Construction Companies in Europe, U.S. Face Climbing Costs on Commodities
Western Europe Faces Higher Construction Costs
Antoine Antoniol/Bloomberg
Eight out of the 10 countries with the highest construction costs are in Europe, where demand is at best lackluster, EC Harris said.
Eight out of the 10 countries with the highest construction costs are in Europe, where demand is at best lackluster, EC Harris said. Photographer: Antoine Antoniol/Bloomberg
Construction companies in western Europe face escalating costs for building materials as they compete for supplies that producers prefer to ship to faster- growing countries like China and India, EC Harris LLP said.
The looming supply shortage will make it more difficult for contractors in Europe to contain expenses unless they plan their procurement needs better, according to a report today released by the London-based consulting firm.
“Key materials will be unavailable or only within the reach of those who can afford to pay premium prices,” said Mathew Riley, head of the cost and commercial unit at the London-based real-estate adviser. “Serious cost and time overruns on construction projects will be inevitable” if companies don’t change strategy, he said.
Companies in Europe have already been forced to absorb higher commodity costs without lifting their own prices because of increased competition for contracts. Eight out of the 10 countries with the highest construction costs are in Europe, where demand is at best lackluster, EC Harris said.
Switzerland has the highest construction costs for the second straight year because of its expensive labor and the strength of the franc, according to a study by the adviser that measured 55 countries against the U.K. The base currency used was the pound, which slid to a record low 1.1470 francs on Aug. 9 and has dropped about 11 percent this year against the Swiss currency.
Each square meter built in Switzerland cost on average 25 percent more than in Denmark, the next most expensive country, EC Harris said in today’s report. Swiss construction costs are 71 percent higher than in the U.K.
‘GDP Growth’
The only two non-European countries to feature in the 10 most-expensive countries for construction costs were Australia, which was tied for fourth with France and Ireland, and Canada in 10th place.
Construction costs in India and China are 70 percent and 55 percent less respectively than the U.K., which is the world’s 12th most expensive country. Construction costs in the U.S., Singapore and Hong Kong were all about 10 percent lower than in the U.K., the EC Harris study showed.
“Developing nations are closing this gap as they continue to invest in significant new-build programs to fuel further GDP growth,” Riley said in the release.
To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net
To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net
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