UK markets overtaken by secondary cities in America
London has fallen out of the top 10 most expensive cities to build in globally, according to Turner & Townsend.
The consultant’s international construction market survey for 2023 revealed the UK capital had fallen to 14th across the world, with the average cost of construction now sitting at £3,136 per sq m.
The next two most expensive UK markets were Manchester (£2,504) and Edinburgh (£2,425), which ranked 30th and 32nd respectively.
According to T&T, UK markets have been overtaken by secondary cities in the US, such as Atlanta and Tampa, due to a strong dollar and heavy greens subsidies.
T&T’s UK managing director for cost management, Martin Sudweeks, 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 12 months, the overall picture is one of high competition for labour and resources.”
Despite this, conditions in the UK market remain pressured, with average construction cost inflation of 9.4% during 2022 in the markets measured. This is expected to fall to 3.6% this year as supply chains ease and interest rates soften demand.
Roughly 10% construction inflation in London last year was matched by a number of other cities – Newcastle, Manchester and Bristol – and outstripped by Belfast, which recorded 11% cost escalation.
“Real estate clients need to be braced for high costs to be sustained for the foreseeable future, and plan accordingly,” Sudweeks added.
“Staying close to the supply chain, monitoring vulnerabilities, and working on productivity will be essential to keep projects moving ahead.”
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