The United States is by far the world’s most expensive place to build in US Dollar equivalent terms, a new report shows.

Based on data from 89 countries, the International Construction Market Survey published by project and cost management services firm Turner & Townsend has ranked the most expensive cities in the world in which to build across four building types in USD equivalent terms.

All up, New York City came in first place with an average cost over the four building types of $US5,451 per square meter (sqm).

This is closely followed by San Franciso ($USD 5,200/sqm), which slipped from first in 2022 to second in 2023.

The two American cities are the only markets in the world where the cost of construction exceeds $US5,000 per square meter.

Moreover, the US recorded six of the world’s top ten most expensive construction markets.

In addition, to New York and San Francisco, these include Boston, Los Angeles, Chicago and Seattle in seventh, eighth, nineth and tenth spot respectively.

In its report, Turner & Townsend says the dominance of American cities within the most expensive construction markets reflects both the relative strength of the US dollar and the strength of the US construction market following recent stimulus measures.

In terms of the first factor, the US dollar has been relatively strong compared with other currencies by historic standards over the past year despite having eased back over recent months.

This has made build costs in other countries comparatively cheap when converted into US dollar terms for the purpose of comparison.

Furthermore, strong construction market conditions have also been driven by the passing of three key pieces of legislation which are designed to help the US to ‘build back better’ from the global pandemic.

These include the 2021 Infrastructure Investment and Jobs act which unleased $US 91.2 billion to repair and reinvigorate aging transport infrastructure; the Inflation Reduction Act in 2022 which was designed to stimulate a range of sectors which are associated with decarbonisation (from advanced battery cell and hydrogen manufacturing to retrofitting existing real estate); and the CHIPS and Science Act which is providing around $US 280 billion in funding for the research and manufacture of semiconductors in order to help reduce the nation’s reliance on international supply chains.

Collectively, Turner & Townsend say that these packages of legislation are underpinning strong construction demand overall and maintaining pressure on costs by driving competition for labour and materials.

The effect of this is also spreading to secondary cities such as Atlanta, Tampa, Phoenix, Nashville and Austin.

Meanwhile, the report says that the changing of top two positions between New York and San Franciso reflects both the strength of New York’s rebound from COVID-19 and the ongoing appeal of the ‘Big Apple’ as a target for investment in a range of sectors.

Outside of the US, meanwhile, remaining top 10 markets are more consistent.

Geneva and Zurich have been placed third and fourth in 2023, moving up from fifth and sixth position in 2022.

In Asia, Tokyo and Osaka have moved into fifth and sixth place in 2023, down from second and third spots last year.

Notable for their absence are Hong Kong and London, which have dropped from seventh and tenth place in 2022 to eleventh and fourteenth in 2023.

However, the report says that these moves are more attributable to the comparable rise of US cities than any softening in either Hong Kong or London as both of these major global hubs have seen consistent cost escalation through the year.