Sydney is Australia’s most expensive construction market and is the 30th most costly place in the world in which to build, the latest report says.

Releasing its 2020 International Construction Costs report based on an analysis of 100 cities and 20 building functions, built asset consultancy Arcadis named London as the world’s most expensive city in which to build followed by New York, Hong Kong, Geneva and San Fran Cisco.

In Australia, Sydney was the most expensive city, coming in at 30th place overall.

This was followed by Brisbane (38th), Melbourne (41st), Perth (50th) and Adelaide (56th).

Moreover, whilst it predicts that tender prices throughout Australia will remain flat for most of 2020 amid a slowdown in activity due to the coronavirus, it talks of ‘super inflation’ in some construction markets from 2021 onwards.

This will happen as an abundance of cash sees a large number of projects either start or restart over a short period whilst immediate resource capability to deliver the work may be limited as some contractors and subcontractors become insolvent during the crisis.

On specific markets, according to the report:

  • Tender prices in Sydney will remain flat this year but will gather momentum between 2021 and 2023 amid a large pipeline of public sector projects such as Sydney Metro, Badgerys Creek Airport, WestConnex and Sydney Gateway.
  • In Brisbane, tender pricing will remain subdued throughout 2020 and 2021 but will surge to around four percent by 2023 as projects which have been delayed during the crisis are anticipated to be in delivery at this time.
  • Tender price growth in Melbourne could rise to greater than five percent by 2023 as ongoing projects such as the Melbourne Metro and West Gate Tunnel are expected to be joined by North East Link and potentially the proposed Melbourne Airport Rail Link.
  • In Perth, tender price growth is likely to be subdued as the Western Australian economy was already in decline prior to the COVID-19 outbreak.
  • In Adelaide tender pricing will be subdued over the next two years because of COVID-19. That said, unless there is a complete construction lockdown, there will be some activity in the market due to public spending on social infrastructure and defence.

Worldwide, the report warned that the coronavirus could impact the construction sector through supply chain disruptions and specific lockdowns of building sector itself.

These disruptions could lead to project delays, cash-flow challenges and insolvencies.

This has happened amid what have already been subdued conditions in world economies and many construction markets during 2019.