Hong Kong is the most expensive place in the world to build, according to research by cost consultants EC
The firm’s International Construction Cost Report 2013 found building projects cost on average between 42 and 68 per cent more in the administrative region of China than in the UK.
European nations Switzerland - the previous table-topper - Denmark and Sweden were the next most expensive countries, in that order. Macau, which borders Hong Kong, was fifth in the table.
Hong Kong experienced rampant cost inflation last year as construction output grew by 15 per cent. Commercial and residential projects are in high demand as the region benefits from tourism and consumer spending from mainland China.
Earlier this month it was confirmed the high-profile, international competition to design a 14ha art-themed park on Hong Kong’s waterfront at West Kowloon had been ‘indefinitely suspended’ due to cost worries (AJ 07.08.2013). The West Kowloon Cultural District authority had warned back in June that the budget for the wider cultural district would have to be trimmed in the face of rising construction costs.
As well as varying economic fortunes, global construction prices have been affected by changes in the values of currencies.
Simon Rawlinson, head of strategic research and insight at EC Harris, said: ‘Currency fluctuations have had a substantial effect on relative construction costs over the past year, particularly the fall of the Yen and the appreciation of the Chinese Yuan.’
The increased relative value of the Yuan makes importing Chinese materials more expensive, and has also contributed to China moving up the global cost rankings, he said.
India is the cheapest country to build in, according to the survey, with the average cost of projects just 29 to 34 per cent of those in the UK.
Indonesia, Vietnam and Morocco are the next cheapest in that order.
Although building costs have fallen in the UK over the past 12 months, the country remains the 14th most expensive of the 47 countries studied due to a weaker pound and inflation in some European markets.
The Royal Institution of Chartered Surveyors warned last year that the property market in Hong Kong could become volatile.
The EC Harris report said: ‘Measures have been put into place to cool the prime housing market, mainly by restricting overseas investment and constraining lending.
‘However, with significant infrastructure investment in rail, metro, aviation and ports, a large affordable housing programme and a buoyant commercial sector, continued real term growth at around 6 per cent per annum is anticipated.’
Simon Rawlinson, head of strategic research and insight at EC Harris said: ‘It does not necessarily follow that markets with high construction costs will deliver healthy professional fees, but many low cost markets are genuinely challenging for UK-based designers due to a combination of low construction costs and fee levels. The volume of construction required to generate £1 million of fees in Malaysia or Indonesia is much greater than in Hong Kong or Singapore.
Many low cost markets are challenging for UK-based designers
’ High cost markets are often attractive to design consultants - clients are ambitious and often aim to deliver highgrade buildings. However when inflation is running at nearly 10%, as it is currently in Hong Kong, then there is likely to be tremendous pressure on the design and construction programme to deliver the project as quickly as possible – so resourcing could be a big issue.
Many of the most expensive markets in the survey, Hong Kong, Switzerland and Denmark for example, are also relatively small – so opportunities are likely to be pretty limited compared to big markets in Europe, Asia and the US.”