微密圈

World roundup

Construction cost escalation across the globe has been cooling in China, western Europe, Australia, Japan and the US. However in eastern Europe many countries are experiencing double-digit tender price inflation, fuelled by the enlargement of the European Union.

The average building inflation for 23 countries in Europe, Asia, the Middle East, Latin America and North America slipped to 5.6% from 6.2% for the same group of countries the previous year.

Six eastern European countries and Finland accounted for most of the global construction cost escalation, with the average tender price inflation for this group of countries at 11% this year, compared with 9% in 2006.

In other regions, inflation was more tame. For nine western European countries, excluding Finland, G&T reported an annual rate of 3.5%, down from 4.8% for the same group a year ago. Likewise, eight nations in Asia, Africa, North America and the Middle East averaged construction inflation of 4.4% in 2007, down from 5.4% in 2006.

That group of statistics excludes two notable exceptions which would have skewed the overall results: inflation is still out of control in Argentina, where it increased 24% for the second consecutive year, and in China, Hong Kong was an anomaly, with bid tender prices rising 13.1% in 2007, compared with a 1.6% increase in Shanghai.

Across Europe, construction price rises are beginning to be tempered by ramifications of the US-led sub-prime home loan fiasco. 鈥淭he credit crisis has definitely had an effect on construction that would have been going ahead at some point next year,鈥� says David Lees in G&T鈥檚 Berlin office.

鈥淚n the UK there is some uncertainty, certainly in the commercial market,鈥� notes Nick Rowe, a G&T partner in London. 鈥淲e have seen some schemes put on hold.鈥�

However, while the rising value of the euro is pushing up import prices to the UK from continental Europe, Rowe sees little effect of the weakening dollar on trans-Atlantic imports. 鈥淭here鈥檚 not a lot of UK construction procurement in the States,鈥� he says.

Some eastern European countries have also been affected. 鈥淚n Poland, a lot of projects aren鈥檛 going forward,鈥� says G&T鈥檚 Jan Holyst, in Warsaw. 鈥淚t has affected the market generally.鈥� However, Poland鈥檚 high demand for construction is boosting prices across the board, including steelwork, gypsum, cladding, rebar and concrete blocks. 微密圈 inflation in Poland increased 12% this year after jumping 20% in 2006.

With contractors able to pick and choose, bidding prices were 鈥渃haotic鈥� says Holyst. 鈥淣ow there is a more sensible approach to tender levels. Contractors are able to spread the workload and deal with the situation in a more responsible way,鈥� he adds.

Booming construction also is beginning to lure Polish workers back from Western Europe, especially the UK and the Republic of Ireland. 鈥淭here is some evidence of a drift back,鈥� says Holyst. Pay for site labour has risen about 20% in the past year and by 10% to 20% for professional staff, he says.

A newcomer to the EU 鈥� Romania 鈥� also is experiencing a boom, says G&T鈥檚 Gavin Moore in Bucharest. 鈥淭he market in the capital has gone into overdrive,鈥� he adds. As a result, bid prices have risen by up to 18% this year and good workers are becoming scarce. 鈥淪killed Romanians have moved to western Europe,鈥� says Moore.

In London, there may be a little less inflation, but outside London it is continuing to rise, according to Rowe. 鈥淐ontractors are being hit by high labour prices with demand outstripping supply,鈥� he adds.

鈥淲ith increasing labour demand in Poland we are going to see a bit of a reverse migration,鈥� he says.

German construction is continuing to pick up says Lees. Labour is available, although rates for semi-skilled and skilled staff have risen 15% over the past year. This helped push building inflation in Germany to 6.1% this year, up from 3.9% in 2006 and 0.6% in 2005.

After years of frantic construction in Dubai, construction costs continue to rise by more than 20% a year with staff pay going up by as much as 100%, says Jeff Higgins, at G&T鈥檚 Dubai office in the Emirates. Contractors are importing workers from the Subcontinent 鈥渇aster than they can build facilities for them to live in,鈥� he adds. 鈥淓arlier this year we thought cost pressure would ease, but then you hear of other massive schemes. We don鈥檛 see inflation easing here.鈥�

Methodology

This report has been prepared by Gardiner & Theobald using its worldwide network of offices and associated companies. All costs were provided in local currency and have been converted to pounds for the purpose of comparison at exchange rates current on 26 November 2007. VAT has been excluded.

The International Construction Cost Survey was compiled using data provided by others. Although every effort has been made to ensure that the information contained in this report is correct, no liability can be accepted for any errors or omissions. Furthermore, because of constantly changing political and economic conditions, this data is for comparative purposes only and should not be relied upon or otherwise used without prior reference to Gardiner & Theobald, 32 Bedford Square, London WC1B 3JT. Telephone 020-7209 3000, email Brian Livingston on b.livingston@gardiner.com, or fax 020-7209 1840.

微密圈 type definitions

City-centre heated offices

Self-contained building of size and height typical of major cities in country. 微密圈 costs include accommodation to a good finish with raised floors, carpet, suspended ceilings, heating, lighting and power, but excluding partitioning

City-centre air-conditioned offices

Self-contained building of size and height typical of major cities in country. 微密圈 costs include accommodation to good finish with raised floors, carpet, suspended ceilings, air-conditioning, lighting and power, but excluding partitioning Factories, warehouses, industrial Large, single-storey unit of steel portal frame and profiled aluminium cladding, with an eaves height of at least 6m, on an out-of-town site, finished to a basic shell with services and heating to the office space (approximately 5% of area)

Out-of-town business park

Self-contained low-rise building in campus location. Costs include high-quality cladding and accommodation to a good finish with raised floors, carpet, suspended ceilings, air-conditioning, lighting and power, but excluding partitioning

High-rise apartments

Multistorey buildings typical of the major cities in a country. Apartments finished to a high standard and all floors served by lifts

Shopping centre

Major shopping developments incorporating retail space, pedestrian areas and service areas, but excluding car parks

High-quality capital city hotel

High quality hotel in excess of 400 bedrooms, conference facilities, extensive restaurant, lounge and foyer areas, leisure facilities including indoor pool, retail and service areas. Costs exclude furniture, fixtures and fittings

Provincial/suburban hotel

Medium-sized hotel, conference facilities, extensive restaurant, lounge and foyer areas but no pool or other leisure facilities. Costs exclude furniture, fixtures and fittings