The latest Arcadis 2023 International Construction Costs (ICC) report reveals that Geneva, Switzerland is now the most expensive city in the world to build in, overtaking London, UK. The report covers 100 global cities and compares construction costs across 20 building types, including residential, commercial, and public sector developments. New York and San Francisco come in third and fourth place respectively. The top ten most expensive cities remain mostly unchanged from last year due to high inflation levels, including Munich, Copenhagen, and Zurich. Hong Kong is among the top five, along with new entrants Boston and Philadelphia in the US, thanks to dollar appreciation and ongoing local inflation.

The report also highlights that the European market costs were particularly impacted by the invasion of Ukraine over 2022, and this added 5-6% to the region’s inflation due to the resulting disruption to local manufacturing supply chains and regional-specific energy markets. On the other hand, the world's least expensive cities to build in include Bengaluru, India, Kuala Lumpur, Malaysia, and Delhi, India.

The report states that sustainable buildings in prime locations are increasingly in high demand, resulting in the application of a ‘green premium’ in how the most sustainable assets are being valued. The inflation outlook reveals that fewer than ten cities recorded zero or negative inflation, all of which were located in southeast and east Asia.

The US and the UK are expected to see further rises in construction costs despite the predicted contraction in the construction market in 2023. Ireland experienced a 16.2% increase in construction products cost in 2022, while material prices in Germany are expected to remain "challenging" in 2023, despite input cost inflation easing to a two-year low in January 2023.

Arcadis also noted that the ongoing pandemic continued to affect the global construction industry, with supply chain disruptions and labor shortages leading to project delays and cost increases.

However, despite these challenges, the report highlighted the importance of sustainable building practices and the increasing demand for green buildings in prime locations. This trend is expected to continue as the world shifts towards more environmentally conscious development.

In terms of specific regions, the report highlighted the impact of the Ukraine invasion on construction costs in Europe, with a 5-6% increase in inflation. In China, the report predicted construction inflation to reach 3% in 2023, while the US could see rising costs due to infrastructure stimulus.

Overall, the 2023 Arcadis ICC Index provides valuable insights into the global construction industry and the factors that impact construction costs in different regions. It underscores the importance of sustainable building practices and the need for the industry to adapt to evolving trends and challenges.