London remains one of the most expensive places in the world for construction as a global skills shortage starts to bite.
Turner & Townsend’s International Construction Market Survey 2017 ranks London the fifth most expensive place to build in the world, although a fall in the value of the pound has pushed it down from third place in 2016.
Only New York, San Francisco, Zurich and Hong Kong are more expensive construction markets than London, which is set to see a 4.1% rise in building costs this year. According to the report, skills shortages around the world are to blame for rising construction costs; around half of the world’s markets report damaging skills shortages.
The survey also says the price gap between the North and South of England is closing as the weaker pound has attracted more foreign investment, making construction costs higher in both regions. Costs in the north of England are set to rise by 3.6%, while those in southern England will rise by 2%.
“As more markets report skills shortages than ever before in the history of this study, it is clear that construction is not doing nearly enough to tackle this issue, which, if not addressed, has the potential to become a crisis,” said Turner & Townsend global managing director for real estate Steve McGuckin.
“Against this backdrop, the UK construction industry needs to boost productivity levels. There is an urgent need for contractors and clients to embrace innovative technologies and new methods of construction, as well as using data analytics and better programme management to increase output.”
Construction in London now costs £2,488M per square metre. In New York and Zurich labour shortages have pushed the hourly wage to nearly £77.
The ICMS ranks construction costs in 43 markets each year.