Four of the ten most expensive cities in which to construct buildings are in the United States, including the most expensive. Have a guess as to where it is?
Construction around the world has become more expensive following the COVID-19 pandemic.
Various factors contribute to the rising construction costs in cities, including the availability of skilled labor, age of workers, cost of labor and supply-chain disruptions. Turner & Townsend, a UK-based construction company, conducted an International Construction Market Survey named the top 10 most expensive construction cities in the world as of mid-2022.
While skilled labor shortages were already becoming an issue before the pandemic, the spread of the virus and subsequent restrictions caused the problem to worsen worldwide. According to this year’s survey, 79.6% of markets experienced skilled labor shortages, 15.9% were balanced, and 4.5% experienced a surplus in construction labor.
A parallel can be drawn between the lack of skilled labor and the age of construction workers. The U.S. has a median age of 43 for construction workers, with 40% of the total construction workforce falling between 45 and 60 years old. In China, most of the construction workforce falls in the 40- to 60-year-old range.
In the UK, the number of employees in the construction industry above the age of 60 climbed more than any other age group. As a result, construction costs will continue to rise as older workers phase out and newer workers look elsewhere for work.
Construction wages have also increased across most markets. Europe’s wages increased by 22.4% to $65.8 an hour in 2022, compared to $44.40 an hour in 2019. North America has the highest average labor cost in the world at $68.40 an hour. Over the next 12 months, construction wages in North America are expected to increase further, due to worsening labor shortages, the survey states.
The report also shows that of the 88 markets surveyed, 79.5% of individuals indicated a medium or high impact on their local construction market due to supply-chain disruptions. Due to these complications, nearly half of all markets showed that construction projects have increased by four or more weeks.
Turner & Townsend named the most expensive global construction markets on an international scale. The top 10 most expensive construction cities as of mid-2022 are:
- San Francisco, U.S.
- Tokyo, Japan
- Osaka, Japan
- New York City, U.S.
- Geneva, Switzerland
- Zurich, Switzerland
- Hong Kong
- Boston, U.S.
- Los Angeles, U.S.
- London, England
Because of the turbulent conditions of the market and the COVID-19 pandemic, construction costs are projected to remain high and increase further.