London drops from 10 most expensive cities to build

Aaron Morby 11 months ago
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London has fallen out of the top 10 most expensive cities for construction falling to 14th place in the global rankings for highest cost of building.

According to Turner & Townsend’s International Construction Market Survey, the average cost of construction is £3,136 per sq m.

London remains the most expensive UK city in which to build. The next two most expensive UK markets, Manchester and Edinburgh, only ranked 30th and 32nd with average costs of £2,504 and £2,425 per sq m respectively.

UK city cost inflation forecast
Ranking in
89 cities
Cost/m2 (£) 2022 inflation (%) 2023 inflation (%) Wages / hour (£)
London 14 3,137 10 4.0 42.47
Manchester 30 2,504 10 4.0 37.50
Edinburgh 32 2,425 8 3.5 35.97
Bristol 33 2,410 10 4.0 34.50
Leeds 35 2,350 9.5 3.5 38.25
Birmingham 37 2,336 8.0 3.5 36.75
Glasgow 38 2,309 8.0 3.5 34.25
Newcastle 40 2,275 10.0 4.0 34.75
Belfast 42 2,259 11.0 2.0 33.83

UK markets have been overtaken by exceptional growth in secondary US cities such as Atlanta and Tampa, reflecting a strong US dollar and the impact of green subsidies in the States.

Real estate activity in the US has been boosted by a series of policy initiatives designed to attract investment, including the Biden administration’s Inflation Reduction Act (IRA).

Martin Sudweeks, UK managing director, Cost Management at Turner & Townsend, said: “Exceptional growth in US markets has seen a relative shift in the UK’s global ranking of the most expensive places to build.

“However, that shouldn’t be misinterpreted as a sign that the market has cooled.  While the expectation is that the rate of cost inflation will ease in the next twelve months, the overall picture is one of high competition for labour and resources.”

Looking forward in the UK the rate of inflation is expected to cool to 3.6% in 2023 as pressure on supply chains eases and demand falls, with higher interest rates increasing the cost of borrowing to finance projects.

The UK is the fourth most expensive global region for construction labour, with average wages across the nine markets £36.50 per hour.

 

 

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