BUILDING & ENGINEERING | Staff Reporter, Hong Kong

Hong Kong is 2nd most expensive place to build in Asia

The country came in behind Japan and tied places with Singapore.

Japan, Hong Kong and Singapore are the most expensive places in Asia to build and are amongst the world’s top twenty most expensive countries, according to the 2011 International Construction Cost Report released by built asset consultancy, EC Harris.

According to the survey, which benchmarks the cost of building in each country, the construction prices in Asian countries have risen more than Western countries in the past twelve months resulting in higher overall rankings for the Asian locations.

Tim Robinson, Head of Cost and Commercial Management in Asia at EC Harris, said: “We’ve seen
construction prices in Hong Kong continue to rise due to the shortage of skilled labour, increased demand on commodities and increased construction output volume in the public and private markets. Some construction trades have seen their daily wages increase by 10%. The work performed in the public sector increased by 67% in 2010 and key construction commodity prices have continued to rise. These upward trends in construction costs are expected to continue over the next few years and will consequently affect construction prices in the near future. “

South Korea and Macau completed the top five most expensive countries across the region whilst China finished in seventh position and in 47th place overall. India and Sri Lanka were named the cheapest places to build in the survey both in Asia and the wider world as a whole.

Robinson added: “Singapore is also experiencing a boom in construction activity brought about by the confidence in the market leading to a demand for construction in the tourism, commercial and residential sectors. Construction costs in Asian cities such as China, India, Vietnam and Indonesia offer a significant price advantage over European and Middle Eastern countries. This is driven by the availability of cheaper labour. It will be interesting to see how global design standardisation, higher commodity prices, currency appreciation and rising levels of inflation could result in a levelling out of the international construction index.”

Contractors focus on optimizing supply chain to improve access to talent and commodities

The report also found that contractors across the region are increasingly concerned about their ability to access and afford the level of labour and volume of commodities they will require to make their client’s ambitious construction plans affordable. As more and more resource begins to get channelled to China and India to support their growth plans, contractors in more established markets like Hong Kong and Singapore will need to focus more closely on risk analysis and forward-planning to guarantee continuity of supply in the years ahead. Materials such as copper and steel will become less readily available and disproportionately more expensive.

The global report found that overall Switzerland was the most expensive country in which to build with costs approx 90% higher than Hong Kong. Australia and New Zealand, also figured in the top twenty most expensive countries, with the former placed in joint fifth position overall, whilst New Zealand finished in 15h position.

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