London is the most expensive city in the world in which to build, according to the latest International Construction Costs report, published by Arcadis. 

According to the study of comparative construction costs across 100 global cities, London ranked first ahead of New York (2nd) and Hong Kong (3rd). In contrast, the ten least expensive cities for construction are in Asia with the majority of those found in China and India.

Outside of London, UK cities are well represented in the top 25. Edinburgh ranked in 10th place, cementing its position as a regional hub for attracting international trade and investment. 

Manchester and Birmingham, in 16th and 24th place respectively for construction costs globally, are both examples of thriving regional economies where increased activity across sectors including offices, hotels, retail, education and student housing are all indications of a booming local construction market.

The research for the Arcadis International Construction Costs report was carried out before the global impact of COVID-19 was fully understood, but the comparative data represents a valuable snapshot into the state of construction markets on the eve of the crisis. 

Over the past three weeks, the UK has faced unprecedented challenges, with society locked-down and direct government intervention to support the economy, business and families. Construction has been badly affected, with work suspended on around 2,000 sites and prospects for future work severely affected. 

The report says that actions taken by clients, project teams and the wider supply chain over the weeks and months to come will have a significant bearing on the future health, capacity and capability of the UK construction sector.

A substantial Conservative win in the general election and their plans for record high spending on infrastructure and public services initially boosted industry confidence, but these high hopes have been overtaken by events. The return of long-term private investment will depend on the outcome of the COVID-19 outbreak as well as Brexit negotiations with the EU.

The government’s interventions to help save the jobs and keep the economy running are an example of short to mid-term measures to support resilience, responding to the sudden shock caused by the pandemic. 

It is important, says the report, that this momentum is maintained even as the UK looks to recover from the effects of COVID-19.

Edel Christie, UK managing director for buildings at Arcadis, said: “Continuing investment in some of the highest quality residential, hotel and commercial developments in the world has bumped up London’s cost range over the past year. Across the UK, the construction market grew at twice the speed of the wider economy, driven by housing and infrastructure.

“Globally, we now face the challenges that COVID-19 will bring. With the global disruption of the pandemic, there is a real risk that the momentum towards climate action will be lost. It is crucial that we overcome the crisis, while still enhancing resilience and sustainability, and plotting a course towards a carbon neutral future. The success of our industry’s future depends on our ability to respond to these challenges effectively.”

10 most expensive cities

1. London 

2. New York City                                                                 

3. Hong Kong                                                              

4. Geneva                                                                   

5. San Francisco                                                         

6. Copenhagen

7. Tokyo

8. Zurich

9. Dublin

10. Edinburgh.

10 least expensive cities

100. Bengaluru                                                           

99. New Delhi                                                             

98. Mumbai                                                                 

97. Kuala Lumpur                                                       

96. Shenzhen                                                              

95. Whuan

94. Guangzhou

93. Chengdu

92. Bangkok

91. Hangzhou

Where do UK cities rank?

1. London (1/100)

2. Dublin (9/100)

3. Edinburgh (10/100)

4. Bristol (14/100)

5. Manchester (16/100)

6. Glasgow (17/100)

7. Liverpool (20/100)

8. Leeds (21/100)

9. Birmingham (24/100)

10. Belfast (36/100)

Click here to download the full Arcadis International Construction Costs report.