Singapore is one of the top three most expensive markets in Asia for construction and placed 14th on the global list, according to an annual study on international construction costs.
According to the Arcadis International Construction Costs Report, Singapore has seen significant relative cost reductions over the last year and has moved down five places in the global ranking compared to the previous global ranking.
Mr Alan Hearn, head of Buildings Solutions, Asia, said: “Singapore saw strong growth throughout the year, driven by a combination of robust housing markets and high levels of infrastructure spend. For 2015, the growth rate for the construction cost is estimated to be 2 to 4 per cent.”
In Asia, Hong Kong came out as the most expensive and Macau followed after in the second spot.
However on the global map, Hong Kong is not as expensive as Switzerland and Denmark. In contrast to last year’s index, European countries dominate the top ten. This is due, in part, to the ongoing economic recovery in the likes of Germany and France which is gradually translating into contractors demanding more for their services.
The study found that relative construction costs have been affected by currency fluctuations, commodity prices and increasing demand for development in some recovering economies. These factors have significantly decreased the relative cost of building in Asia markets, compared to those in other regions.
Some of Asia’s emerging markets have also been dealt a hard hit as the likes of India, India, Indonesia, Malaysia, Thailand and Vietnam saw a considerable drop in relative costs due to currency devaluation.
On the other hand, the construction outlook in China remained strong, but the report observed a gradual shift to a consumption-based economy.
Mr Hearn said: “In 2015, we expect construction investment in China to continue to diversify across both project types and geographies, which will sustain strong growth. Meanwhile, Malaysia has seen strong growth of late and this looks set to continue. As for emerging markets such as the Philippines, Indonesia, Vietnam and India, fluctuations in commodity and currency markets, along with wider economic trends, may also affect the ability of these markets to fund projects or attract PPP (Public Private Partnership) investment.”
The annual study benchmarks building costs in 43 locations across the globe covering 13 building types. Costs are representative of the local specification used to meet market need. The building solutions adopted in each location are similar and as a result, the cost differential reported represents differences in specification as well as the cost of labour and materials – rather than significant differences in building function.