Productivity issues also behind rise, consultant adds

Building specifications and productivity issues are among the reasons why London is the most expensive city in the world in which to build, according to a new report by Arcadis.

The UK’s capital came out top in the firm’s latest International Construction Costs report with London beating Swiss city Geneva into second place with Norway’s capital Oslo in third.

The report said the five least expensive cities to build, including Kuala Lumpur and Delhi, are in Asia and India.

Arcadis head of strategic research and insight Simon Rawlinson said London’s position was “in part a reflection on the specification of UK buildings. We do like to have beautifully specified buildings here.


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More towers are planned in the coming years for London’s financial district in the Square Mile

“London has always been right at the top. We deliver very good quality buildings and we have a heritage of ambitious designers.”

But he said problems with UK productivity was adding to the bill. “We don’t use many standardised solutions. The issue around productivity we need to look at very carefully.”

Rawlinson said supply chains in the UK were more fragmented than other countries while inefficiencies meant some schemes saw a doubling up of resources.

Bill Barton, the director of specialist Leeds construction law firm Barton Legal, said regional cities offered better value for money but admitted: “For London, being expensive is not a new phenomenon and this news will not detract international parties from choosing to build in the city.”

He added Brexit had driven workers’ wages up and said: “London might be expensive but that’s because it offers a safer environment to work and, as a city, London employs more sustainable construction methods than most around the world. These things cost. Compound these factors with the finite available land that the city has, resulting in companies being forced to build up or down to create their own space, and the planning implications of building in a heritage city, and costs of building in the city begin to add up.”

Arcadis’s report said that rising energy prices, materials shortages and labour availability were also behind increased costs.

Other cities in the top 10 include New York, Hong Kong and San Francisco.. Regional UK cities in the top 40 included Bristol in 11th spot, Manchester in 14th, Cardiff 18th and Glasgow 22nd.