Where are the most expensive cities for construction?

By Andy BrownMay 12, 2021

New York City fell to sixth place worldwide in terms of the most expensive cities to build in

The most expensive cities in the world for construction in 2021 are located primarily in Europe, with only two of the top 10 - New York and San Fransciso - found in the U.S.

Geneva in Switzerland is the most expensive city in the world to undertake construction work, according to a report from Netherlands-based consultant Arcadis.

London was the second most expensive city – it was top last year. It was followed by three other European cities, with Copenhagen, Denmark, Norway’s Oslo and Zurich in Switzerland occupying the next three spots.

New York, which was second on the list in 2020, has fallen to sixth place. According to the report, this year New York City suffered the consequences of the U.S. dollar tumbling during the pandemic. Both construction activity and demand were heavily impacted, especially by the restrictions introduced during the first wave of Covid when all nonessential construction had to stop for almost three months.

Output in construction decreased by almost 4%, with commercial and manufacturing sectors hit most. Infrastructure fared the best, with a number of big projects ongoing, such as Gateway Tunnel and Second Avenue Subway. The outlook for 2021 is modest with many big projects set to conclude and new work pipelines still uncertain. 

San Francisco ranked seventh worldwide this year, declining two positions from fifth place last year, also due to the weakened dollar. Construction activity went offline for one week only and was allowed to continue for the rest of the year. However, strict safety procedures impacted productivity, and this is reflected in decreased output which fell by 4% compared to 2019 levels.

Yet San Francisco remains an attractive market, and it is anticipated that with the economic stimulus approved, many of the projects that were put on hold will be brought back to life, especially in the residential and technology sectors. 

Rounding out the top 10 in the world were Hong Kong in eighth place, followed by Dublin, Ireland in ninth and Macau, China in tenth.

Factors impacting construction costs

Part of the reason for European cities occupying all five top spots this year was said to be related to the previously mentioned drop in the value of the U.S. dollar.

“Since April 2020, there has been a marked depreciation, reflecting to a degree the impact of the U.S. Fed’s ultra-low interest rate guidance,” the report said. “As a result of a cheaper dollar, construction costs in the U.S. have fallen relative to other locations, and U.S. cities have shifted down the index.”

Despite the relative decline in costs, materials prices in the U.S. are skyrocketing.

To that point, the report’s most surprising finding was that construction prices have not fallen in response to the pandemic. It stated that, “in the past, when demand for construction has fallen, construction prices have fallen sharply. Even after the huge disruption in markets last year, this has not happened.”

The report also commented that construction has performed better than most other industries in relation to the Covid-19 pandemic. The authors write that, “The positive outlook for construction in 2021 is underpinned by a wide range of public investment. Governments recognize the wider contribution that construction makes to national economies through the creation of jobs and support to domestic industry.”

Top 10 most expensive cities for construction within the U.S.

1. New York (6 worldwide)

2. San Francisco (7)

3. Boston (16)

4. Philadelphia (20)

5. Seattle (27)

6. Chicago (31)

7. Los Angeles (33)

8. Washington, D.C. (36)

9. Las Vegas (37)

10. Detroit (51)

To see the full report and world rankings, click here

VIDEO: Caterpillar 385C excavator loads trucks with two passes
Watch this recent installment from the Mega Machines Channel on YouTube showing a Cat excavator wasting no time in getting the job done
New Fat Truck practically walks on water to transport materials
The Pickup version 2.8P answers a specific job site need for an amphibious vehicle that can move things and people through harsh conditions
Latest wheel loader models leverage smart technologies to reduce TCO
Recent advancements to this job site staple are increasing efficiency, safety and comfort