing, with infrastructure becoming more important. Construction cost increases are likely to be modest in 2015–16, but could start to rise more quickly if growth remains strong. Costs are attractive in global terms and the legal system is becoming more supportive of investment.

Around the globe


Kenya – international building costs KSH

USD(exchange

rate: 92.00)


Excavate basement (m3) (1,800m3 job) 391 4 Excavate footings (m) 351 4 Concrete in slab (m3) (1,500m3 job) 13,340 145 Reinforcement in beams (tonne) 150,000 1,630 Formwork to soffit of slab (m2) 486 5 Blockwork in wall (m2) (10,000m2 block job) 1,740 19 Structural steel beams (tonne) 244,236 2,655 Pre-cast concrete wall (m2) 5,655 61 Curtain wall glazing including support system (m2) (1,000m2 job) 17,590 191 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 3,909 42 Single solid core door including frame and hardware (no) (50 door job) 34,220 372 Painting to walls primer + 2 coats (m2) 300 3 Ceramic tiling (m2) (1,000m2 job) 1,762 19 Vinyl flooring to wet areas (m2) (500m2 job) 1,757 19 Carpet medium tufted (m2) (4,500m2 job) 4,396 48 Lighting installation (m2) (5,000m2+ job) – –Copper pipe 15mm to wall (m) (1,000m+ job) – –Fire sprinklers (per m2) (5,000m2 job) – –Air conditioning including main plant (m2) (5,000m2+ job) – –

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 11,706 127 Reinforcement bar 16mm (tonne) (120 tonne job) 87,704 953 Concrete block (400x200) per 1,000 (>10,000 block job) 87,704 953 Standard brick per 1,000 14,000 152 Structural steel beams (tonne) (100 tonne+ job) 175,421 1,907 Glass pane 10mm tempered (m2) 14,500 158 Softwood timber for framing 100mm x 50mm (m) 454 5 13 mm plasterboard (m2) 491 5 Emulsion paint (litre) 684 7 Copper pipe 15 mm (metre) (1,000m+ job) 300 3 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 150 2

Plant




Malaysia – Kuala LumpurLow construction costs and a favourable exchange rate

International building costs per m2 of internal area, in 2015 MYR


Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewActivity in Malaysia’s buoyant construction industry is set to grow by 11.6 percent in 2015, contributing to overall GDP growth of 5.6 percent. Investment by the public sector in transport and energy infrastructure is strong.

However, there’s a cloud on the horizon, as falling oil prices will affect government funding revenues. On the other hand, much of the work is likely to be financed by Private Public Partnerships.

Construction market and trendsThe 2015 budget includes RM76bn for road and rail projects, including the Klang Valley MRT railway extension and phase two of the 1,663km Pan Borneo highway. A further RM15bn is earmarked for major highways including the West Coast

Expressway with RM34bn allocated to LRT2 light rail. A Singapore to Kuala Lumpur high-speed rail line is also under consideration.

Malaysia appears to offer excellent value for money with moderate wages and some of the lowest construction costs of any developed economy. Materials prices have stayed low and labour rates are lower compared with Singapore.

Future outlookEconomic growth of around five percent should add some moderate cost pressures due to weaker tender price competition. With construction cost starting from a low base, a rise of five percent is expected in 2015. Overseas investors would also benefit from the lower exchange rate.

Around the globe


Malaysia – international building costs MYR



Excavate basement (m3) (1,800m3 job) 35 10 Excavate footings (m) 50 14 Concrete in slab (m3) (1,500m3 job) 288 80 Reinforcement in beams (tonne) 4,069 1,125 Formwork to soffit of slab (m2) 37 10 Blockwork in wall (m2) (10,000m2 block job) 70 19 Structural steel beams (tonne) 6,365 1,760 Pre-cast concrete wall (m2) 226 62 Curtain wall glazing including support system (m2) (1,000m2 job) 1,009 279 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 110 30 Single solid core door including frame and hardware (no) (50 door job) 887 245 Painting to walls primer + 2 coats (m2) 10 3 Ceramic tiling (m2) (1,000m2 job) 150 41 Vinyl flooring to wet areas (m2) (500m2 job) 106 29 Carpet medium tufted (m2) (4,500m2 job) 97 27 Lighting installation (m2) (5,000m2+ job) 157 43 Copper pipe 15mm to wall (m) (1,000m+ job) 46 13 Fire sprinklers (per m2) (5,000m2 job) 115 32 Air conditioning including main plant (m2) (5,000m2+ job) 300 83

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 258 71 Reinforcement bar 16mm (tonne) (120 tonne job) 3,800 1,051 Concrete block (400x200) per 1,000 (>10,000 block job) 3,500 968 Standard brick per 1,000 422 117 Structural steel beams (tonne) (100 tonne+ job) 2,992 827 Glass pane 10mm tempered (m2) 775 214 Softwood timber for framing 100mm x 50mm (m) 15 4 13 mm plasterboard (m2) 27 7 Emulsion paint (litre) 28 8 Copper pipe 15 mm (metre) (1,000m+ job) 28 8 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 16 4

Plant


Market: coolerTendering: warmCost escalation 2014–15: 3.0%Cost escalation 2015–16: 5.0%Contractors’ margin: 12.5%Preliminaries: 10.0%Location factor (USD): 52PPP coefficient: 2.91


Netherlands – AmsterdamUpswing in housing signals construction revival



Airports


Car parks

Multi-storey above ground 556 630 Multi-storey below ground 1,081 1,230

Commercial


Education


Hospitals


Hotels


Industrial

Warehouse/factory units – basic 769 880 Large warehouse distribution centre 869 990 High-tech factory/laboratory 1,694 1,930

Residential


Retail


Economic overviewThe outlook for the construction sector in the Netherlands is reasonably positive. While its economy is weaker than those of other Northern European countries such as Germany and the UK, it is ahead of southern European economies.

Construction markets and trendsConfidence has improved significantly over 2014 and construction activity across all sectors is forecast to increase by close to two percent in 2015. Positive influencers are the improved economic situation domestically and internationally, falling mortgage rates, rising sales of new homes and good affordability. These are expected to outweigh restraining factors such as the residual debt problem, scaling back of stimulus measures and credit restrictions.

Infrastructure construction is strong, especially transportation and utilities, with long-term projects likely to ensure activity levels remain high. Residential construction, depressed since the global financial crisis, has rallied strongly with 21,100 transactions in the first two months of 2015, up 12 percent compared to the same period in 2014. In the non-residential sector, activity is decreasing.

Future outlookOverall cost increases are likely to be moderate, with plenty of excess capacity in the construction sector. However, the upswing in the housing sector is likely to continue, eventually adding some pressure to construction trade costs.

Around the globe


Netherlands – international building costs EUR



Excavate basement (m3) (1,800m3 job) 13 15 Excavate footings (m) 25 28 Concrete in slab (m3) (1,500m3 job) 197 224 Reinforcement in beams (tonne) 1,172 1,334 Formwork to soffit of slab (m2) 35 40 Blockwork in wall (m2) (10,000m2 block job) 48 55 Structural steel beams (tonne) 2,558 2,911 Pre-cast concrete wall (m2) 106 121 Curtain wall glazing including support system (m2) (1,000m2 job) 640 728 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 80 91 Single solid core door including frame and hardware (no) (50 door job) 1,134 1,291 Painting to walls primer + 2 coats (m2) 17 19 Ceramic tiling (m2) (1,000m2 job) 76 86 Vinyl flooring to wet areas (m2) (500m2 job) 47 53 Carpet medium tufted (m2) (4,500m2 job) 35 40 Lighting installation (m2) (5,000m2+ job) 69 79 Copper pipe 15mm to wall (m) (1,000m+ job) 26 30 Fire sprinklers (per m2) (5,000m2 job) 37 42 Air conditioning including main plant (m2) (5,000m2+ job) 87 99

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 95 108 Reinforcement bar 16mm (tonne) (120 tonne job) 970 1,104 Concrete block (400x200) per 1,000 (>10,000 block job) 2,637 3,001 Standard brick per 1,000 407 463 Structural steel beams (tonne) (100 tonne+ job) 1,340 1,525 Glass pane 10mm tempered (m2) 132 150 Softwood timber for framing 100mm x 50mm (m) 2 2 13 mm plasterboard (m2) 5 6 Emulsion paint (litre) 9 10 Copper pipe 15 mm (metre) (1,000m+ job) 5 6 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 2

Plant


Market: warmerTendering: lukewarmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 2.0%Contractors’ margin: 5.0%Preliminaries: 13.0%Location factor (USD): 77PPP coefficient: 1.03


Poland – WarsawBruised construction industry wants to avoid pain of the past

International building costs per m2 of internal area, in 2015 PLN


Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewLow interest rates, four percent nominal wage growth and a fall in unemployment from 14 percent in 2014 to 11 percent in early 2015 are driving demand for new homes. While housing comprises only 13 percent of the total construction sector, it is a bright spot that will help improve confidence among financial institutions.

Construction market and trendsThe period before the UEFA Euro 2012 Football Championship caused significant problems for the Polish construction industry, with a high number of insolvencies due to insufficient capital, and rising materials costs. Major road building projects, intended to modernise the road system, were plagued by problems of higher materials costs, inflexible contracts and low margins. The experience left local and other

European contractors and investors bruised. Lowest priced tendering has now been abandoned for public projects.

More roads are planned. Poland is the largest net beneficiary of EU funds and the new 2014–20 budget will supply EUR24.3bn towards infrastructure, which will be supplemented by internal funds for the construction of 1770km of new roads and 35 ring roads. The peak will be 2016–18, with some risk of repeating the previous problems of high materials prices.

Future outlookCurrently construction cost escalation is low with around one percent per annum increases in costs. The market in 2015 will remain lukewarm. Some gradual stabilisation, followed by improvement, is likely over the medium term, mostly due to large projects now planned for construction in 2016.

Around the globe


Poland – international building costs PLN



Excavate basement (m3) (1,800m3 job) 24 6 Excavate footings (m) 90 24 Concrete in slab (m3) (1,500m3 job) 540 146 Reinforcement in beams (tonne) 3,500 946 Formwork to soffit of slab (m2) 90 24 Blockwork in wall (m2) (10,000m2 block job) 110 30 Structural steel beams (tonne) 9,000 2,432 Pre-cast concrete wall (m2) 460 124 Curtain wall glazing including support system (m2) (1,000m2 job) 1,050 284 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 54 15 Single solid core door including frame and hardware (no) (50 door job) 2,500 676 Painting to walls primer + 2 coats (m2) 15 4 Ceramic tiling (m2) (1,000m2 job) 115 31 Vinyl flooring to wet areas (m2) (500m2 job) 90 24 Carpet medium tufted (m2) (4,500m2 job) 90 24 Lighting installation (m2) (5,000m2+ job) 100 27 Copper pipe 15mm to wall (m) (1,000m+ job) 65 18 Fire sprinklers (per m2) (5,000m2 job) 70 19 Air conditioning including main plant (m2) (5,000m2+ job) 520 141

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 265 72 Reinforcement bar 16mm (tonne) (120 tonne job) 2,620 708 Concrete block (400x200) per 1,000 (>10,000 block job) 4,240 1,146 Standard brick per 1,000 900 243 Structural steel beams (tonne) (100 tonne+ job) 6,500 1,757 Glass pane 10mm tempered (m2) 350 95 Softwood timber for framing 100mm x 50mm (m) 7 2 13 mm plasterboard (m2) 11 3 Emulsion paint (litre) 4 1 Copper pipe 15 mm (metre) (1,000m+ job) 18 5 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 4 1

Plant




Qatar – DohaA raft of mega-projects, but cost rises remain modest

International building costs per m2 of internal area, in 2015 QAR


Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential

Individual detached or terrace style house medium standard 6,750 1,850 Individual detached house prestige 9,750 2,680 Townhouses medium standard 6,750 1,850 Apartments low-rise medium standard 6,500 1,780 Apartments high-rise 7,500 2,060 Aged care/affordable units – –

Retail


Economic overviewDespite the fall in oil prices, Qatar’s economy is set to grow strongly with the Ministry of Developmental Planning and Statistics forecasting real GDP growth of 7.7 percent for 2015. Its construction market remains volatile and is subject to both internal and external pressures of meeting the 2022 World Cup deadlines, as well as the external pressure of oil prices.

Construction markets and trendsQatar is investing significantly in construction: a new city at Lusail; a new 126km metro network around Doha; a new long-distance passenger and freight railway linking Saudi Arabia and Bahrain; football stadia; a second phase to Hamad International Airport; major road improvements including an Orbital Motorway; and several malls, hotels and other iconic buildings.

The cost of improving working conditions for a labour force which comes from less-developed nations has had minimal effect on tender prices. Specialist labour services are sourced from Europe or Asia and availability is subject to their local markets.

Future outlookConstruction inflation remains at a reasonable 3.7 percent, similar to inflation for 2014 and is rising steadily, rather than violently as expected. The Qatar National Vision 2030 forms the backbone of construction activity, and as long as this remains unaltered construction activity will keep growing.

Around the globe


Qatar – international building costs QAR



Excavate basement (m3) (1,800m3 job) 41 11 Excavate footings (m) 46 13 Concrete in slab (m3) (1,500m3 job) 613 168 Reinforcement in beams (tonne) 4,815 1,321 Formwork to soffit of slab (m2) 145 40 Blockwork in wall (m2) (10,000m2 block job) 117 32 Structural steel beams (tonne) 14,200 3,896 Pre-cast concrete wall (m2) 655 180 Curtain wall glazing including support system (m2) (1,000m2 job) 1,750 480 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 182 50 Single solid core door including frame and hardware (no) (50 door job) 4,190 1,150 Painting to walls primer + 2 coats (m2) 26 7 Ceramic tiling (m2) (1,000m2 job) 195 54 Vinyl flooring to wet areas (m2) (500m2 job) 155 43 Carpet medium tufted (m2) (4,500m2 job) 175 48 Lighting installation (m2) (5,000m2+ job) 325 89 Copper pipe 15mm to wall (m) (1,000m+ job) 65 18 Fire sprinklers (per m2) (5,000m2 job) 115 32 Air conditioning including main plant (m2) (5,000m2+ job) 810 222

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 298 82 Reinforcement bar 16mm (tonne) (120 tonne job) 3,340 916 Concrete block (400x200) per 1,000 (>10,000 block job) 4,174 1,145 Standard brick per 1,000 2,980 818 Structural steel beams (tonne) (100 tonne+ job) 6,560 1,800 Glass pane 10mm tempered (m2) 745 204 Softwood timber for framing 100mm x 50mm (m) 18 5 13 mm plasterboard (m2) 12 3 Emulsion paint (litre) 76 21 Copper pipe 15 mm (metre) (1,000m+ job) 14 4 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 3 1

Plant




Russia – MoscowSanctions hit hard as works for 2018 World Cup continue

International building costs per m2 of internal area, in 2015 RUB

USD(exchange

rate: 62.37)

Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential

Individual detached or terrace style house medium standard 43,250 690 Individual detached house prestige 67,000 1,070 Townhouses medium standard 41,000 660 Apartments low-rise medium standard 51,000 820 Apartments high-rise 63,000 1,010 Aged care/affordable units 49,000 790

Retail

Large shopping centre including mall 55,000 880 Neighbourhood including supermarket 47,000 750 Prestige car showroom 85,000 1,360

Economic overviewConstruction activity has slowed in Russia, along with the general economy, due to Western sanctions imposed in response to the Ukraine tensions, and the fall in oil prices.

Construction markets and trendsAs a result of the economic crisis, commercial vacancy rates in Moscow hit almost 45 percent in the first part of 2015. Commercial construction completions, at a record high in 2014 and expected to be high in 2015, only add to the oversupply. Commercial developers who had been financed in dollars have fallen on hard times.

Housing completions are forecast to fall by six percent this year, according to Russia’s Ministry for Construction, Housing and Utilities, having reached a record high for the post-Soviet era of 80 million square metres.

Works to build the infrastructure to host the 2018 FIFA World Cup continue, despite some calls to boycott the event. However, Russia has announced several cuts to the spending programme totaling RUB27bn (EUR440m), reducing the total spend to RUB637.6bn (EUR10.5bn).

As a result of the ruble’s collapse against the dollar, Russian construction costs in US dollars have fallen significantly compared to our last survey. Costs are also affected by high general inflation levels.

Future outlookThe ongoing geopolitical situation makes it more difficult to make accurate predictions and projections for the immediate future. However, the overall clear trend is one of a weaker economy and construction market.

Around the globe


Russia – international building costs RUB

USD(exchange

rate: 62.37)


Excavate basement (m3) (1,800m3 job) 580 9 Excavate footings (m) 765 12 Concrete in slab (m3) (1,500m3 job) 8,490 136 Reinforcement in beams (tonne) 60,800 975 Formwork to soffit of slab (m2) 1,290 21 Blockwork in wall (m2) (10,000m2 block job) 1,650 26 Structural steel beams (tonne) 103,600 1,661 Pre-cast concrete wall (m2) 8,395 135 Curtain wall glazing including support system (m2) (1,000m2 job) 42,070 674 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 2,750 44 Single solid core door including frame and hardware (no) (50 door job) 32,250 517 Painting to walls primer + 2 coats (m2) 560 9 Ceramic tiling (m2) (1,000m2 job) 3,750 60 Vinyl flooring to wet areas (m2) (500m2 job) 3,080 49 Carpet medium tufted (m2) (4,500m2 job) 2,720 44 Lighting installation (m2) (5,000m2+ job) 2,970 48 Copper pipe 15mm to wall (m) (1,000m+ job) 635 10 Fire sprinklers (per m2) (5,000m2 job) 1,440 23 Air conditioning including main plant (m2) (5,000m2+ job) 7,450 119

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 5,742 92 Reinforcement bar 16mm (tonne) (120 tonne job) 31,680 508 Concrete block (400x200) per 1,000 (>10,000 block job) 71,280 1,143 Standard brick per 1,000 19,008 305 Structural steel beams (tonne) (100 tonne+ job) 49,500 794 Glass pane 10mm tempered (m2) 7,128 114 Softwood timber for framing 100mm x 50mm (m) 198 3 13 mm plasterboard (m2) 190 3 Emulsion paint (litre) 60 1 Copper pipe 15 mm (metre) (1,000m+ job) 433 7 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 84 1

Plant


Market: coolerTendering: coldCost escalation 2014–15: 20.0%Cost escalation 2015–16: 15.0%Contractors’ margin: 7.0%Preliminaries: 8.0%Location factor (USD): 42PPP coefficient: 40.18


SingaporeStill a leader, but construction is cooling

International building costs per m2 of internal area, in 2015 SGD


Airports


Car parks

Multi-storey above ground 1,230 910 Multi-storey below ground 1,740 1,280

Commercial


Education


Hospitals


Hotels


Industrial


Residential


Retail


Economic overviewThe government has attempted to rein in the overpriced housing sector by tightening monetary policy to reduce the danger of households getting into debt. This is putting a lid on prices and new developments. Because of housing’s dominance in the consumer price index (CPI) weightings, inflation has now become negative, although core inflation for other goods is still positive.

Construction markets and trendsOverall the construction market looks set to cool a little in 2015, especially in the private sector. There is some caution among developers in the private housing sector linked to the slowdown in China’s economic growth, and local concerns about the sustainability of global trade.

However, the Changi Airport Terminal 5 expansion project will add to the private construction workload.

Around 60 percent of the SGD35bn projects expected in Singapore in 2015 are coming from the public sector’s pipeline of public, civil and institutional projects. Sengkang General Hospital, Tampines Town Hub and extensions to the East Coast MRT are driving some of the public sector construction. Public housing construction is flattening off, in line with demand.

Future outlookSingapore will remain a construction leader in Asia, but 2015–16 looks set to be a more moderate period and hence construction costs should remain quite stable.

Around the globe


Singapore – international building costs SGD



Excavate basement (m3) (1,800m3 job) 75 55 Excavate footings (m) 25 18 Concrete in slab (m3) (1,500m3 job) 158 116 Reinforcement in beams (tonne) 1,550 1,142 Formwork to soffit of slab (m2) 37 27 Blockwork in wall (m2) (10,000m2 block job) 65 48 Structural steel beams (tonne) 4,100 3,020 Pre-cast concrete wall (m2) 135 99 Curtain wall glazing including support system (m2) (1,000m2 job) 1,365 1,005 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 25 18 Single solid core door including frame and hardware (no) (50 door job) 845 622 Painting to walls primer + 2 coats (m2) 10 7 Ceramic tiling (m2) (1,000m2 job) 87 64 Vinyl flooring to wet areas (m2) (500m2 job) 80 59 Carpet medium tufted (m2) (4,500m2 job) 63 46 Lighting installation (m2) (5,000m2+ job) 205 151 Copper pipe 15mm to wall (m) (1,000m+ job) 28 20 Fire sprinklers (per m2) (5,000m2 job) 82 60 Air conditioning including main plant (m2) (5,000m2+ job) 267 196

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 108 80 Reinforcement bar 16mm (tonne) (120 tonne job) 1,200 884 Concrete block (400x200) per 1,000 (>10,000 block job) 700 516 Standard brick per 1,000 350 258 Structural steel beams (tonne) (100 tonne+ job) 2,200 1,620 Glass pane 10mm tempered (m2) 120 88 Softwood timber for framing 100mm x 50mm (m) 12 9 13 mm plasterboard (m2) 8 6 Emulsion paint (litre) 18 13 Copper pipe 15 mm (metre) (1,000m+ job) 13 10 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 2

Plant




South Africa – JohannesburgPlagued by problems, the outlook for construction is weak

International building costs per m2 of internal area, in 2015 ZAR

USD(exchange

rate: 11.66)

Airports


Car parks


Commercial


Education


Hospitals


Hotels


Industrial


Residential Individual detached or terrace style house medium standard 6,700 570 Individual detached house prestige 12,000 1,030 Townhouses medium standard 7,400 630 Apartments low-rise medium standard 7,900 680 Apartments high-rise 9,500 820 Aged care/affordable units 7,000 600

Retail


Economic overviewThe South African economy weakened further over 2014 with only 1.5 percent real GDP growth. Policy reforms and investment in infrastructure are required to turn the economy around, but government and delays in key project implementation are seen as a major barrier to this happening.

Construction markets and trendsConstruction is still well behind 2010 FIFA World Cup activity, however the sector has strengthened over the last year. The industry remains plagued by power outages and insufficient power infrastructure to support new development. Labour disputes remain a constant challenge in certain markets.

The weakness in commodity prices and the slowdown in the resources industry have resulted in a lower appetite for new projects in the mining industry. Several large infrastructure programmes announced by the government are facing

persistent delays due to changing economic fundamentals. However, these projects seem inevitable given South Africa’s requirement for infrastructure, utilities, telecommunications and social housing. Consumer price inflation is at its lowest in four years. Material costs are benign, but wage settlements continue to afford above-inflation wage and salary increases. The fall in the rand will increase the cost of imported materials and equipment.

Future outlookOverall the outlook is weak for the economy and for the construction industry and there are significant regional variances. Business confidence in the private sector in South Africa is depressed as a result of a combination of factors. Though government infrastructure projects are expected to boost construction activity, they may not begin in the next year. Regardless of this, construction cost escalation is expected to remain above inflation targets.

Around the globe


South Africa – international building costs ZAR

USD(exchange

rate: 11.66)


Excavate basement (m3) (1,800m3 job) 45 4 Excavate footings (m) 103 9 Concrete in slab (m3) (1,500m3 job) 1,519 130 Reinforcement in beams (tonne) 12,300 1,055 Formwork to soffit of slab (m2) 240 21 Blockwork in wall (m2) (10,000m2 block job) 240 21 Structural steel beams (tonne) 39,375 3,378 Pre-cast concrete wall (m2) 500 43 Curtain wall glazing including support system (m2) (1,000m2 job) 2,680 230 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 280 24 Single solid core door including frame and hardware (no) (50 door job) 1,911 164 Painting to walls primer + 2 coats (m2) 30 3 Ceramic tiling (m2) (1,000m2 job) 250 21 Vinyl flooring to wet areas (m2) (500m2 job) 201 17 Carpet medium tufted (m2) (4,500m2 job) 261 22 Lighting installation (m2) (5,000m2+ job) 700 60 Copper pipe 15mm to wall (m) (1,000m+ job) 165 14 Fire sprinklers (per m2) (5,000m2 job) 290 25 Air conditioning including main plant (m2) (5,000m2+ job) 1,500 129

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 1,120 96 Reinforcement bar 16mm (tonne) (120 tonne job) 11,138 956 Concrete block (400x200) per 1,000 (>10,000 block job) 3,800 326 Standard brick per 1,000 1,350 116 Structural steel beams (tonne) (100 tonne+ job) 34,500 2,960 Glass pane 10mm tempered (m2) 1,800 154 Softwood timber for framing 100mm x 50mm (m) 65 6 13 mm plasterboard (m2) 54 5 Emulsion paint (litre) 56 5 Copper pipe 15 mm (metre) (1,000m+ job) 57 5 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 14 1

Plant




South Korea – SeoulWith moderate construction costs, it’s a good time to enter the market

International building costs per m2 of internal area, in 2015 KRW

USD(exchange

rate: 1,105.23)

Airports


Car parks


Commercial

Offices – business park 1,167,000 1,060 CBD offices – up to 20 floors medium (A-Grade) 1,432,000 1,300 CBD offices – high-rise prestige 1,803,000 1,630

Education

Primary and secondary schools 1,060,000 960 University 1,443,000 1,310

Hospitals

Day centre (including basic surgeries) 1,167,000 1,060 Regional hospital 1,697,000 1,540 General hospital (eg city teaching hospital) 1,803,000 1,630

Hotels

3 star travellers 1,560,000 1,410 5 star luxury 3,329,000 3,010 Resort style 2,132,600 1,930

Industrial

Warehouse/factory units – basic 936,000 850 Large warehouse distribution centre 728,000 660 High-tech factory/laboratory 2,704,000 2,450

Residential

Individual detached or terrace style house medium standard 1,196,000 1,080 Individual detached house prestige 1,768,500 1,600 Townhouses medium standard 1,414,800 1,280 Apartments low-rise medium standard 1,144,000 1,040 Apartments high-rise 1,456,000 1,320 Aged care/affordable units 1,248,000 1,130

Retail

Large shopping centre including mall 1,767,000 1,600 Neighbourhood including supermarket 988,000 890 Prestige car showroom 1,945,000 1,760

Economic overviewIn South Korea’s trade exposed economy, headwinds are coming from a weak housing sector, slowing population growth and weaker exports, particularly to its biggest trading partner, China.

The government introduced efforts to stimulate the housing sector in 2014, including higher loan-to-value ratios, which should help push up prices and stimulate consumer spending. However, lingering concerns regarding China and the global economy are damaging business confidence and keeping growth rates low.

Construction market and trendsThe government has plans to develop South Korea’s infrastructure, with a KRW124trn (USD108.6bn) plan to improve transport infrastructure across the country

announced in 2013. In the private sector, notable projects include the 556m tall Lotte World Tower, which will be the tallest building on the Korean peninsula when complete.

In the longer term, the infrastructure sector can expect a boost from the government’s plans to develop nuclear energy. It is proposing to construct 18 new nuclear power plants by 2030, increasing nuclear power’s share of energy capacity to nearly 60 percent.

Future outlookThe South Korean economy is likely to experience only lukewarm growth in the medium term. Weak consumer and business sentiment is stifling demand. Construction costs are likely to be very stable, and increase by only two percent in 2015, providing an opportunity for external players to enter the South Korean market.

Around the globe


South Korea – international building costs KRW

USD(exchange

rate: 1,105.23)


Excavate basement (m3) (1,800m3 job) 6,680 6 Excavate footings (m) 6,680 6 Concrete in slab (m3) (1,500m3 job) 135,000 122 Reinforcement in beams (tonne) 1,251,400 1,132 Formwork to soffit of slab (m2) 31,000 28 Blockwork in wall (m2) (10,000m2 block job) 41,000 37 Structural steel beams (tonne) 2,008,500 1,817 Pre-cast concrete wall (m2) 265,000 240 Curtain wall glazing including support system (m2) (1,000m2 job) 318,000 288 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 47,800 43 Single solid core door including frame and hardware (no) (50 door job) 266,000 241 Painting to walls primer + 2 coats (m2) 4,800 4 Ceramic tiling (m2) (1,000m2 job) 46,500 42 Vinyl flooring to wet areas (m2) (500m2 job) 37,100 34 Carpet medium tufted (m2) (4,500m2 job) 53,000 48 Lighting installation (m2) (5,000m2+ job) 43,260 39 Copper pipe 15mm to wall (m) (1,000m+ job) 11,600 10 Fire sprinklers (per m2) (5,000m2 job) 23,870 22 Air conditioning including main plant (m2) (5,000m2+ job) 214,000 194

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 84,700 77 Reinforcement bar 16mm (tonne) (120 tonne job) 748,000 677 Concrete block (400x200) per 1,000 (>10,000 block job) 998,000 903 Standard brick per 1,000 682,000 617 Structural steel beams (tonne) (100 tonne+ job) 1,176,000 1,064 Glass pane 10mm tempered (m2) 137,600 124 Softwood timber for framing 100mm x 50mm (m) 2,800 3 13 mm plasterboard (m2) 3,300 3 Emulsion paint (litre) 3,200 3 Copper pipe 15 mm (metre) (1,000m+ job) 6,720 6 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2,270 2

Plant




UAE Stable and resilient construction market

International building costs per m2 of internal area, in 2015 AED


Airports


Car parks

Multi-storey above ground 3,590 980 Multi-storey below ground 4,360 1,190

Commercial


Education


Hospitals


Hotels


Industrial


Residential

Individual detached or terrace style house medium standard 6,160 1,680 Individual detached house prestige 10,010 2,720 Townhouses medium standard 5,390 1,470 Apartments low-rise medium standard 5,655 1,540 Apartments high-rise 6,680 1,820 Aged care/affordable units – –

Retail


Economic overviewThe UAE’s economy is exhibiting real signs of stability, projected to grow at a modest level in 2015. As with all Middle East countries the economy is reliant upon oil prices, but it appears to be less affected than other countries by the recent fall.

Construction markets and trendsThe construction sector is showing signs of increased activity. Much of this has not yet translated into actual construction activity, but the outlook for both infrastructure and building construction looks more positive.

Tender prices are neither increasing nor reducing but contractors are being more selective choosing to work for the major clients.

Costs for commercial and education projects have increased marginally but the residential, hospitality and retail sectors are stable.

With the economy recovering, the expatriate population in the country has started to increase again, and with it the demand for medium and high-quality residential property.

Construction costs generally have remained stable over the last 12 months. Material prices have reduced slightly due to global demand while labour rates have generally remained constant.

Future outlookGovernment investment in large infrastructure projects will be the primary driver of construction activity in the region. Construction cost escalation is likely to continue along its stable trajectory.

Around the globe


UAE – international building costs AED



Excavate basement (m3) (1,800m3 job) 32 9 Excavate footings (m) 31 8 Concrete in slab (m3) (1,500m3 job) 450 123 Reinforcement in beams (tonne) 3,900 1,063 Formwork to soffit of slab (m2) 115 31 Blockwork in wall (m2) (10,000m2 block job) 160 44 Structural steel beams (tonne) 10,500 2,861 Pre-cast concrete wall (m2) 666 181 Curtain wall glazing including support system (m2) (1,000m2 job) 1,435 391 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 135 37 Single solid core door including frame and hardware (no) (50 door job) 4,800 1,307 Painting to walls primer + 2 coats (m2) 20 5 Ceramic tiling (m2) (1,000m2 job) 150 41 Vinyl flooring to wet areas (m2) (500m2 job) 110 30 Carpet medium tufted (m2) (4,500m2 job) 310 84 Lighting installation (m2) (5,000m2+ job) 225 61 Copper pipe 15mm to wall (m) (1,000m+ job) 120 33 Fire sprinklers (per m2) (5,000m2 job) 135 37 Air conditioning including main plant (m2) (5,000m2+ job) 500 136

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 260 71 Reinforcement bar 16mm (tonne) (120 tonne job) 3,200 871 Concrete block (400x200) per 1,000 (>10,000 block job) 3,700 1,007 Standard brick per 1,000 2,700 735 Structural steel beams (tonne) (100 tonne+ job) 6,900 1,878 Glass pane 10mm tempered (m2) 680 185 Softwood timber for framing 100mm x 50mm (m) 13 4 13 mm plasterboard (m2) 11 3 Emulsion paint (litre) 24 7 Copper pipe 15 mm (metre) (1,000m+ job) 40 11 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 13 4

Plant


Market: warmerTendering: lukewarmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 3.0%Contractors’ margin: 8.0%Preliminaries: 12.0%Location factor (USD): 52PPP coefficient: 2.54


Uganda – KampalaGovernment investment boosts infrastructure sector

International building costs per m2 of internal area, in 2015 UGX

USD(exchange

rate: 3,150)

Airports


Car parks

Multi-storey above ground 1,291,500 410 Multi-storey below ground 1,638,000 520

Commercial

Offices – business park 2,709,000 860 CBD offices – up to 20 floors medium (A-Grade) 2,866,500 910 CBD offices – high-rise prestige 4,284,000 1,360

Education

Primary and secondary schools 1,890,000 600 University 2,205,000 700

Hospitals

Day centre (including basic surgeries) 2,709,000 860 Regional hospital 3,181,500 1,010 General hospital (eg city teaching hospital) 4,788,000 1,520

Hotels


Industrial

Warehouse/factory units – basic 1,102,500 350 Large warehouse distribution centre 1,606,500 510 High-tech factory/laboratory 4,788,000 1,520

Residential

Individual detached or terrace style house medium standard 1,260,000 400 Individual detached house prestige 2,079,000 660 Townhouses medium standard 1,764,000 560 Apartments low-rise medium standard 2,079,000 660 Apartments high-rise 2,394,000 760 Aged care/affordable units 1,795,500 570

Retail

Large shopping centre including mall 3,811,500 1,210 Neighbourhood including supermarket 2,551,500 810 Prestige car showroom 2,520,000 800

Economic overviewUganda’s domestic economy is steadily growing at 5.6 percent GDP. However, the Ugandan shilling has fallen by 13 percent against the US dollar in the last six months as a result of reduced direct foreign investment and high dependence on imports.

Government investment in infrastructure and public facilities including roads, energy, schools and hospitals continues to grow. With the help of foreign investment, particularly from China, several high-profile construction projects have recently been announced including the USD1.4bn Karuma hydropower dam across the River Nile, expansion of Entebbe International Airport, and a new railway line between Kenya and Rwanda, running through Uganda.

Construction market and trendsThe depreciation of the shilling has hindered private sector development. There is speculation that inflation might rise due to spending pressures as the 2016 elections approach.

Uganda’s economy should be further boosted in 2018 when oil production is scheduled to begin, following the construction of the country’s first USD3bn refinery in Hoima. Russian state corporation Rostec is the preferred bidder on the Public Private Partnership deal.

Future outlookPublic infrastructure investment is likely to be strong in the 2015/2016 financial year, with further growth expected in the agriculture, power and oil and gas sectors.

Around the globe


Uganda – international building costs UGX

USD(exchange

rate: 3,150)


Excavate basement (m3) (1,800m3 job) 12,600 4 Excavate footings (m) 9,450 3 Concrete in slab (m3) (1,500m3 job) 614,250 195 Reinforcement in beams (tonne) 5,099,850 1,619 Formwork to soffit of slab (m2) 40,950 13 Blockwork in wall (m2) (10,000m2 block job) 94,500 30 Structural steel beams (tonne) 10,508,400 3,336 Pre-cast concrete wall (m2) 390,600 124 Curtain wall glazing including support system (m2) (1,000m2 job) 882,000 280 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 113,400 36 Single solid core door including frame and hardware (no) (50 door job) 1,269,450 403 Painting to walls primer + 2 coats (m2) 12,600 4 Ceramic tiling (m2) (1,000m2 job) 94,500 30 Vinyl flooring to wet areas (m2) (500m2 job) 311,850 99 Carpet medium tufted (m2) (4,500m2 job) 157,500 50 Lighting installation (m2) (5,000m2+ job) 381,150 121 Copper pipe 15mm to wall (m) (1,000m+ job) 85,050 27 Fire sprinklers (per m2) (5,000m2 job) 255,150 81 Air conditioning including main plant (m2) (5,000m2+ job) 315,000 100

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 504,000 160 Reinforcement bar 16mm (tonne) (120 tonne job) 3,339,000 1,060 Concrete block (400x200) per 1,000 (>10,000 block job) 4,006,800 1,272 Standard brick per 1,000 526,050 167 Structural steel beams (tonne) (100 tonne+ job) 8,407,350 2,669 Glass pane 10mm tempered (m2) 333,900 106 Softwood timber for framing 100mm x 50mm (m) 9,450 3 13 mm plasterboard (m2) 9,450 3 Emulsion paint (litre) 3,150 1 Copper pipe 15 mm (metre) (1,000m+ job) 63,000 20 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 34,650 11

Plant

Hire 50t mobile crane + operator (day) 4,315,500 1,370

Market: CoolerTendering: lukewarmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 8.0%Contractors’ margin: 6.0%Preliminaries: 8.0%Location factor (USD): 48PPP coefficient: 2,157


UK – LondonRecovery continues with London steaming ahead

International building costs per m2 of internal area, in 2015 GBP


Airports


Car parks

Multi-storey above ground 650 960 Multi-storey below ground 1,000 1,470

Commercial


Education


Hospitals


Hotels


Industrial

Warehouse/factory units – basic 800 1,180 Large warehouse distribution centre 950 1,400 High-tech factory/laboratory 1,850 2,720

Residential


Retail


Economic overviewThe UK’s economic recovery remains on track with an increase in GDP of 2.8 percent over 2014. However, the main risk to sustained growth is considerable: the stability of the European Union and Greece’s tenuous bailout. May’s General Election delayed some investment decisions as businesses waited for clarity on policies.

Construction market and trendsLondon is leading the UK construction sector with annualised growth in the fourth quarter of 2014 37 percent higher than output seen in the midst of recession during 2008. This growth in London is largely due to the new-build housing sector, with the prime high-end residential market particularly hot. Labour costs are rising across the region as the market continues to experience growth and capacity is stretched.

Future outlookWith the construction sector in London very heated and demand outstripping supply, contractors are being very selective about the projects they take on. Wage inflation, strong demand, higher costs of getting materials and equipment to constrained sites, and margin clawback are likely to push construction costs higher over the next 12 months.

Tender pricing is likely to remain volatile and outperform the UK average as over capacity continues to cause stress in the contracting market. In London, clients should be prepared for the unexpected – some tender returns could be significantly over pre-tender estimates for certain trades, which are at stretched capacity. Securing early advice on market appetite, appropriate use of contract terms and conditions, and packaging work and risk intelligently will be key mitigation measures for construction purchasers in an overheating market.

Around the globe


UK – international building costs GBP



Excavate basement (m3) (1,800m3 job) 16 24 Excavate footings (m) 20 29 Concrete in slab (m3) (1,500m3 job) 160 235 Reinforcement in beams (tonne) 1,100 1,618 Formwork to soffit of slab (m2) 45 66 Blockwork in wall (m2) (10,000m2 block job) 45 66 Structural steel beams (tonne) 1,950 2,868 Pre-cast concrete wall (m2) 95 140 Curtain wall glazing including support system (m2) (1,000m2 job) 650 956 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 45 66 Single solid core door including frame and hardware (no) (50 door job) 750 1,103 Painting to walls primer + 2 coats (m2) 10 15 Ceramic tiling (m2) (1,000m2 job) 60 88 Vinyl flooring to wet areas (m2) (500m2 job) 30 44 Carpet medium tufted (m2) (4,500m2 job) 30 44 Lighting installation (m2) (5,000m2+ job) 80 118 Copper pipe 15mm to wall (m) (1,000m+ job) 40 59 Fire sprinklers (per m2) (5,000m2 job) 45 66 Air conditioning including main plant (m2) (5,000m2+ job) 120 176

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 100 147 Reinforcement bar 16mm (tonne) (120 tonne job) 860 1,265 Concrete block (400x200) per 1,000 (>10,000 block job) 850 1,250 Standard brick per 1,000 430 632 Structural steel beams (tonne) (100 tonne+ job) 1,650 2,426 Glass pane 10mm tempered (m2) 100 147 Softwood timber for framing 100mm x 50mm (m) 3 4 13 mm plasterboard (m2) 5 7 Emulsion paint (litre) 5 7 Copper pipe 15 mm (metre) (1,000m+ job) 7 10 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 3 4

Plant


Market: warmerTendering: hotCost escalation 2014–15: 5.0%Cost escalation 2015–16: 5.0%Contractors’ margin: 5.5%Preliminaries: 15.0%Location factor (USD): 100PPP coefficient: 1.00


UK – other regionsOutside the capital, regional hotspots exist with other markets growing at a more modest pace

International building costs per m2 of internal area, in 2015

CentralGBP

NorthGBP

Northern Ireland

GBPScotland

GBPSouth

GBP

Airports

Domestic terminal, full service 2,900 2,860 2,800 2,900 3,200 Low-cost carrier terminal, basic service 2,250 2,250 2,200 2,250 2,350

Car parks

Multi-storey above ground 550 550 500 550 610 Multi-storey below ground 750 750 720 750 960

Commercial

Offices – business park 1,500 1,500 1,370 1,450 1,750 CBD offices – up to 20 floors medium (A-Grade) 1,650 1,650 1,550 1,650 1,825 CBD offices – high-rise prestige 2,160 2,160 2,030 2,100 2,400

Education

Primary and secondary schools 1,500 1,550 1,300 1,550 1,650 University 2,000 2,000 1,820 2,050 2,250

Hospitals

Day centre (including basic surgeries) 1,400 1,400 1,430 1,500 1,750 Regional hospital 2,300 2,400 2,200 2,400 2,450 General hospital (eg city teaching hospital) 2,850 2,850 2,600 2,850 3,000

Hotels

3 star travellers 1,600 1,575 1,400 1,575 1,750 5 star luxury 2,550 2,550 2,450 2,500 2,600 Resort style 2,000 2,050 2,050 2,100 2,300

Industrial

Warehouse/factory units – basic 650 650 600 650 700 Large warehouse distribution centre 770 775 700 775 840 High-tech factory/laboratory 1,500 1,500 1,450 1,500 1,700

Residential

Individual detached or terrace style house medium standard 1,260 1,265 1,060 1,200 1,350 Individual detached house prestige 1,600 1,550 1,450 1,600 2,300 Townhouses medium standard 1,400 1,400 1,390 1,400 1,900 Apartments low-rise medium standard 1,500 1,560 1,370 1,500 1,850 Apartments high-rise 1,900 1,900 1,770 1,850 2,150 Aged care/affordable units 1,500 1,500 1,300 1,500 1,650

Retail

Large shopping centre including mall 1,600 1,600 1,500 1,600 1,725 Neighbourhood including supermarket 1,100 1,100 1,000 1,100 1,200 Prestige car showroom 1,400 1,400 1,300 1,400 1,475

Construction market and trendsIn the south of the UK, tender prices are increasing at a greater pace than elsewhere as contractors select opportunities based on risk. Labour is migrating to London, forcing local labour costs up. Cambridge stands out as a bubble in the UK regions with tender prices escalating at similar rate to the London, driven by intensive capital investment in the life sciences, technology, education and residential sectors and a stretched local supply chain.There’s a knock-on effect in central England, with retention of sub-contractors becoming problematic as they are attracted to bigger, lower-risk projects in London and the south east. Some skills shortages among trades and professionals are emerging.In the north of England, the residential sector is leading growth. A lack of capacity is fuelling price inflation in the north west with a shift to two-stage tendering, although competition remains fierce in other areas.

Market conditions in Scotland vary between regions, with Aberdeen ahead, despite certain oil projects being put on hold. As the market improves, sub-contractors are being selective over what they will price, sometimes preferring central Scotland to the north or the islands.Northern Ireland’s slow recovery in construction lags behind other UK regions with pressure on the Government to resurrect delayed public projects. Tenders remain highly competitive. If workloads do increase, labour scarcity could cause problems.Future outlookAll regional construction markets should continue to improve during 2015–16, with the south leading and Belfast at the rear. Gradually, trade skills shortages are likely, contractors will cherry-pick which projects they bid for and construction costs will increase, rippling out from the south east.

Around the globe


UK – international building costsCentral

GBPNorth

GBP

Northern Ireland

GBPScotland

GBPSouth

GBP


Excavate basement (m3) (1,800m3 job) 10 10 5 12 14 Excavate footings (m) 15 16 12 16 18 Concrete in slab (m3) (1,500m3 job) 143 143 86 140 144 Reinforcement in beams (tonne) 980 980 750 980 990 Formwork to soffit of slab (m2) 33 32 31 33 41 Blockwork in wall (m2) (10,000m2 block job) 34 30 20 30 41 Structural steel beams (tonne) 1,650 1,650 1,400 1,650 1,755 Pre-cast concrete wall (m2) 84 84 70 84 86 Curtain wall glazing including support system (m2) (1,000m2 job)

480 480 432 500 550

Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 30 30 30 35 41 Single solid core door including frame and hardware (no) (50 door job)

620 619 600 650 675

Painting to walls primer + 2 coats (m2) 6 6 4 6 7 Ceramic tiling (m2) (1,000m2 job) 43 44 41 43 50 Vinyl flooring to wet areas (m2) (500m2 job) 27 27 17 27 28 Carpet medium tufted (m2) (4,500m2 job) 25 26 21 25 27 Lighting installation (m2) (5,000m2+ job) 53 52 50 45 65 Copper pipe 15mm to wall (m) (1,000m+ job) 25 25 24 25 36 Fire sprinklers (per m2) (5,000m2 job) 36 33 35 35 41 Air conditioning including main plant (m2) (5,000m2+ job) 100 100 86 100 108

Labour costs

Group 1 tradesman eg plumber, electrician 26 26 22 26 34 Group 2 tradesman eg carpenter, bricklayer 24 24 19 25 31 Group 3 tradesman eg carpet layer, tiler, plasterer 23 22 17 22 30 General labourer 19 19 15 19 20 Site foreman 31 31 25 30 36

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 83 85 70 84 90 Reinforcement bar 16mm (tonne) (120 tonne job) 750 750 660 750 817 Concrete block (400x200) per 1,000 (>10,000 block job) 630 625 410 750 808 Standard brick per 1,000 380 380 320 350 409 Structural steel beams (tonne) (100 tonne+ job) 1,350 1,350 1,100 1,400 1,568 Glass pane 10mm tempered (m2) 94 94 100 100 95 Softwood timber for framing 100mm x 50mm (m) 3 3 2 3 3 13 mm plasterboard (m2) 4 4 4 4 4 Emulsion paint (litre) 3 4 4 3 4 Copper pipe 15 mm (metre) (1,000m+ job) 4 4 6 5 6 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 2 2 2 2 3

Plant

Hire 50t mobile crane + operator (day) 900 900 600 900 1,100

Central North Northern Ireland

Scotland South

Market: warmer warmer warmer warmer warmer Tendering: warm warm lukewarm warm hot Cost escalation 2014–15: 2.5% 3.0% 2.0% 3.0% 4.0%Cost escalation 2015–16: 3.0% 3.0% 3.0% 4.5% 4.0%Contractors’ margin: 3.5% 4.0% 2.5% 3.5% 4.0%Preliminaries: 12.0% 12.0% 11.0% 13.0% 13.0%Location factor (USD): 74 75 59 75 85PPP coefficient: 0.81 0.81 0.68 0.81 0.91


USA – New York CityNew York’s economy poised to lead global growth

International building costs per m2 and ft2 of internal area, in 2015

USDMetric

(m2)US Standard

(ft2)

Airports

Domestic terminal, full service 6,000 558 Low-cost carrier terminal, basic service 3,400 316

Car parks


Commercial

Offices – business park 2,650 247 CBD offices – up to 20 floors medium (A-Grade) 4,850 451 CBD offices – high-rise prestige 5,500 512

Education


Hospitals


Hotels

3 star travellers 2,690 250 5 star luxury 4,800 446 Resort style 3,280 305

Industrial


Residential


Retail


Economic overviewWith an economy that is growing above three percent year-on-year and core inflation well under two percent, the USA can finally be deemed to have achieved sustainable economic growth. Cheaper oil prices are boosting the US economy with an expected knock-on effect for consumer finances and business confidence.

There are question marks over what will happen when the Federal Reserve’s quantitative easing programme changes, and whether the housing market can reach pre-2008 levels. Bearing these risk factors, the USA seems poised to be the engine of global growth in 2015–16.

Construction markets and trendsThe New York construction market is buoyant with $100bn of new construction forecast in 2015–17, much of this is due

to the active residential apartment market; in 2014 $11.9bn was spent on super-high-rise luxury apartments around Central Park alone.

Activity in non-residential sectors is growing too with construction of mass transit, schools, office developments, hotels, retail and sporting venues all underway. As a result, construction costs are among the highest in the world. The price of labour, including wages and benefits, is higher than anywhere else including other US cities.

Future outlookCosts are increasing at five percent per annum and the market looks set to grow over the next 12 months and for several more years beyond that. Construction costs and cost escalation in New York are likely to be above national average due to the strong union presence, higher wages and difficult site locations.

Around the globe


USA – international building costsUSD

Metric US Standard


Excavate basement (m3) (1,800m3 job) 24 0.68Excavate footings (m) 37 11.28Concrete in slab (m3) (1,500m3 job) 295 8.36Reinforcement in beams (tonne) 2,000 1,786 Formwork to soffit of slab (m2) 86 7.99Blockwork in wall (m2) (10,000m2 block job) 140 13 Structural steel beams (tonne) 6,000 5,358 Pre-cast concrete wall (m2) 269 25 Curtain wall glazing including support system (m2) (1,000m2 job) 1,346 126 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 86 7.99Single solid core door including frame and hardware (no) (50 door job) 1,450 1,450 Painting to walls primer + 2 coats (m2) 20 1.86Ceramic tiling (m2) (1,000m2 job) 150 14 Vinyl flooring to wet areas (m2) (500m2 job) 86 7.99Carpet medium tufted (m2) (4,500m2 job) 60 5.58Lighting installation (m2) (5,000m2+ job) 154 14 Copper pipe 15mm to wall (m) (1,000m+ job) 50 15 Fire sprinklers (per m2) (5,000m2 job) 38 3.54Air conditioning including main plant (m2) (5,000m2+ job) 431 40

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 137 3.88Reinforcement bar 16mm (tonne) (120 tonne job) 1,000 893 Concrete block (400x200) per 1,000 (>10,000 block job) 1,200 1,200 Standard brick per 1,000 550 440 Structural steel beams (tonne) (100 tonne+ job) 2,400 2,143 Glass pane 10mm tempered (m2) 237 22 Softwood timber for framing 100mm x 50mm (m) 5 1.5313 mm plasterboard (m2) 10 0.93Emulsion paint (litre) 7 26 Copper pipe 15 mm (metre) (1,000m+ job) 12 3.66Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 6 1.83

Plant


Market: warmerTendering: hotCost escalation 2014–15: 5.0%Cost escalation 2015–16: 5.0%Contractors’ margin: 6.0%Preliminaries: 12.5%Location factor (USD): 135PPP coefficient: 2.14


USA – Houston and SeattleSeattle chases New York, while Houston’s pace remains on the rise

International building costs per m2 and ft2

of internal area, in 2015

HoustonUSD

SeattleUSD

Metric US Standard Metric US Standard

Airports

Domestic terminal, full service 4,500 419 5,000 465 Low-cost carrier terminal, basic service 2,500 233 3,000 279

Car parks

Multi-storey above ground 570 53 770 72 Multi-storey below ground 1,100 103 1,800 168

Commercial

Offices – business park 1,150 107 1,500 140 CBD offices – up to 20 floors medium (A-Grade) 2,040 190 2,260 210 CBD offices – high-rise prestige 3,910 364 4,100 381

Education

Primary and secondary schools 2,110 197 2,150 200 University 2,570 239 2,700 251

Hospitals

Day centre (including basic surgeries) 2,040 190 2,160 201 Regional hospital 3,340 311 4,030 375 General hospital (eg city teaching hospital) 2,910 271 3,600 335

Hotels

3 star travellers 1,820 170 2,420 225 5 star luxury 3,490 325 3,800 354 Resort style 2,010 187 2,300 214

Industrial

Warehouse/factory units – basic 700 66 740 69 Large warehouse distribution centre 860 80 960 90 High-tech factory/laboratory 3,560 331 4,000 372

Residential Individual detached or terrace style house medium standard

1,800 168 2,150 200

Individual detached house prestige 2,900 270 3,230 301 Townhouses medium standard 1,100 103 1,500 140 Apartments low-rise medium standard 1,250 117 1,700 158 Apartments high-rise 1,500 140 1,770 165 Aged care/affordable units 1,100 103 1,450 135

Retail

Large shopping centre including mall 2,500 233 3,000 279 Neighbourhood including supermarket 1,100 103 1,200 112 Prestige car showroom 2,490 232 2,550 237

Construction markets and trendsFocusing on two major US regions, Houston has a dynamic construction sector but the oil price slump is affecting its jobs and economy. In 2014 the residential and commercial construction sectors were very strong, though as the economy slows a little, there is potential for oversupply. Petrochemical majors are still investing in gas-based liquefaction and ethylene crackers along the Texas coast.

There were record levels of development in Seattle during 2014 with up to $3.2bn worth of projects under construction. Technology businesses account for 20 percent of office space take-up. Residential construction is strong accounting for 65 percent with 32 apartment buildings underway at the end of 2014, though this will fall by up to ten percent in 2015, indicating a maturing of the residential cycle. Hotel developments are buoyant with four major hotels under construction.

Future outlookSkills shortages pushed up the prices of housing construction in Houston, with construction costs generally rising by three percent in 2014. In 2015–16, despite impacts in the oil and gas sector, construction is still on the rise, largely driven by education and healthcare. Construction costs are likely to increase by 2.5 percent, above inflation but lower than other regions.

In Seattle, high workloads for subcontractors and an ageing workforce are pushing up construction costs which increased by five percent in 2014 and are forecast to rise by six percent in 2015. In 2015–16, the office sector will remain buoyant, although the residential sector is likely to peak as higher construction costs raise prices and the market approaches oversupply.

Around the globe


USA – international building costs

HoustonUSD

SeattleUSD

Metric US Standard Metric US Standard


Excavate basement (m3) (1,800m3 job) 12 0.34 15 0.43Excavate footings (m) 16 4.88 19 5.80Concrete in slab (m3) (1,500m3 job) 264 7.48 270 7.65Reinforcement in beams (tonne) 1,529 1,366 1,800 1,608 Formwork to soffit of slab (m2) 55 5.11 73 6.79Blockwork in wall (m2) (10,000m2 block job) 97 9.02 108 10 Structural steel beams (tonne) 4,901 4,376 5,226 4,666 Pre-cast concrete wall (m2) 215 20 237 22 Curtain wall glazing including support system (m2) (1,000m2 job)

1,010 94 1,087 101

Plasterboard 13mm thick to stud wall (m2) (3,000m2 job)

54 5.02 65 6.04

Single solid core door including frame and hardware (no) (50 door job)

1,110 1,110 1,200 1,200

Painting to walls primer + 2 coats (m2) 14 1.28 16 1.51Ceramic tiling (m2) (1,000m2 job) 90 8.37 101 9.39Vinyl flooring to wet areas (m2) (500m2 job) 57 5.30 65 6.04Carpet medium tufted (m2) (4,500m2 job) 53 4.97 59 5.48Lighting installation (m2) (5,000m2+ job) 136 13 140 13 Copper pipe 15mm to wall (m) (1,000m+ job) 35 11 43 13 Fire sprinklers (per m2) (5,000m2 job) 32 2.98 35 3.26Air conditioning including main plant (m2) (5,000m2+ job)

269 25 377 35

Labour costs

Group 1 tradesman eg plumber, electrician 57 57 77 77 Group 2 tradesman eg carpenter, bricklayer 49 49 59 59 Group 3 tradesman eg carpet layer, tiler, plasterer 44 44 60 60 General labourer 39 39 49 49 Site foreman 120 120 100 100

Material costs

Concrete 30 MPa (m3) (1,500m3 job) 135 3.83 131 3.71Reinforcement bar 16mm (tonne) (120 tonne job) 960 858 980 875 Concrete block (400x200) per 1,000 (>10,000 block job)

1,000 1,000 1,000 1,000

Standard brick per 1,000 440 440 440 440 Structural steel beams (tonne) (100 tonne+ job) 1,960 1,750 2,090 1,866 Glass pane 10mm tempered (m2) 230 21 232 22 Softwood timber for framing 100mm x 50mm (m) 4 1.22 4 1.2213 mm plasterboard (m2) 9 0.84 9 0.84Emulsion paint (litre) 6 23 6 23 Copper pipe 15 mm (metre) (1,000m+ job) 10 3.05 10 3.05Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job)

5 1.53 5 1.53

Plant

Hire 50t mobile crane + operator (day) 2,000 2,000 2,500 2,500

Houston Seattle

Market: warmer warmerTendering: warm hotCost escalation 2014–15: 3.0% 5.0%Cost escalation 2015–16: 2.5% 6.0%Contractors’ margin: 5.0% 5.0%Preliminaries: 10.6% 10.0%Location factor (USD): 88 109PPP coefficient: 1.56 1.78


Vietnam – Ho Chi Minh CityGrowing economy and government policy attracts foreign investors

International building costs per m2 of internal area, in 2015 VND

USD(exchange

rate: 21,770.00)

Airports


Car parks

Multi-storey above ground 8,054,900 370 Multi-storey below ground 16,980,600 780

Commercial

Offices – business park 14,585,900 670 CBD offices – up to 20 floors medium (A-Grade) 18,069,100 830 CBD offices – high-rise prestige 20,246,100 930

Education

Primary and secondary schools 12,191,200 560 University 14,585,900 670

Hospitals

Day centre (including basic surgeries) 15,456,700 710 Regional hospital 29,607,200 1,370 General hospital (eg city teaching hospital) 29,607,200 1,370

Hotels


Industrial

Warehouse/factory units – basic 9,578,800 440 Large warehouse distribution centre 9,796,500 450 High-tech factory/laboratory 16,980,600 780

Residential

Individual detached or terrace style house medium standard 14,585,900 670 Individual detached house prestige 15,674,400 720 Townhouses medium standard 11,973,500 560 Apartments low-rise medium standard 15,674,400 720 Apartments high-rise 18,069,100 830 Aged care/affordable units 11,973,500 560

Retail

Large shopping centre including mall 15,674,400 745 Neighbourhood including supermarket 11,973,500 560 Prestige car showroom 13,279,700 610

Economic overviewVietnam’s Government remains committed to its millennium development goals of improving the country’s infrastructure and economy. And with 5.8 percent GDP growth in 2014, the economy does now appear to be recovering.

Construction market and trendsThough construction cost inflation and growth have been subdued for most of 2014, similar to 2013, the market seems to have bottomed out and started to recover from mid-2014. The start to 2015 has been strong, with over 8,000 real estate transactions in the first quarter, more than triple the same period last year.

Future outlookCredit availability has improved, which will boost the construction sector and housing demand. Foreign investment is increasing due to the brighter economic conditions and a recent relaxation of foreign investment rules in the property sector. There are significant levels of activity in the infrastructure and affordable housing sectors.

With strong economic growth, improving monetary policy conditions, relaxing foreign investment rules and a strong government commitment towards infrastructure, the outlook for the construction sector in Vietnam looks very positive. However, there is still sufficient spare capacity in the market to deal with the increased demand and there should not be any pressing cost pressures in the immediate future.

Around the globe


Vietnam – international building costs VND

USD(exchange

rate: 21,770.00)


Excavate basement (m3) (1,800m3 job) 65,310 3 Excavate footings (m) 87,080 4 Concrete in slab (m3) (1,500m3 job) 1,610,980 74 Reinforcement in beams (tonne) 24,643,640 1,135 Formwork to soffit of slab (m2) 239,470 11 Blockwork in wall (m2) (10,000m2 block job) 283,010 13 Structural steel beams (tonne) 32,023,670 1,475 Pre-cast concrete wall (m2) 1,001,420 46 Curtain wall glazing including support system (m2) (1,000m2 job) 10,057,740 463 Plasterboard 13mm thick to stud wall (m2) (3,000m2 job) 457,170 21 Single solid core door including frame and hardware (no) (50 door job) 5,856,130 270 Painting to walls primer + 2 coats (m2) 87,080 4 Ceramic tiling (m2) (1,000m2 job) 457,170 21 Vinyl flooring to wet areas (m2) (500m2 job) 370,090 17 Carpet medium tufted (m2) (4,500m2 job) 740,180 34 Lighting installation (m2) (5,000m2+ job) 391,860 19 Copper pipe 15mm to wall (m) (1,000m+ job) 740,180 34 Fire sprinklers (per m2) (5,000m2 job) 674,870 31 Air conditioning including main plant (m2) (5,000m2+ job) 892,570 41

Labour costs


Material costs

Concrete 30 MPa (m3) (1,500m3 job) 1,240,890 57 Reinforcement bar 16mm (tonne) (120 tonne job) 19,070,520 878 Concrete block (400x200) per 1,000 (>10,000 block job) 6,313,300 291 Standard brick per 1,000 1,589,210 74 Structural steel beams (tonne) (100 tonne+ job) 22,227,170 1,024 Glass pane 10mm tempered (m2) 1,806,910 83 Softwood timber for framing 100mm x 50mm (m) 65,310 3 13 mm plasterboard (m2) 65,310 3 Emulsion paint (litre) 43,540 2 Copper pipe 15 mm (metre) (1,000m+ job) 413,630 19 Copper cable (metre) (3C + E, 2.5mm PVC) (100,000m+ job) 43,540 2

Plant

Hire 50t mobile crane + operator (day) 25,906,300 1,200

Market: staying the sameTendering: lukewarmCost escalation 2014–15: 2.0%Cost escalation 2015–16: 4.0%Contractors’ margin: 5.0%Preliminaries: 10.0%Location factor (USD): 38PPP coefficient: 11,672.23

In short, it’s a better way to compare construction costs between countries. Purchasing Power Parity (PPP) is a technique that compares construction costs with the cost of living (purchasing power) in each country.

The PPP methodology removes the impact of exchange rates which are notoriously volatile.

Often costs are converted to USD (or any other currency) in order to compare costs between countries. Because exchange rates have fluctuated so much in recent times, this can give a false impression of how a country’s construction costs compare with others. A high exchange rate will make local costs look high against the comparison country. A low exchange rate will do the opposite.

To gain a better indication of whether a country’s construction is expensive we use PPP. A standard basket of goods is priced in each country in the local currency. This basket includes quantities of labour, plant and materials common to all forms of construction. Then we compare the cost of the basket of goods with the cost of construction in the country to obtain a purchasing power parity cost.

The higher the PPP cost, the higher the cost of construction in local cost-of-living terms. PPP costs can, therefore, be used to better compare the relative costs of building from country to country.

Though such indexes are used in some branches of economics, it has not often been used to compare construction costs. We have developed this methodology with Bond University’s Institute of Sustainable Development in Queensland, Australia, using their CitiBloc method for calculation of basket item costs.

To compare PPP costs divide the $/m2 rate in local currency by the PPP coefficient for that country.

Building costs per m2 (sometimes referred to as direct costs, as opposed to indirect costs) are for construction of the building including preliminaries (or general conditions) costs and substructure, columns, upper floors, staircases, roof, external walls, external doors, internal walls, internal doors, wall finishes, floor finishes, ceiling finishes, fitments, plumbing, HVAC, fire protection, electrical and communication systems and transportation systems.

It is assumed that building costs are based on the typical building standards and building methods for the region.

Exclusions from building costsExternal works, landscaping, professional fees, demolition, loose furniture, fittings and equipment, developer's internal costs and finance, local authority fees and headworks charges, land, legal, finance and holding costs, GST or sales taxes, site investigation and test bores, removal of significant obstructions in the ground, abnormal footings. Allowance for underground or onsite car parking is also excluded from the building cost unless stated otherwise.

Labour costs are the all-inclusive cost to the employer, which includes the basic hourly wage, allowances, taxes, annual leave cost, and where paid by the employer, workers’ compensation and health insurance, pensions and travel costs and fares. It excludes overheads, margins, and overtime and bonuses.

Composite trade rates are the fully installed rates charged by the subcontractor to cover labour, materials, delivery, plant, overheads and margins and sales tax.

References and further readingAmerican Society of Civil Engineers (2013), Failure to act economic impact summary report www.asce.org/uploadedFiles/Issues_and_Advocacy/Our_Initiatives/Infrastructure/Content_Pieces/failure-to-act-economic-impact-summary-report.pdf – accessed on 19.06.15BIS Shrapnell (2015) Residential Property Prospects 2015–2018 www.bis.com.au/reports/res_prop_prospects_r.html – accessed on 19.06.15BN Americas (2014) Rousseff reelection could usher in tender reforms www.bnamericas.com www.bnamericas.com/en/news/infrastructure/rousseff-reelection-to-usher-in-tender-reforms/ – accessed on 19.06.15Focus Economics (2015) Brazil Economic Outlook www.focus-economics.com/countries/brazil – accessed on 19.06.15Focus Economics (2015) Economic growth speeds up in Q1 on the back of consumption www.focus-economics.com/news/chile/gdp/economic-growth-speeds-q1-back-consumption – accessed on 19.06.15International Monetary Fund (2015) Uneven Global Recovery, Complex Underlying Currents www.imf.org/external/pubs/ft/survey/so/2015/NEW041415A.htm – accessed on 19.06.15Jones Laing Lasalle (2014) High-technology Office Outlook, www.us.jll.com/united-states/en-us/Documents/technology-trends/US_high_technology_office_outlook_Sept2014_JLL.pdf – accessed on 19.06.15

KPMG (2014) Skills to Build www.kpmg.com/UK/en/IssuesAndInsights/ArticlesPublications/Documents/PDF/Market%20Sector/Building%20and%20Construction/skills-to-build-report.pdf – accessed on 19.06.15Metropolitan Transportation Authority web.mta.info/mta/network.htm – accessed on 19.06.15New York Building Congress (2014) NYC construction almost fully back to boom era, according to New York Building Congress report www.buildingcongress.com/press/2014-10-23.html – accessed on 19.06.15PanAm Post (2014) Bachelet Puts US$28 Billion on the Table for Chile Infrastructure panampost.com/panam-staff/2014/07/04/bachelet-puts-us28-billion-on-the-table-for-chile-infrastructure/ – accessed on 19.06.15Pinsent Masons (2015) www.out-law.com/en/articles/2015/january/china-agrees-to-boost-infrastructure-investment-in-kenya/ – accessed on 19.06.15Reportlinker (2014) Construction in South Korea – Key Trends and Opportunities to 2018 www.reportlinker.com/p01634371-summary/Construction-in-South-Korea-Key-Trends-and-Opportunities-to.html – accessed on 19.06.15Transport for London (2014) The Mayor of London’s Capital Spending Plan for 2015-16 www.london.gov.uk/sites/default/files/2015-16MayorsCapitalSpendingPlan.pdf – accessed on 19.06.15


What is PPP?

In this report, trade, labour and material prices and prices per m2 are indicative, and should not be relied on without first obtaining advice from a qualified professional person. Costs are dependent on building design, inclusions, exclusions, and site conditions. Cost comparisons between countries are subject to different interpretations, building methods, and standards for costing, measurement and construction. Costs may vary substantially between regions within countries. Turner & Townsend plc and its subsidiaries, the authors and contributors expressly disclaim all and any liability and responsibility to any person in respect of anything done or omitted to be done in reliance wholly or in part upon the whole of the contents of this publication.

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