London had the highest tender prices in the world last year, according to a report by Rider Levett Bucknall.

The QS’ international construction cost commentary showed that the capital had a higher tender price index than other busy construction hubs, such as New York and Dubai.

It predicts that tender prices in London will rise by 6-8% this year, adding more £1.5bn to the value of the market. The report attributes the figure to a surge in the commercial office market and the housing sector. Work on the Olympics is also cited as an inflationary factor.

The report also noted that “it is increasingly difficult to procure tenders for more difficult, complex projects”, as contractors face a capacity crunch at the same time as clients struggle with the credit crunch.

It also notes that firms will face demands for increased salaries as the pressure intensifies to attract and retain staff.

Globally the report found the construction market was expanding rapidly, as were international tender prices.

In Dubai, for instance, building costs have risen more than 50% over the past three years and are forecast to go up by an additional 15% this year.