London, once the reigning champion as the world's most expensive city for construction projects, has now been surpassed by Geneva, according to the latest International Construction Costs report published by Arcadis. This report, which comprehensively surveyed 100 cities, revealed that London has fallen to the second position, still ahead of Copenhagen. Notably, other prominent UK cities such as Bristol, Manchester, Birmingham, Liverpool, Edinburgh, and Cardiff also secured places on the global list, showcasing the country's remarkable construction capabilities and attracting attention from investors worldwide.
Among the top 10 cities in terms of construction costs, Oslo, Zurich, New York, San Francisco, Hong Kong, Dublin, and Macau also featured prominently. It is worth noting that the devaluation of the US dollar played a significant role in the ranking shift for American cities, resulting in New York and San Francisco slipping to the sixth and seventh places, respectively.
On the other end of the spectrum, the Arcadis report revealed that the most cost-effective cities for construction projects were all located in India. Bengaluru, Delhi, and Mumbai occupied the bottom positions on the list, presenting opportunities for cost-efficient development in these vibrant Indian cities. Arcadis meticulously developed its construction costs index by conducting a thorough survey, considering market conditions, and leveraging the expertise of its global team of professionals across 20 different building functions.
The UK construction sector faced considerable challenges due to the COVID-19 pandemic, with a 13% decline in construction output observed last year. Arcadis predicts a resilient recovery and anticipates that activity will rebound and return to pre-pandemic levels by the coming year. Nilesh Parmar, Deputy Chief Executive for the UK and Ireland at Arcadis, commended the sector's ability to navigate the crisis effectively. Parmar highlighted the construction industry's pivotal role in the UK's "build back better" initiative, emphasising its significant contribution to the nation's recovery efforts. Despite the overall challenges, the residential market remained robust, benefiting from government intervention and attracting global investment, particularly in mid-market build-to-rent projects.
Looking ahead, there is a shift in the investment landscape for public transport projects in the UK. As part of the government's post-Brexit "levelling-up" agenda, the focus of investment is expected to move away from London and towards other UK cities. This strategic shift aims to promote balanced regional development and create new opportunities for construction projects in various parts of the country.
The Arcadis report offers valuable insights into the dynamic and ever-changing realm of construction costs, shedding light on the evolving global construction market. With London relinquishing its position as the most expensive city, it opens doors for new possibilities and investment prospects in different UK cities. This development signifies a significant shift in investment patterns and holds great potential for regional development and economic growth across the country.