London returns to being the most expensive construction location in the world


London has returned to the top spot as the most expensive city for construction worldwide.

London has narrowly overtaken Geneva to top the rankings once again as the most expensive city in the world in which to build, according to the latest Arcadis 2024 International Construction Costs (ICC) report, released by the global design and engineering consultancy today.

According to the study of comparative construction costs across 100 global cities, enhanced specifications associated with safety and sustainability have been pushing prices upwards, causing London to overtake Geneva (2nd) in the rankings, closely followed by Zurich (3rd) and Munich (4th). Rising costs and double-digit price growth in Munich have propelled the Bavarian capital significantly up the rankings, this year surpassing major US cities like New York (5th) and San Francisco (6th) in terms of relative cost to build.

The 2024 Arcadis International Construction Costs Index covers 100 of the world’s large cities across six continents. The cost comparison was developed covering twenty different building types, including residential, commercial, and public sector developments, and is based on a survey of construction costs, a review of market conditions and the professional judgement of Arcadis’ global team of experts. The calculations are based in US dollars and indexed against the price range for each building type relative to Amsterdam.

2023 was a difficult year across the world, with high borrowing costs undercutting the positive impact of infrastructure investment in many countries. However, with markets stabilising and inflation beginning to ease, the world is at a pivotal moment in the recovery of the global construction sector. Increasing demand for labour, materials and power mean that productivity is now becoming an increasingly critical factor in investment decisions and project viability.

Arcadis notes in particular the rapid acceleration of investment into the advanced manufacturing and technology sector, including data centres, pharmaceutical facilities, gigafactories and wafer-fabs. The sheer scale and complexity of these end-date-critical projects inevitably results in more financial risk, meaning that clients need to evolve their design, procurement, and construction capabilities even as these multi-billion-dollar programs are being built.

Martijn Karrenbeld, global director for industrial manufacturing at Arcadis, explained: “The key priority for clients is delivering an operational facility on time, but in a resource-constrained market, existing supply chains and delivery models might not be adequate to provide the assurance needed to protect multi-billion investments. This will place a premium on productivity-led design, procurement, and construction to deliver projects at scale – and project teams need to be ready to adapt.”

Arcadis sets out a practical five-point framework in its report, which outlines a comprehensive approach focused on delivering fast, complex programmes. Applicable to all markets and sectors, the framework offers prompts to help build-in resilience to deal with setbacks, scale and manage risk, model programme interdependencies and invest in data and live project controls to increase confidence and assurance.

Edel Christie, chief growth officer at Arcadis, said: “As conditions stabilize for construction sectors globally, the market for delivery is evolving at a rapid pace. Better use of data, insight and decision-making is critical, whether that’s to meet sustainability requirements, improve stakeholder management, attract more capacity, or better engage with the capabilities of a global supply chain. Delivering according to plan is critical and, even as construction programmes become more complex and resources harder to secure, the need to effectively manage risk will be critical for start-ups and industry champions alike.”

Click here to download the Arcadis 2024 International Construction Costs Index.

Ten most expensive cities
1. London
2. Geneva
3. Zurich
4. Munich
5. New York City
6. San Francisco
7. Philadelphia
8. Copenhagen
9. Hong Kong
10. Bristol

Ten least expensive cities
100. Buenos Aires
99. Lagos
98. Kuala Lumpur
97. Nairobi
96. Bengaluru
95. Johannesburg
94. Delhi
93. Mumbai
92. Chengdu
91. Hi Chi Minh