London remains UK’s most expensive place to build
The growth in demand for AI infrastructure is squeezing global construction market capacity and adding to skilled labour shortages, according to Turner & Townsend.
The consultant’s latest Global Construction Market Intelligence report found that the AI boom had resulted in data centres becoming the second most in-demand construction sector in the UK, following defence.
Residential development and commercial office development remain subdued, ranking ninth and seventh respectively.
Globally, data centres are the most constrained sector in relation to contractor capacity according to T&T, with more than 70% of 112 markets analysed reporting tightening or overstretched capacity.
Skills shortages in the UK are particularly acute in specialist trades, with 100% of respondents from the industry in this country citing shortages of qualified M&E workers, all of which are essential in tech-led projects.
“The global construction market is shifting and new dynamics are reshaping the key drivers of cost performance,” said Stephanie Marshall, managing director of real estate and cost management at T&T.
“Demand is increasingly uneven and concentrated on AI-driven sectors like data centres, while broader labour constraints, supply chain volatility and geopolitical risk are becoming more pronounced.
“In the UK, there is a very real risk that growth in the pool of skilled labour needed to build data centres won’t keep up with demand. In construction, AI has the potential to be a force for good in terms of job creation, but only if the right resources are put in place to support it.”
London remains the most expensive place to build in the UK and places fifth globally, while in the regions cost pressures are rising, with Birmingham, Edinburgh and Glasgow set to see 4% inflation in 2026, higher than the 3.7% nationwide average.
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