Singapore is the third most expensive Asian city to build in after Hong Kong and Macau, according to the latest International Construction Costs Index published by Arcadis, a global design and consultancy firm for natural and built assets.
Globally, Singapore is ranked 10th. New York is the world’s most expensive city for construction, followed by London and Hong Kong.
The annual Arcadis index analyzes the relative cost of construction across 44 major cities, and found that strong currency performance and significant resource constraints have seen these places command premiums of up to 60 percent compared with many European locations.
However, this price inflation comes at a cost, with the viability of major commercial and public sector schemes put at risk in these cities as prices continue to soar. Furthermore, rising costs and the falling value of currencies could restrict demand from emerging market investors in these areas, potentially triggering a shift in interest to lower-cost cities in the long term, noted Arcadis.
The consultancy stated that every construction market this year saw overall cost inflation restricted due to the drop in commodity prices. Particularly with oil, growing uncertainty over prices will have a long-term impact on the global construction industry.
Alan Hearn, Head of Buildings Solutions, Asia, said: “Singapore’s construction market has enjoyed a strong recovery since 2010. It is for this reason that the recent slowdown in residential and commercial markets represents something of a correction. In the private sector, both the residential and industrial sectors were relatively weak in 2015 and the office market also suffered due to oversupply.
“Looking ahead, continued investment in road and rail can be anticipated as these aspects of infrastructure have not received as much investment in recent years in Singapore.
“For Asia, China’s economic slowdown and weakening demand in many cities, including Singapore and Jakarta, mean that growth in the region is expected to ease as we enter 2016.”
Ho Chi Minh City, Kuala Lumpur, Bangkok, Bangalore and Taipei are among the world’s cheapest cities for construction, added the report.
The full report can be downloaded here.