05 | Methodology
Comparing construction costs
⏱ 3 min read
Comparing construction costs internationally is not just about providing indicative costs across global markets, but also gaining an understanding of best practice in different countries – which can spark innovation in design and delivery.
Convert to a single currency – USD for comparison.
Most of the international comparisons drawn within this report are linked to currency exchange. This is the most common and useful means of comparison for a multinational organisation paying for projects in its home currency.
Market volatility is a mainstay in the current economic climate, and this uncertainty, coupled with contractionary monetary policy, continues to impact exchange rates and the affordability of many countries’ imports and exports. Our exchange rates compare March 2024 values against March 2023, and so exclusively capture changes within that window of time. Between March 2023 and March 2024, 69.7 percent of currencies have depreciated against the US dollar, while 30.3 percent appreciated.
Higher US interest rates aimed at curbing inflation, and better than expected economic growth attracted investors seeking better returns and driving up the US dollar. This strength weakened other currencies as the US became a more attractive investment. Increased geopolitical tensions have also boosted the value of the US dollar.
While this is not picked up directly in the cost data we analysed in our 2024 report, it plays a prominent role in comparing international construction costs. As such, a watchful eye is needed to monitor and evaluate currency trends, which can heavily impact project and programme costs.
The average cost in USD for the following different building types are assessed to calculate the ranking of how expensive each market is to build in.
- CBD Offices - high-rise prestige
- CBD Offices - up to 20 floors medium (A-Grade)
- 3 Star travellers
- 5 Star luxury
- Resort style
- Large warehouse distribution centre
- Large shopping centre including mall
- Neighbourhood including supermarket
- Prestige car showroom
- Apartments high-rise
- Townhouses medium standard
Advantages
- Easy to understand and visualise.
- Gives the cost of typical building in each country.
Disadvantages
- A change in the exchange rate makes a significant difference: if a particular currency is strong compared to the base currency, the cost of construction looks expensive.
- It is not a reliable indicator of relative costs and efficiency of construction between countries.
Location index
The location index provided in this document offers a common base to compare costs of construction across different markets. London equals 100 as the initial base or reference point, with the deviation from 100 driven by our average cost in USD of several different building types of construction.
Terms and references
Building costs per m²
The average cost per m² of a building measured to the outer perimeter of external walls or other external construction features, sheltered areas and external floor areas. In this survey, building costs per m², sometimes referred to as direct costs (as opposed to indirect costs), are for construction of the building, including preliminaries (or general conditions) costs and substructure, columns, upper floors, staircases, roof, external walls, external doors, internal walls, internal doors, wall finishes, floor finishes, ceiling finishes, fitments, plumbing, HVAC, fire protection, electrical and communication systems and transportation systems.
It is assumed that building costs are based on the typical building standards and building methods for the region.
This survey’s building costs per m² information comes from programmes underway at the beginning of 2024, relevant for Q1 2024, and excludes applicable taxes. All exchange rates are from March 2024.
Our international building costs per m² comparison has been calculated using the average values of the typical costs of all asset classes within our survey – excluding new data entries. Cost per m² information, collated from our survey, has formed the baseline of our in-house view of international building cost comparisons and rankings. Expert opinions of experienced colleagues and sector specialists, informed by projects and programmes delivered in each location, and external data have been used to support decision-making.
Costs, comparisons and location factors are only applicable for generalised building works as a high-level indication of preliminary costs. They are only suitable as an initial assessment of approximate build costs and quoted figures are to be treated with at least a +/-10.0 percent range of accuracy.
Actual costs are dependent on building design, inclusions, exclusions and site conditions. Cost comparisons between countries are subject to different interpretations, building methods, and standards for costing, measurement and construction. Costs may vary substantially between regions within countries.
Exclusions from building costs per m²
External works, landscaping, professional fees, demolition, loose furniture, fittings and equipment, developer’s internal costs and finance, local authority fees and headworks charges, land, legal, finance and holding costs, GST or sales taxes, site investigation and test bores, removal of significant obstructions in the ground, abnormal footings. Allowance for underground or onsite car parking is also excluded from the building cost unless stated otherwise.
Labour costs
Labour costs are the all-inclusive cost to the employer, which includes the basic hourly wage, allowances, taxes, annual leave cost, and where paid by the employer, workers’ compensation and health insurance, pensions, and travel costs and fares. It excludes overheads, margins, overtime and bonuses.
Inflation forecasts
This report contains forward-looking construction cost inflation data that are subject to risk factors associated with global and local market changes. It is to be noted that, at the time of this report’s publication, the expectations reflected in these indices are reasonable. However, given the current volatile market conditions and rapid pace at which market conditions have and are continuing to change, these forecasts may be affected and may no longer be valid.
Therefore, the inflation forecasts included in this report should be used only as a guide. Turner & Townsend recommends seeking the advice of a local Turner & Townsend representative or contact prior to the use of these allowances, to ensure they are valid and remain current.
