London Construction Market No Longer Considered the Most Expensive
The London construction market being the leader of the capital in terms of building costs has now been shifted marginally to the 2nd position. According to the latest International Construction Costs (ICC) report published by Arcadis, Geneva is ranked top on the list as the most expensive city in the world, and London was ranked second and Copenhagen third position.
Arcadis cost comparison was developed to cover over 20 building functions which look at comparative construction costs across 100 global cities. It was based on a survey of construction costs, a review of market conditions, and professional judgment from its global team of experts. These calculations are based on US dollars and indexed against the price of each building type relative to Amsterdam.
The prices were estimated to decrease by 4% but this was offset by the Sterling strengthening by a comparable value against the dollar. The expectation is that the Tender Price Indices (TPIs) remain flat in 2021, before picking up from 2022 and returning to regular 4-5% by 2023.
Top 10 Most Expensive Cities
|1. Geneva||6. New York|
|2. London||7. San Francisco|
|3. Copenhagen||8. Hong Kong|
|4. Oslo||9. Dublin|
|5. Zurich||10. Macau|
Causes Of The Marginal Shift Of the London Construction Market
1. The Effect of the COVID-19 Pandemic
The Covid-19 pandemic has caused a huge decline and loss of revenue opportunities in the London construction sector. According to Arcadis, construction output declined by 13 percent in the UK last year due to the pandemic, and it is forecast to recover to pre-Covid levels during the beginning of 2022. The Arcadis deputy chief executive for the UK and Ireland Nilesh Parmar also added: “The UK construction sector managed the pandemic very well. Effective safety measures have enabled productivity levels to recover, and the construction sector has been singled out as a major contributor to the ‘Build back better’ initiative in the UK”.
2. Brexit Headwinds
The United Kingdom’s departure from the European Union also had a great effect on construction industries. The UK immigration scheme that came into operation affected the supply of labour in the construction industry. The London construction industries are still in the process of learning a whole host of new rules and regulations impacting almost every aspect of the procurement and delivery of projects in the UK and across the EU.
Despite the Covid-19 pandemic and the Brexit headwind challenges faced by London construction companies, it didn’t stop the construction activities in the city. And these current circumstances favour clients as contractors look to secure workload and are not yet busy with public sector projects.
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