RLB International Report First Quarter 2015

INTERNATIONAL CONSTRUCTION
MARKET
REPORT INTELLIGENCE
FIRST Quarter 2015

Independent consultants, local knowledge
and expertise, global network
The strength of Rider Levett Bucknall, the largest independent and most geographically prevalent construction cost
consultancy of its kind in the world, is that it has the most foremost construction intelligence available to it. We collect
and collate current construction data and forecast trends on a global, regional, country, city and sector basis. Rider Levett
Bucknall publish key industry intelligence publications throughout each year. For more detailed sector and city/country
information than is published within the International Report please review our regional or country specific publications.
A listing of our publications and proposed publishing date are:
Regional RELEASE Sector Specific RELEASE

Oceania Report Apr, Oct EMEA Hotels Monitor Mar, Sep
European Report Apr Latin America & Caribbean Hotels Monitor May, Oct
Americas – Caribbean Nov
Riders Digests
Gulf States TBA
Hong Kong & China Report Jan, Mar, Apr, Jul, Oct Riders Digest – USA Feb
Riders Digest – Singapore Jan
Country Specific Riders Digests – Australian States Jan
UK Index Bimonthly Riders Digest – UK Jan
Singapore Mar, Jun, Sep, Dec Riders Digest – Philippines Feb
China Apr, Oct
USA Feb, May, Aug & Nov
New Zealand Apr, Jul, Oct, Dec
All publications are available from rlb.com or for a hard copy please contact your local office.
Sources of Information – International Report

Information contained within this report has been compiled from numerous global sources and RLB offices.
Certain text and data contained within the report has been compiled from information published by the following
organisations.
International Monetary Fund – Regional Economic Outlooks imf.org

World Bank worldbank.org
Asian Development Bank adb.org
ANZ Bank research anz.com
Global Construction Perspectives and Oxford Economics globalconstruction2025.com
The Economist economist.com
Reserve Bank of Australia rba.gov.au
Colliers International colliers.com
Further information can be found on their websites.
Cover: Nedbank MenlynMaine, Pretoria, Africa

Architect: Boogertman + Partners
Disclaimer: While the information in this publication is believed to be correct at the time of publishing, no responsibility is accepted for its accuracy.
Persons desiring to utilise any information appearing in the publication should verify its applicability to their specific circumstances. Cost information in this
publication is indicative and for general guidance only and is based on rates as at December 2014.
RLB promotes a sustainable environment.

Printed by Mercedes Waratah using the Ecoclean Chemical Recycling Process on Maine Recycled. This stock consists of 60% certified recycled (PCW)
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INTERNATIONAL
REPORT
The Rider Levett Bucknall International Report provides a half-yearly

snapshot of construction market conditions and price movements
around the world, via commentaries and analysis from Rider Levett
Bucknall directors in key locations.
The RLB International Construction Cost Relativity Index is shown on
page 5, with each location placed in its ranking spot in respect of all the
other locations in the study.
A broad overview of global construction economic issues is provided
on page 6 followed by a table of historical and forecasted movements in
RLB’s Tender Price Index for 53 key cities on page 13.
Key regional statistics are highlighted on pages 8 & 9. This data
describes the historical and projected economic conditions which the
construction industry functions within those regions or countries.
Pages 10 to 12 consider the wider issue of the construction activity
cycle for seven building market sectors, in each location, using the
RLB Construction Activity Cycle Model to provide an insight into each
cities construction sectors position in the market cycle.
Pages 14 and 15 feature Construction Rate Ranges for different key
building types in cities within each region, providing an easy cost
comparison between locations.
From pages 17 to 57, RLB directors provide market intelligence
commentary, highlighting the key issues that are impacting on the
construction industry in major global cities together with providing
information relating to current construction price movements.
Building Cost Ranges and International Construction Cost Relativities

are available in the RLB Intelligence Smartphone App and via the
RLB Desktop WebApp. Further information can be found at
rlbintelligence.com
To download our free App visit

rlb.com/app or scan the QR code.
Rider Levett Bucknall | International Report – First Quarter 2015 3

BUILDING ON A TRUSTED VISION
Rider Levett Bucknall offers independent cost management, project

management and advisory services. Committed to broad development
through a combination of organic, acquisitive and alliancing growth, the
firm recently opened new offices in Toronto (Canada), West Cumbria (UK),
St Lucia and Yangon (Myanmar).
The International Report First Quarter 2015 provides global and regional
construction market conditions and tender price movements via local
directors around the world. Additional locations have been included in this
edition, dovetailing recent growth in the firm’s global coverage.
RLB prides itself on exceptional RLB remains committed to its 2014

service delivery to its clients, offering research activities. A series of cost Health
a combination of pre-eminent cost reports, the firm’s renowned Riders Chris O'Brien Lifehouse, Australia
experts, a history of proven success Digest and a world-first Smartphone
and a global alliance with a broad and Desktop application contain a Office
knowledge bank of experience. wide range of research advice to Liberty Place, Australia
Projects regularly demand a team assist industry colleagues and clients. Sport
of distinguished professionals Singapore Sports Hub, Singapore
The firm recently expanded the RLB
from around the world, fostering a
Crane IndexTM to cover additional
collaborative approach. 2013
regions across the world. The Crane
RLB has proudly sponsored the Index originated in Australia in 2012 Infrastructure
World Architecture Festival for as a unique gauge of construction Brisbane Ferry Terminals, Australia
four consecutive years. The firm activity highlighting the construction Leisure Led Development
provided services towards the fluctuation for all sectors across Singapore Sports Hub, Singapore
awarded projects listed on this page. Australia. The Crane Index is now
Images of some of these exceptional published twice yearly in Australia, 2012
world-class developments are New Zealand, North America, the Office
featured throughout this report. Middle East and Southern Africa. Darling Quarter, Australia
In 2015, RLB will continue to capitalise Masterplanning
on its experience and strength in Msheireb Downtown Doha, Qatar
defined areas of expertise to deliver
global best practice. 2011
Transport
Kurilpa Bridge, Australia
4 Rider Levett Bucknall | International Report – First Quarter 2015

International Construction
Cost Relativities
City Q1, 2015

New York Americas 180
Honolulu Americas 174
London Europe 157
Hong Kong Asia 157
Boston Americas 152
San Francisco Americas 151
Chicago Americas 147
Washington Americas 143
Los Angeles Americas 136
Macau Asia 133
Bristol Europe 132
Darwin Oceania 127
Manchester Europe 122
Sydney Oceania 120
Perth Oceania 119
Birmingham Europe 118
Seattle Americas 117
Canberra Oceania 116
Melbourne Oceania 113
Doha Middle East 111
Christchurch Oceania 111
Adelaide Oceania 110
Wellington Oceania 107
Abu Dhabi Middle East 106
Portland Americas 106
Townsville Oceania 106
Dubai Middle East 105
Riyadh Middle East 104
Phoenix Americas 101
Denver Americas 100
Auckland Oceania 99
Las Vegas Americas 98
Brisbane Oceania 96
Beijing Asia 91
Shanghai Asia 90
Guangzhou Asia 85
Shenzhen Asia 80

Global Construction Summary
Inflation is low and falling in almost all advanced economies. Currently all
advanced-economy central banks are failing to achieve their projections of
2% inflation, and some are struggling to avoid deflation.
The majority of large, developed economies are growing more slowly

than they did when their economic engines were roaring. But it is only the
Eurozone that has badly disappointed in recent years.
Most analysts are optimistic about the Among major economies, growth in Australia is forecast to expand
fall in oil prices over the past year but the United States rebounded during at a 2.9% while New Zealand is
the fall in the price of both copper 2014 ahead of expectations after the forecasting growth of 2.8% for 2015.
and iron ore is more problematic on a contraction in the Q1 2014. Growth A shared theme in both countries
global stage. The price of oil is being is projected to exceed 3% percent in is predicted lower inflation. Recent
driven lower by oversupply. The price 2015. Canada’s positive growth will data in Australia has been favourable
of a barrel of Brent crude has fallen be offset by lower oil prices which with employment, building approvals
below US$50 and global supply is will slow the recovery and reduce and exports for Q4 2014 beating
forecasted to exceed demand during inflation below target. expectations. New Zealand’s
2015 and 2016. Falls in the price of economic performance has been
The United Kingdom is showing
both copper and iron ore could signal impressive, especially record building
positive signs. The UK will grow at
worrying signs for global growth. permits, exports and home sales
above average rates, higher than
Copper and iron ore are important for the latter months of 2014. Net
that of the last decade – a period
inputs into everything from cars, migration inflows continue to post
that includes the peak of the financial
construction, infrastructure to mobile fresh highs, keeping consumption and
crisis. The Eurozone’s growth is still
phones, and large price fluctuations housing-related activity buoyant.
weak, with the exception of the UK
are interpreted as an indicator of
which is stronger. Norway is quite China’s economy is being slowed in
falling global demand.
vulnerable to the significant drop in a planned way. The general trend
The benefit of lower oil prices may oil prices. With the European Central is a reduction in the strong growth
not be enough to counter slowing Bank commencing their Qualitative seen in the previous decade to a sub
investment and consumption globally Easing program, analysts are finding 7% rate. China’s slowdown, coming
during 2015, the World Bank has it difficult to become more optimistic after years of significant investment
cautioned. on growth in 2015. in real estate and infrastructure,
is fuelling further deflationary
Unease about the strength of With deflation in both Hungary and
pressures in global industrial
the global economy is revealing Poland, there is a concrete risk that
markets due to the excess capacity
itself. Europe’s growth is relatively Central Banks may cut again or
in China’s manufacturing, steel and
stagnant: Japan is proceeding extend the period of extraordinarily
cement sectors. With cheaper oil
through “Abenomics”, forecasting low interest rates. Growth in Turkey
available, India is positioned to reap
GDP growth in 2015 of 0.9%. China’s and South Africa is failing to pick up,
the rewards of lower input costs.
central government is implementing in spite of improving inflation and
Indonesia is likely reaching the
a carefully managed slowdown. The current accounts. Russia is being
bottom of its cycle, while Malaysia
World Bank has commented "The squeezed by recent sanctions and
may suffer from the oil slump as a net
sharp decline in oil prices since mid- low oil prices and is facing a sharp
exporter.
2014 will support global activity and 4.5-6.0% contraction in growth
help offset some of the headwinds to during 2015.
growth in oil-importing developing
economies. However, it will dampen
growth prospects for oil-exporting
countries, with significant regional
repercussions".

All of this adds up to a recipe for
continued slow growth, secular
stagnation, disinflation, and even
deflation. That is why, in the absence
of appropriate fiscal policies to
address insufficient aggregate
demand, unconventional monetary
policies will remain a central feature
of the macroeconomic landscape.
Globally, there is still slack in real-
estate markets where booms went
bust (the United States, the United
Kingdom, Spain, Ireland, Iceland, and
Dubai). With bubbles in other markets
(for example, China, Hong Kong,
Singapore, Canada, Switzerland,
France, Sweden, Norway, Australia
and New Zealand) which pose a
potential new risk, as any collapse
would lower home prices in these
countries.
The International Monetary Fund
has published, that with too much
supply and too little demand there is
potential to invest in infrastructure,
which is lacking – or crumbling
– in most advanced economies
and emerging markets (with the
exception of China). With long-term
interest rates close to zero in most
advanced economies (and in some
cases even negative), the case for
infrastructure spending is indeed
compelling. But a variety of political
constraints – particularly the fact
that fiscally strapped economies
slash capital spending before cutting
public-sector wages, subsidies, and
other current spending – are holding
back the needed infrastructure boom.

MARKET data
Key Statistics
YEAR
AUSTRALIA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 2.6 % 3.6 % 2.3 % 2.8 % 2.9 % 3.0 %
GDP per capita – AUD $64,665 $65,818 $66,205 $67,267 $68,395 $69,620
Exchange Rate (As at 1 July per US$) 0.933 0.978 1.088 1.058 1.124 –
PPP Rate 1.511 1.482 1.477 1.462 1.463 1.473
Inflation 3.3 % 1.8 % 2.5 % 2.7 % 2.6 % 2.5 %
Unemployment 5.1 % 5.2 % 5.7 % 6.2 % 6.1 % 5.9 %
YEAR
CHINA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 9.3 % 7.7 % 7.7 % 7.4 % 7.1 % 6.8 %
GDP per capita – CNY ¥11,467 ¥12,284 ¥13,164 ¥14,067 ¥14,989 ¥15,936
PPP Rate 3.506 3.583 3.633 3.655 3.669 3.682
Inflation 5.4 % 2.6 % 2.6 % 2.3 % 2.5 % 3.0 %
Unemployment 4.1 % 4.1 % 4.1 % 4.1 % 4.1 % 4.1 %
YEAR
EURO AREA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 1.6 % -0.7 % -0.4 % 0.8 % 1.3 % 1.7 %
GDP per capita – InT $ 0 0 0 0 0 0
Exchange Rate (As at 1 July per US$) - EURO 0.690 0.794 0.767 0.731 0.794 –
PPP Rate N/A N/A N/A N/A N/A N/A
Inflation 2.7 % 2.5 % 1.3 % 0.5 % 0.9 % 1.2 %
Unemployment 10.1 % 11.3 % 11.9 % 11.6 % 11.2 % 10.7 %
YEAR
NEW ZEALAND 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 1.9 % 2.5 % 2.8 % 3.6 % 2.8 % 2.5 %
GDP per capita – NZD $32,520 $33,121 $33,743 $34,518 $35,218 $35,795
PPP Rate 1.486 1.456 1.468 1.475 1.459 1.468
Inflation 4.0 % 1.1 % 1.1 % 1.6 % 2.0 % 2.0 %
Unemployment 6.5 % 6.9 % 6.2 % 5.7 % 5.2 % 5.2 %
YEAR
SINGAPORE 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 6.1 % 2.5 % 3.9 % 3.0 % 3.0 % 3.0 %
GDP per capita – SGD $65,954 $65,968 $67,407 $68,471 $70,101 $71,817
PPP Rate 0.891 0.889 0.877 0.866 0.863 0.861
Inflation 5.2 % 4.6 % 2.4 % 1.4 % 2.5 % 2.7 %
Unemployment 2.0 % 2.0 % 1.9 % 2.0 % 2.1 % 2.2 %

MARKET data
Key Statistics
YEAR
UNITED KINGDOM 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 1.1 % 0.3 % 1.7 % 3.2 % 2.7 % 2.4 %
GDP per capita – GBP £23,737 £23,646 £23,915 £24,520 £25,019 £25,454
Exchange Rate (As at 1 JULY per US$) 0.624 0.638 0.657 0.584 0.613 –
PPP Rate 0.698 0.693 0.695 0.698 0.697 0.695
Inflation 4.5 % 2.8 % 2.6 % 1.6 % 1.8 % 2.0 %
Unemployment 8.1 % 8.0 % 7.6 % 6.3 % 5.8 % 5.5 %
YEAR
USA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 1.6 % 2.3 % 2.2 % 2.2 % 3.1 % 3.0 %
GDP per capita – USD $48,152 $48,922 $49,658 $50,385 $51,613 $52,841
Exchange Rate (As at 1 JULY per US$) 1.000 1.000 1.000 1.000 1.000 1.000
PPP Rate 1.000 1.000 1.000 1.000 1.000 1.000
Inflation 3.1 % 2.1 % 1.5 % 2.0 % 2.1 % 2.1 %
Unemployment 8.9 % 8.1 % 7.4 % 6.3 % 5.9 % 5.8 %
YEAR
LATIN AMERICA and the CARRIBEAN 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 4.5 % 2.9 % 2.7 % 1.3 % 2.2 % 2.8 %
GDP Per Capita (Int $) 13,982 14,467 14,904 15,175 15,618 16,181
Inflation 6.8 % 6.1 % 7.1 % n/a n/a n/a
YEAR
MIDDLE EAST & NORTH AFRICA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 4.5 % 4.8 % 2.3 % 2.6 % 3.8 % 4.5 %
Inflation 8.6 % 9.6 % 9.2 % 7.5 % 8.0 % 7.4 %
YEAR
SOUTH AFRICA 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 3.6 % 2.5 % 1.9 % 1.4 % 2.3 % 2.8 %
GDP per capita – ZAR R 37,017 R 37,426 R 37,625 R 37,642 R 37,994 R 38,536
PPP Rate 4.774 4.899 5.109 5.342 5.549 5.751
Inflation 5.0 % 5.7 % 5.8 % 6.3 % 5.8 % 5.5 %
Unemployment 24.8 % 24.9 % 24.7 % 25.2 % 25.0 % 24.8 %
YEAR
Asean-5 2011 2012 2013 2014(f) 2015(f) 2016(f)
GDP 4.7 % 6.2 % 5.2 % 4.7 % 5.4 % 5.5 %
Inflation 5.8 % 3.8 % 4.6 % 4.6 % 5.0 % 4.6 %

MARKET data
Construction Sector Activity
PEAK GROWTH PEAK DECLINE

ZONE PEAK ZONE ZONE
The RLB Construction Market Activity
Cycle wave graph represents the
MID GROWTH MID ZONE MID DECLINE theoretical “boom / bust” business
ZONE ZONE
cycle of the construction economy.
TROUGH TROUGH DECLINE

GROWTH ZONE TROUGH ZONE ZONE
The market activity arrows highlight the current point in the construction activity cycle of the major sectors
within each RLB office.
Houses Apartments Offices Industrial Retail Hotel Civil

AMERICAS
Anguilla
Antigua and Barbuda
Bahamas
Barbados
Bermuda
Boston
British Virgin Islands
Cayman Islands
Chicago
Cuba
Denver
Dominica
Dominican Republic
Grenada
Guadaloupe
Haiti
Honolulu
Jamaica
Las Vegas
Los Angeles
Martinique
Montserrat
Netherlands Antilles
New York
Phoenix
Portland
Puerto Rico
San Francisco
Seattle
St Kitts and Nevis
St Lucia
St Vincent and
the Grenadines
Trinidad and Tobago
Turks and Caicos Islands
US Virgin Islands
Washington
NP: Not published

RLB Construction Market Activity Model
Growth Sectors vs Decline Sectors
NUMBER OF CITIES
70
60
50
40
30
20
10
0
GROWTH DECLINE
HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

No of Cities within Zones
NUMBER OF CITIES
50
45
40
35
30
25
20
15
10
0
PEAK ZONE MID ZONE TROUGH ZONE
RLB Global Market Activity RLB Global Market Activity RLB Global Market Activity
Peak Zone Sector Mid Zone Sector Trough Zone Sector
HOUSES 12% HOUSES 10%

HOUSES 19% CIVIL 12%
CIVIL 16% CIVIC 16% APARTMENTS 12%
APARTMENTS 23% APARTMENTS 13% HOTEL 17%
HOTEL 11%
HOTEL 16%
RETAIL 13%
RETAIL 13% OFFICES 12% OFFICES 17%
RETAIL 16%
OFFICES 13%
INDUSTRIAL 8% INDUSTRIAL 15% INDUSTRIAL 16%

MARKET data
Construction Sector Activity
Houses Apartments Offices Industrial Retail Hotel Civil
Asia
Beijing
Chengdu
Guangzhou
Ho Chi Minh City
Hong Kong
Jakarta
Kuala Lumpur
Macau
Seoul
Shanghai
Shenzhen
Singapore
EUROPE
Amsterdam
Berlin
Birmingham
Bristol
Dublin NP
London
Manchester
Moscow
Rome
Sheffield
Vienna
Welwyn
Wokingham
Africa
Cape Town
Johannesburg
Maputo (Mozambique)
Port Louis (Mauritius)
Pretoria
Middle East
Abu Dhabi
Doha
Dubai
Oceania
Adelaide
Auckland
Brisbane
Canberra
Christchurch
Darwin
Melbourne
Perth
Sydney
Townsville NP
Wellington
NP: Not published

MARKET DATA
RLB TENDER PRICE ANNUAL % CHANGE
2009 2010 2011 2012 2013 2014(F) 2015(F) 2016(F) 2017(F) 2018(F)
Africa
Cape Town np np np np np 7.2 6.8 5.4 4.8 4.8
Johannesburg np np np np np 7.2 6.8 5.4 4.8 4.8
Maputo np np np np np 4.0 4.0 4.0 4.0 4.0
Port Loius np np np np np 5.0 5.5 6.0 6.0 6.5
Pretoria np np np np np 7.2 6.8 5.4 4.8 4.8
Americas
Boston (5.0) 0.1 1.7 3.7 5.2 5.6 6.1 5.1 4.1 4.1
Chicago np np np np 4.7 5.2 6.1 5.1 4.1 4.1
Denver (8.1) 0.2 1.8 1.8 2.2 3.9 5.1 5.1 4.1 4.1
Honolulu (8.4) (0.5) 5.3 3.1 7.7 12.7 10.4 7.2 6.1 4.1
Las Vegas (9.0) (1.0) 1.7 2.0 0.9 3.5 4.6 5.1 4.1 4.1
Los Angeles (6.9) 3.2 1.9 1.0 1.8 5.9 6.1 6.1 4.1 4.1
New York (4.0) 0.8 2.5 4.3 5.9 5.3 6.1 5.1 4.1 4.1
Phoenix (11.3) (0.1) 2.1 2.4 2.5 3.9 4.8 5.6 4.1 4.1
Portland (5.7) 0.3 2.1 0.9 1.7 6.5 6.1 5.1 4.1 4.1
San Francisco (7.6) 2.6 1.7 0.9 1.8 7.1 6.1 5.4 4.1 4.1
Seattle (11.6) (0.5) 1.1 2.1 3.5 4.6 5.1 4.8 4.1 4.1
Washington (6.2) 0.6 1.0 3.9 5.4 6.2 6.1 5.1 4.1 4.1
Asia
Beijing 1.5 4.5 5.1 0.5 1.0 2.0 1.5 2.0 2.0 2.0
Chengdu np np np np np 1.1 0.5 0.4 0.4 0.4
Guangzhou 4.4 4.1 5.6 4.1 4.1 3.0 (0.0) 2.0 2.0 2.0
Hong Kong (5.4) 7.9 9.5 7.4 9.0 8.2 7.2 6.1 3.0 3.0
Macau (12.3) 3.8 7.2 7.2 9.3 10.4 7.2 6.1 3.0 3.0
Seoul np np np np 2.4 1.7 1.5 1.6 1.7 1.8
Shanghai 2.9 4.7 7.7 3.5 2.0 (1.0) (3.0) 1.0 2.0 2.0
Shenzhen 3.4 6.0 3.5 (1.0) 3.0 1.5 (0.5) 2.0 2.0 2.0
Europe
Berlin np np np np np 2.0 2.0 1.6 2.0 2.0
Birmingham (9.3) (1.0) (1.0) (0.8) 5.9 3.7 4.1 4.6 4.6 4.6
Bristol (7.9) (4.0) 3.2 (2.1) 6.8 6.9 6.7 4.9 5.2 5.4
Budapest np np np np np np 2.5 3.0 3.3 2.5
Dublin np np np np 4.0 5.0 8.0 9.0 9.0 9.0
London (8.6) (1.6) 3.2 1.3 3.4 5.1 5.6 4.8 4.6 4.1
Sheffield np np np np 6.3 7.1 4.7 4.9 5.3 5.5
Welwyn Garden City np np np np 5.9 4.6 4.9 4.8 4.4 4.3
Wokingham np np np np 5.9 6.4 5.1 4.1 3.8 3.0
Madrid np np np np np 0.1 1.2 1.3 1.4 1.4
Manchester (12.1) (1.5) 3.2 (0.8) 5.9 3.7 4.1 5.5 8.3 7.9
Moscow np np np np np 1.7 0.5 3.6 3.6 3.6
Warsaw np np np np np (0.8) 0.7 3.2 3.2 1.2
Middle East
Abu Dhabi 2.0 1.0 2.0 0.7 3.2 3.3 4.7 5.7 6.1 7.3
Doha 4.5 1.0 3.0 4.0 3.2 4.5 5.0 5.5 6.0 7.0
Dubai 2.0 1.0 2.0 1.4 3.2 3.7 4.7 5.7 6.1 6.5
Riyadh 2.5 2.0 2.5 3.0 4.4 5.0 4.8 4.8 4.5 4.5
Oceania
Adelaide (2.8) 2.9 (3.2) 0.1 0.9 0.6 2.5 3.0 3.5 3.5
Auckland 1.0 0.0 0.0 0.0 0.8 4.1 5.6 4.8 3.5 3.0
Brisbane (5.8) (0.7) 0.3 (0.0) (0.9) 3.5 5.1 6.1 4.1 4.1
Canberra 1.1 3.4 1.4 (0.6) 2.2 1.6 2.1 2.5 3.2 3.5
Christchurch 1.5 4.6 3.0 4.7 5.1 6.1 7.0 7.0 6.6 5.3
Darwin 3.5 2.0 (11.4) 2.0 3.0 3.0 4.0 3.5 3.5 3.0
Melbourne 1.7 4.2 3.0 0.0 0.2 1.5 2.5 3.0 3.5 3.5
Perth (6.2) (1.6) 1.3 (2.3) 1.1 2.0 2.5 3.0 3.0 4.1
Sydney 0.0 1.0 2.2 1.2 2.0 3.0 4.5 4.5 4.5 4.0
Townsville (4.7) 0.4 0.5 1.0 1.3 2.0 2.0 3.0 4.1 4.1
Wellington 1.0 1.5 1.0 1.5 2.0 3.4 3.0 3.0 3.0 3.0
NP: Not published

MARKET data
International Construction Rates
The following data represents estimates of current building costs in the respective market. Costs may vary as a
consequence of factors such as site conditions, climatic conditions, standards of specification, market conditions etc.
Range of cost per m2 of gross floor area

Office Building Retail
Local
Premium Offices Grade A Mall Strip Shopping
Currency
Low High Low High Low High Low High
AMERICAS
Bahamas USD 2,495 4,455 2,335 3,270 1,635 2,830 1,520 2,390
Barbados USD 2,270 3,790 2,055 3,250 1,745 2,700 1,520 2,380
Bermuda USD 3,540 4,715 3,305 4,480 2,950 3,765 2,605 3,425
Boston USD 2,155 3,015 1,885 2,635 1,290 2,260 970 1,560
British Virgin Islands USD 2,915 3,025 2,540 3,735 2,110 3,510 1,755 2,335
Cayman Islands USD 2,810 4,110 2,595 3,790 2,700 3,680 2,380 3,250
Chicago USD 2,475 3,875 1,290 1,940 1,240 2,260 860 1,400
Cuba USD 3,110 4,340 2,790 4,025 3,110 4,350 2,230 2,970
Denver USD 1,505 2,420 1,075 1,615 860 1,400 700 1,345
Honolulu USD 2,745 5,060 2,315 3,820 1,990 4,735 1,670 4,145
Las Vegas USD 1,505 3,070 1,130 2,045 1,240 5,165 700 1,560
Los Angeles USD 2,155 3,230 1,505 2,260 1,345 3,015 1,075 1,720
New York USD 2,205 3,765 1,940 2,905 1,505 2,690 1,240 1,720
Phoenix USD 1,400 2,585 1,075 1,720 1,130 1,775 755 1,345
Portland USD 1,775 2,370 1,240 1,830 1,185 2,370 970 1,400
Puerto Rico USD 2,650 3,540 2,065 2,950 2,065 2,660 1,185 1,765
San Francisco USD 2,370 3,550 1,720 2,585 1,615 3,015 1,400 1,990
Seattle USD 1,775 2,205 1,240 1,720 1,240 2,155 1,025 1,455
St Lucia USD 2,230 3,400 1,635 2,345 1,410 2,110 1,645 2,110
US Virgin Islands USD 2,850 4,155 2,615 3,790 2,250 3,315 1,660 2,370
Washington D.C. USD 1,885 2,585 1,400 1,990 1,025 2,045 805 1,455
ASIA
Beijing Rmb 7,600 12,550 7,100 10,750 8,400 12,850 7,350 11,500
Chengdu Rmb 6,900 11,200 6,350 9,400 7,300 11,050 6,600 10,500
Guangzhou Rmb 7,300 11,670 6,750 10,200 8,350 11,900 7,200 10,800
Ho Chi Minh City VND ('000) 23,341 33,572 19,906 24,916 18,836 25,076 N/P N/P
Hong Kong HKD 21,400 31,900 18,600 25,200 21,900 27,900 18,700 24,300
Jakarta Rp ('000) 9,648 13,200 6,670 10,620 6,520 8,515 N/P N/P
Kuala Lumpur RINGGIT 2,400 4,000 1,300 2,800 2,100 3,500 N/P N/P
Macau MOP 17,500 25,200 15,400 21,600 19,100 23,600 16,200 20,800
Manila PHP 32,468 44,303 26,197 35,705 27,512 31,659 20,836 23,365
Seoul KRW ('000) 2,320 2,960 1,740 2,130 1,550 2,250 1,310 1,980
Shanghai Rmb 7,350 11,900 6,750 10,300 8,150 12,550 7,050 11,300
Shenzhen Rmb 6,900 11,300 6,500 9,850 7,500 11,450 6,600 10,100
Singapore Sgd 2,800 4,050 2,150 3,050 2,250 3,500 N/P N/P
EUROPE
Amsterdam (Netherlands) EUR 1,300 1,650 950 1,400 750 950 600 800
Berlin (Germany) EUR 1,340 1,754 980 1,135 1,135 1,445 826 1,030
Birmingham (UK) GBP 1,725 2,430 1,500 2,435 2,645 3,700 840 1,580
Bristol (UK) GBP 1,920 2,530 1,690 2,530 2,750 3,850 875 1,655
Budapest (Hungary) EUR 1,200 1,500 920 1,300 1,300 1,800 600 1,200
Dublin (Ireland) EUR 1,800 2,000 1,600 1,800 1,900 2,100 1,000 1,200
London (UK) GBP 2,228 2,937 1,874 2,937 3,038 4,253 972 1,823
Madrid (Spain) EUR 825 1,250 640 1,150 1,800 2,500 1,800 2,500
Manchester (UK) GBP 1,815 2,390 1,590 2,390 2,590 3,640 830 1,550
Moscow (Russia) EUR 1,700 2,000 1,100 1,500 2,000 2,800 900 1,400
Oslo (Norway) EUR 2,840 3,690 2,190 2,850 1,800 2,340 1,440 1,870
Paris (France) EUR 1,295 1,306 2,434 2,745 1,538 2,314 1,198 1,538
Podgorica (Montenegro) EUR 1,800 1,800 1,200 1,200 1,400 1,400 N/P N/P
Sheffield (UK) GBP 1,770 2,330 1,500 2,380 2,580 3,620 830 1,550
Vienna (Austria) EUR 1,850 2,325 1,374 1,691 1,797 2,220 1,004 1,163
MIDDLE EAST & AFRICA
Abu Dhabi AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P
Dubai AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P
Riyadh SAR 4,890 7,597 4,991 6,825 4,728 6,198 3,361 4,728
Doha QAR 6,500 8,500 6,100 8,200 5,300 6,500 N/P N/P
OCEANIA
Adelaide AUD 2,600 3,850 2,100 3,250 1,550 2,850 1,300 1,825
Auckland NZD 2,800 4,000 2,400 3,600 1,800 2,300 1,200 1,800
Brisbane AUD 2,450 3,800 1,900 2,900 2,150 2,950 1,050 1,550
Canberra AUD 3,070 3,980 2,490 3,140 2,110 2,960 1,130 1,860
Christchurch NZD 3,600 4,700 3,100 4,100 1,600 2,100 N/P N/P
Darwin AUD 3,000 4,050 2,300 3,700 1,650 2,500 1,100 1,950
Melbourne AUD 3,000 3,750 2,325 2,900 2,025 3,000 1,060 1,550
Perth AUD 3,150 4,770 2,575 3,740 2,300 2,800 1,025 2,565
Sydney AUD 3,100 4,350 2,300 3,250 1,700 3,550 1,350 1,700
Wellington NZD 2,940 3,360 2,310 2,625 1,300 1,800 N/P N/P
N/P: Not published

MARKET data
International Construction Rates
Rates are in national currency per square metre of Gross Floor Area except as follows:
Chinese cities, Hong Kong and Macau: Rates are per square metre of Construction Floor Area, measured to outer face of external walls.
Singapore, Ho Chi Minh City, Jakarta and Kuala Lumpur: Rates are per square metre of Construction Floor Area, measured to outer face of
external walls and inclusive of covered basement and above ground parking areas.
Chinese cities, Hong Kong, Kuala Lumpur, Macau and Singapore: All hotel rates are inclusive of Furniture Fittings and Equipment (FF&E).
Range of cost per m2 of gross floor area

Hotels Car Parking Industrial Residential
5 Star 3 Star Multi Storey Basement Warehouse Multi Storey
Low High Low High Low High Low High Low High Low High
AMERICAS
2,725 7,070 1,530 4,885 N/P N/P N/P N/P 1,410 2,280 1,410 4,565
2,595 4,325 1,735 2,700 N/P N/P N/P N/P 700 2,000 3,025 4,325
3,540 4,715 2,950 3,540 N/P N/P N/P N/P 2,355 2,990 3,055 4,715
2,690 4,305 1,720 2,690 645 970 860 1,185 755 1,075 1,455 3,500
4,670 6,425 2,915 4,090 N/P N/P N/P N/P 1,130 2,215 2,100 3,270
2,915 3,790 2,485 3,465 N/P N/P N/P N/P 1,840 2,915 2,215 3,565
2,690 4,845 1,290 2,260 700 1,185 970 1,400 755 1,400 1,290 3,500
2,790 4,350 2,230 3,110 N/P N/P N/P N/P 1,615 2,230 N/P N/P
1,990 3,015 1,130 1,775 430 755 645 1,025 700 1,185 645 3,765
4,950 7,160 3,120 5,220 915 1,345 1,290 2,530 1,345 2,155 1,830 7,320
3,500 5,005 1,290 2,420 540 915 645 1,615 540 1,075 755 4,305
3,230 4,845 2,155 2,960 1,025 1,240 1,185 1,670 1,025 1,720 1,615 3,335
3,445 5,115 1,990 2,850 700 1,130 915 1,345 970 1,400 1,505 3,765
2,475 4,305 1,185 1,720 430 700 645 1,075 590 1,075 860 4,305
1,885 2,850 1,400 1,830 755 970 1,075 1,505 805 1,400 1,185 2,800
3,830 4,715 2,355 2,950 N/P N/P N/P N/P 935 1,420 1,775 2,950
3,230 5,060 2,370 3,120 1,075 1,400 1,290 1,775 1,025 1,720 1,720 3,765
1,990 2,960 1,505 1,940 700 915 915 1,345 805 1,185 1,075 2,530
3,285 4,110 2,230 2,830 N/P N/P N/P N/P 830 1,765 2,110 2,940
5,340 6,525 3,565 4,445 N/P N/P N/P N/P 1,660 2,370 2,130 3,315
2,475 4,035 1,615 2,475 590 860 805 1,075 755 1,075 1,075 2,690
ASIA
13,000 17,200 9,700 12,450 2,250 3,050 3,750 6,500 4,350 5,450 4,050 6,100
11,550 14,800 8,700 11,000 2,050 2,800 3,650 5,950 3,490 4,300 3,500 5,450
13,000 16,750 9,700 11,900 2,150 3,050 3,750 6,500 4,200 5,250 3,850 5,750
30,351 37,170 22,817 29,518 8,509 12,714 17,499 23,910 5,832 8,830 14,952 22,669
34,100 41,600 28,100 32,400 8,300 9,750 15,600 22,100 14,400 18,200 20,500 35,400
13,670 17,420 10,410 11,875 3,460 4,450 4,450 6,190 4,650 5,680 6,430 9,986
4,800 6,500 2,500 3,800 800 1,200 1,400 3,200 1,000 1,700 1,700 4,100
28,400 35,300 23,700 27,300 N/P N/P 8,650 11,550 N/P N/P 13,200 21,000
53,507 61,599 43,190 48,854 14,666 16,892 16,083 18,510 17,397 20,533 27,209 48,450
3,110 4,600 2,000 2,550 650 800 840 1,060 1,150 1,460 1,500 2,170
12,550 16,500 9,300 11,900 2,100 3,050 4,000 6,600 4,100 5,300 3,750 5,800
12,200 15,900 9,120 11,500 2,050 2,900 3,750 6,350 3,900 4,900 3,650 5,550
4,400 5,800 3,400 3,850 700 1,400 1,500 2,250 1,150 1,650 2,050 3,250
EUROPE
1,500 1,900 1,200 1,500 400 600 650 1,000 375 525 850 1,350
1,960 2,720 1,340 1,750 465 670 774 1,030 362 723 980 1,390
2,015 2,750 1,270 1,870 320 635 800 1,375 350 635 1,590 2,230
2,285 3,045 1,325 1,765 385 770 875 1,465 365 665 1,655 2,320
1,350 1,950 800 1,150 350 500 450 650 400 520 650 950
2,000 2,200 1,340 1,440 400 500 600 1,000 400 560 1,400 1,600
2,405 3,240 1,620 2,076 390 780 1,013 1,671 421 760 1,874 2,684
1,950 2,600 1,300 1,590 1,600 1,900 500 700 400 500 500 790
2,000 2,700 1,250 1,690 315 630 830 1,350 350 630 1,570 2,200
2,800 3,500 1,500 2,000 400 550 800 1,100 450 650 1,200 1,700
3,920 5,090 2,960 3,850 690 880 890 1,160 1,570 2,030 2,420 3,150
4,008 4,436 N/P N/P N/P N/P 880 N/P N/P 2,105 2,338 2,466
2,100 2,100 1,300 1,300 900 900 1,400 1,400 500 500 N/P N/P
1,960 2,690 1,215 1,620 305 610 810 1,315 330 610 1,520 2,170
3,012 3,382 1,691 2,167 529 581 1,163 1,321 581 740 1,480 1,744
MIDDLE EAST & AFRICA
9,000 12,000 6,000 8,500 1,800 3,600 2,850 4,500 1,500 2,700 4,500 6,500
9,500 13,000 6,000 8,500 2,300 3,600 3,100 4,500 1,800 3,400 4,500 6,500
8,304 10,110 5,989 7,465 920 1,220 2,265 2,845 3,312 4,046 4,576 9,647
11,500 14,500 7,500 8,500 N/P N/P 2,750 4,500 N/P N/P 6,500 7,800
OCEANIA
3,500 4,400 2,500 3,400 580 900 1,300 1,900 625 1,100 2,350 3,550
3,600 4,000 2,900 3,350 600 850 1,300 1,800 500 750 2,800 3,600
3,200 4,800 2,500 3,600 700 1,000 1,500 2,000 600 1,000 1,900 3,050
3,780 4,660 2,750 3,840 700 970 940 1,340 650 1,010 2,550 3,700
3,600 4,200 2,900 3,300 850 1,300 1,700 2,100 720 1,100 N/P N/P
3,550 4,400 2,800 3,500 750 1,250 1,150 1,500 750 1,375 2,010 2,600
3,450 4,500 3,050 3,500 655 1,060 1,110 1,365 555 1,100 2,200 3,500
3,600 4,430 2,645 3,635 750 1,000 1,850 3,100 625 1,020 2,230 3,830
3,850 5,050 2,750 3,450 650 1,000 950 1,520 640 990 2,250 4,100
3,400 4,100 2,310 2,730 500 900 1,890 2,730 900 1,400 2,625 3,360

Menlyn Maine Mixed Use Green Precinct, Pretoria, Africa
Architect: Boogertman + Partners

Market Intelligence
Sub- Saharan Africa
Sub-Saharan Africa’s positive During 2014, growth in excess of 2015 Forecasted GDP Growth
outlook reported in Q3 2014 has 6% has been seen in Mozambique, Country 2014% 2015% 2016%
seen 2014 GDP growth at 4.5% up Rwanda, Nigeria, Ethiopia, Cote Angola 3.94 5.92 6.16
slightly from the 4.2% reported d’lvoire, Democratic Republic of Benin 5.48 5.20 4.80
in 2013. Public infrastructure Congo and Burkina Faso. Other Botswana 4.35 4.18 4.05
developments have been a large countries such as Cabo Verde, Burkina Faso 6.66 6.81 7.02
factor in growth across the region Guinea-Bissau and Guinea recorded Burundi 4.74 4.80 5.01
Cabo Verde 1.02 3.02 4.04
with significant investment in the lowest with 2.1%, 2.1% and 0.5%
Cameroon 5.08 5.19 5.27
transport, electricity and ports. respectively.
Central African Rep. 1.01 5.29 5.70
Notwithstanding the recent decline
in copper prices and the ongoing Construction within the region is Chad 9.64 6.72 9.72
increasing due to increased public Comoros 3.92 3.93 3.94

decline in oil prices, the forecast
Congo, Dem. Rep. of 8.63 8.49 7.90
growth for 2015 is expected to be investment in infrastructure as a
Congo, Rep. of 6.00 7.47 7.29
steady at 4.6%. Whilst the decline result of increasing mineral exports,
Côte d'Ivoire 8.50 7.90 7.75
in commodity prices will impact renewal of aging infrastructure
Equatorial Guinea (2.54) (7.87) 1.31
on exports, it is unlikely to reduce and an ever increasing services
Eritrea 2.02 2.14 2.01
growth in the short term due to the sector. The capacity to maintain
Ethiopia 8.20 8.46 8.47
strength of ongoing infrastructure and operate this infrastructure Gabon 5.12 5.39 6.01
investment and agricultural expansion is highlighting the need Gambia, The 7.37 7.00 5.53
expansion. for long term financial management Ghana 4.47 4.69 7.18
reforms in a number of countries. Guinea 2.45 4.08 4.99
Despite particular regions facing These reforms are focussed on the Guinea-Bissau 2.63 4.00 3.70
socio-political risks associated with strengthening of transparency and Kenya 5.34 6.16 6.38
poverty remaining high, conflict accountability in the use of public Lesotho 4.30 4.68 4.97
(South Sudan, Central African resources. Liberia 2.49 4.47 10.88
Republic) and the continuing Ebola Madagascar 3.05 3.98 4.53
outbreak (West Africa), the region Malawi 5.70 5.97 5.50
remains one of the fastest growing Mali 5.92 4.79 5.09
globally. Mauritius 3.32 3.95 4.14

Mozambique 8.34 8.16 8.23
Namibia 4.31 4.49 4.57
Niger 6.33 4.91 5.69
Nigeria 6.97 7.28 7.18
Rwanda 5.96 6.67 7.50
São Tomé & Príncipe 5.00 5.50 5.50
Africa - Growth Sectors vs Decline Sectors
Senegal 4.55 4.65 5.07
NUMBER OF CITIES Seychelles 3.67 3.77 3.65
6 Sierra Leone 8.00 9.91 7.81
South Africa 1.40 2.30 2.80
5 South Sudan (12.25) 18.96 10.28
Swaziland 2.11 2.03 2.07
4 Tanzania 7.21 7.02 7.13
Togo 5.65 5.66 5.84
3 Uganda 5.91 6.28 6.50
Zambia 6.47 7.17 7.72
2
0
GROWTH DECLINE

Location Intelligence
AFRICA
Cape Town Johannesburg

The Cape Town property and Steel reinforcement and structural Despite high office vacancies, rental
construction industry is in the midst steel remains a highly volatile trade growth in office nodes around
of a significant recovery. The sector in the Western Cape. This is more Johannesburg are still growing at
is however showing signs of a lack pronounced with structural steel and levels higher than current inflation
of capacity ranging from property continues to inhibit the growth of levels. The areas around the new
consultants, principal building fast tracked steel construction with Gautrain stations, Sandton &
contractors and subcontractors. This current pricing trends continuing Rosebank, are showing strong signs
is being attributed to the learnings to favour in situ concrete framed of growth, being very popular among
of the past decade where the structures. developers. The manufacturing sector
market has over promised and under remains challenged and the demand
HVAC is characterised by a shortage
delivered. This has resulted in the for industrial space is still low.
of large subcontractors capable of
contractors and subcontractors, with Positive growth is continuing in the
high specification HVAC installations.
the required capabilities, being more retail sector, with new centres being
circumspect in their pricing and risk Aluminium doors, windows and built in previously disadvantaged
acceptance, thereby driving up the shopfronts has seen a number of towns and the refurbishment of
cost of building. established subcontractors close their existing centres in established areas
doors in the midst of the recession like Menlyn and Sandton.
While building costs are increasing,
leaving a capability shortage. This has
end user demand is still lagging, Current significant projects underway
affected the standard of commercial
resulting in low yields for developers include Discovery’s Head Office
and residential projects. There has
and investors together with the within the Sandton’s commercial
been an increase in capability of flush
potential of higher vacancies for node. The landmark building consists
glazed facade contractors.
prospective developments. Despite of 9 basement levels with 6,000
this, the overall trend is a positive one Given the waning capacity and parking bays and a 9 level office
of recovery. the general increase in margins, building with a gross building area of
opportunities to negotiate contracts 100,000m2. The total gross building
Current projects include:
rather than tender are being pursued area is 300,000m2. The development
• V&A Waterfront - ongoing throughout the industry. is expected to house 5,000 people.
development - various projects and The total development cost is
sectors forecast to cost R 3billion and to be
• Cape Town International completed in October 2017.
Convention Centre (CTICC) Phase II A new Head Office for Sasol
Petrochemicals Company is being
• Netcare Hospital (Cape Town
constructed also in Sandton. With an
Foreshore)
office area of 67,000m2, the 10 level
• Century City ongoing development building and seven level basement,
- various projects and sectors will house up to 4,000 employees.
• Cape Town CBD various tall The 5 star Greenstar development
building site commenced in 2013 and is due for
completion in late 2016.
The current weakness in the Rand
could potentially make South
African goods more competitive
internationally, and could give the
industrial sector more impetus. Lower
fuel costs and stable food prices will
give households more disposable
income which bodes well for all
sectors.

AFRICA
Maputo (Mozambique) Port Louis (Mauritius) Pretoria

Mozambique is currently experiencing The district of Moka, situated in the The construction economy for the
major economic uplift and positive centre of the island, has witnessed region (Gauteng) is showing positive
prospects for the foreseeable future. significant growth in terms of signs. The majority of current
infrastructure works and property construction projects within the
Offshore gas was recently discovered development during the past 5 region are private sector owned
in northern Mozambique, which years. The St Pierre region and while the Government is investing in
amounts to the second largest found Bagatelle areas have witnessed the the majority of the civil engineering
in the world (with Qatar the largest) most development activity. Strong works.
with reserves estimated to be 170 investment has been seen in road
trillion cubic feet CF. With this find, The construction industry’s focus
infrastructure within the district. Due
major infrastructure requirements has shifted slightly, over the past few
the increased access, strong growth
have come to the forefront of the years, to be more aligned with the
in development has been seen with
country's construction activity. global perspective. In order to attract
new retail outlets, real estate projects
Residential villages, offices, medical foreign investment, the standards
and business centres being built.
facilities, schools, retail and have been raised to satisfy the needs
engineering facilities will be required Major developments include the of potential investors while staying
in large quantities once the physical Mall of Mauritius – Bagatelle, true to the country’s environmental
extraction of the gas starts in the Mauritius’s leading shopping and responsibilities.
near future. retail destination. During the course
Currently the biggest construction
of 2014, two major shops in the mall,
Current key projects include The activity in Pretoria is around the
namely Woolworths and Cash & Carry
Horizon in Maputo. This project is Menlyn area where Menlyn Maine
have undergone further extension
currently the largest commercial is the focus point constructing the
due to an increase in business
development in the city. The first "green city" in Africa. This Mega
activity.
development consists of four car development will comprise a total
parking decks of 24,000m2, a 14 level Phase 1 of the Bagatelle Motorcity of 315,000m2 of Gross Lettable Area
office tower of 15 000m2, and a 193 was completed in October 2014. including:
key, 18 level residential tower. The This new development aims to be
• 140,000m2 of Commercial Office
project totals an estimated GCA of the destination for car and new
space,
74,000m2. technology enthusiasts. When
completed the development will • 35,000m2 of Retail, Dining and
The Pemba Mixed use Development accommodate showrooms for car Shopping space,
in Pemba (Northern Mozambique) is dealers, bikes and motorcycles and
• 4,000m2 Virgin Active Classic Gym,
a mixed use project, comprising of workshops for car sound fitments,
two construction phases. Phase one tyres and windscreens. Phase 1 of • 85,000m2 of Up-market Residential
comprises a 10,000m2 multi tenanted the project consisted of two retail Apartments
retail centre (strip mall) and 2,500m2 blocks and the majority of the site’s • 18,000m2 of Luxury Hotel space,
multi-tenanted office block (ground infrastructure works.
+ 1). The first phase is expected to • 60,000m2 Time Square Urban
be completed by March 2016. Phase Mauritius’s impact from the GFC Entertainment Complex.
two will comprise a further 10 000m2 was delayed by more than three
years. The local construction market • 5,700m2 of Scenic parklands.
multi tenanted retail centre (strip
mall) and 2 multi tenanted office started to feel the effects of the crisis Existing buildings are being upgraded
blocks of 2,500m2 each (ground +1). towards the end of the year 2012, and others demolished to make way
with the impact escalating in 2013 for new developments in the Hatfield
The bulk of projects in Mozambique and 2014. However, in the second area. Commercial developments
are US dollar based projects. half of 2014, the industry has started under construction include new
The price of steel reinforcing to recover. Activity in the sector has government office accommodation
fluctuates regularly due to the strengthened and it is expected to for Stats SA, Agrivaal and Munitoria.
metals union strikes that have led to improve during 2015 and 2016. The
shortages and has put pressure on local authorities are hopeful more
the prices of steel. Structural steel investment will follow and new
prices have also increased regularly developments will help the industry
by 2%-5%. grow in the next coming years.

Arizona State University Polytechnic Campus Sun Devil Fitness Complex, Mesa, United States of America
Architect: Architekton and 360 Architecture

Photographs provided by Dror Baldinger, AIA Architecture Photography
Market Intelligence
Americas
The effect of falling oil prices and on July. Showing all sections of USA Construction Cost Relativities
the strengthening dollar in the US is the construction industry have Q1, 2015
not yet showing in published figures. performed well for 2014, this may New York 180
GDP growth continues to rise with continue if current requests for Honolulu 174
growth forecasted to be 2.4% for increased infrastructure spending Boston 152
2014 and 3.1% for 2015. The overall are answered with funds. San Francisco 151
impact on economic growth of the Chicago 147
While there are signs wages
fall on oil prices is probably positive, Washington 143
growth is starting to strengthen,
although it may slow growth in the Los Angeles 136
with oil prices falling and the dollar
mining sector. Seattle 117
strengthening, low inflation remains
Portland 106
The U.S. economy is growing at the main risk that may delay rate
Phoenix 101
an above trend pace, in part with hikes. Business and consumer
Denver 100
strong jobs growth. The construction surveys are generally positive.
Las Vegas 98
industry is showing stronger
Within South America, regional
indicators with job gains during 2014.
economic growth is forecasted
July construction spending was at
to accelerate in 2015-16 following 2015 Forecasted GDP Growth
its highest that it had been since
a relatively weak year. The Country 2014% 2015% 2016%
December 2008. The US Department North America
Brazilian economy will remain
of Commerce reported a total of Canada 2.27 2.45 2.36
fragile. Mexico remains at the
US$981 Billion for July 2014 up Mexico 2.39 3.53 3.77
centre of development potential.
8.2% on the previous July. Despite United States 2.15 3.09 3.03
Manufacturing (primarily autos),
a decline in highway spending in in South America
energy, telecommunication, and
both August and September other Argentina (1.70) (1.50) --
utilities are key sectors for further
sectors within construction were Bolivia 5.20 5.00 5.00
integration within the North
on the rise, however November Brazil 0.30 1.39 2.23
American landscape through Chile 2.00 3.34 4.00
saw increases in residential, but
the North American Free Trade Colombia 4.81 4.53 4.52
slight declines across other sectors
Agreement (NAFTA) .The Pacific Ecuador 4.00 4.00 4.00
reducing total construction spending
Alliance countries (Mexico, Guyana 3.32 3.83 4.85
for the quarter.
Colombia, Chile and Peru) are Paraguay 4.00 4.50 4.50
With lower unemployment, wages forecasted to grow by 4% in 2015- Peru 3.60 5.12 5.47
growth and positive sentiments 16. Both Peru and Colombia will Suriname 3.26 3.78 4.23
across most sections of the likely recover fastest. An expanded Uruguay 2.80 2.80 3.00
economy, there has been an increase Panama Canal will boost regional Venezuela (3.00) (1.00) 0.01
in new home sales as well, with trade flows and deepen economic Central America
Belize 2.00 2.50 2.50
a spike in August 2014 up 18% ties from 2016 onwards.
Costa Rica 3.60 3.60 4.20
El Salvador 1.70 1.80 1.80
RLB Construction Market Activity Model Guatemala 3.40 3.70 3.60
The Americas - Growth Sectors vs Decline Sectors Honduras 3.00 3.10 3.20
Nicaragua 4.00 4.00 4.00
NUMBER OF CITIES Panama 6.61 6.44 6.69
30
The Caribbean
Antigua and
1.86 1.73 2.00
25 Barbuda
The Bahamas 1.20 2.10 2.00
20 Barbados (0.55) 0.55 1.51

Dominica 1.43 1.24 1.23
15
Dominican Republic 5.30 4.20 4.00
Grenada 1.11 1.20 1.70
Haiti 3.75 3.70 3.99
10
Jamaica 1.05 1.78 2.23
St. Kitts and Nevis 3.54 3.16 3.24
5
St. Lucia (1.11) 1.39 1.44
St. Vincent and
1.66 2.57 3.05
0 the Grenadines
GROWTH DECLINE
Trinidad and
2.34 2.09 1.86
Tobago

AMERICAS
Americas Caribbean
Denver Bahamas
The strengthening Denver economy During the latter part of 2014 The economy is expected to have
continues to provide new jobs Colorado experienced increases in grown by 1.2% in 2014, according to
through most industry sectors. construction costs at rates far greater the IMF, against an earlier forecast of
From an unemployment rate of 9% than the previous years. Our cost 2.3%, but up on the 0.7% achieved in
during the Global Financial Crisis, it is index suggests cost escalation will 2013 and 1% in 2012. Tourism activity
expected to be as low as 5% in 2014 be recorded at between 4 and 5% has softened and the momentum
and perhaps lower in 2015. for the year. Statutory wage rate remains weak.
increases have been rather modest
Colorado boasts the sixth fastest Led by the ongoing Baha Mar project,
as has material supply process
growth in GDP nationally and government figures show that the
but the increase in the volume of
remains as one of the nation’s non-residential construction sector
construction in the marketplace has
most desirable places to reside and has been booming in the Bahamas,
led to labour shortages in several key
establish a business. This economic growing by 21% in 2013, and there
sub-trades. It is very likely volume of
growth, while overall being a are expectations that tourism-related
construction will continue to grow
positive characteristic, is increasingly construction will continue to support
and is expected that the cost of in-
stretching the resources within the economic output. This will be helped
place construction will rise further in
construction industry and sending by the completion of the $400
2015 as subcontractor resources fail
worrying signals regarding the million renovation and expansion of
to meet demand resulting in reduced
inevitable increase in the price of Lynden Pindling International Airport,
competition.
construction due to the availability of although the Bahamian Contractors
skilled labour to satisfy the volume of Association (BCA) is seeking
work in the industry legislation to revive the stagnant local
construction sector.
The completion of Denver’s Union
Station development project, Scheduled to open in December 2014,
reinstating it as the regional the US$3.5 billion Baha Mar project
transportation hub, has made the will include four hotels as well as a
LoDo (Lower Downtown) area one of 200,000 sq. ft. convention centre,
the most sought after office locations an 18-hole Jack Nicklaus Signature
in the nation. Two new office towers Golf Course and a casino. Located
are set to break ground in 2015 which at Cable Beach, it has been heavily
is certain to encourage development backed by the Chinese in terms of
of other speculative ventures. financing and providing the general
contractor. Nearby, the US$35 million
The boom in marijuana grow houses
Towers Shopping Centre will provide
appears to have settled down for
64,000 sq. ft. of retail space, while
now although it will most likely
another potential project is the
continue to be a significant part
development of the Abaco Club at
of the construction industry as the
Winding Bay into a major residential
fledgling industry finds its feet.
scheme.
Single-family construction has been
fairly flat in 2014 to match a decrease
in demand. The forecast for 2015 is
that this market sector will pick up a
little but only with a 2 to 3% increase.

AMERICAS
Barbados Cayman Islands St Lucia

Barbados’s economy is still failing to The growth in the Cayman Islands’ Saint Lucia is a high-income country
show signs of growth in the face of economy is expected to remain in with a very small-sized economy.
rising government debt (up to 80% the 1-2% range for the third year in According to the World Bank, GDP
of GDP in March 2014), with the 1% succession in 2014, with 1.9% forecast. fell by 0.9% in 2013 but is forecast to
decline in 2013 likely to be repeated The planned Ironwood community grow by 0.9% in 2014, followed by
in 2014 before a small recovery in is a US$360 million mixed-use 2-2.5% growth in both 2015 and 2016.
2015. development, located on the East Following the lead taken by a number
End of the island of Grand Cayman. of other islands in the Caribbean,
The tourism sector has a litany
the government is considering
of woes ranging from effects of It will include an Arnold Palmer
the establishment of an economic
a recessionary economy, visitor signature golf course, a Town Centre
citizenship programme as a new area
security, to declining arrivals and with shops and a vacation resort.
of investment.
low spending, but sees current Having opened a US$40 million,
investments as the bright spot. 112-bed care hospital in Grand The government is also providing a
Cayman in 2014 within a 12 month boost to the construction sector with
The real estate market has shown
construction schedule, DeAngelis new and on-going projects in 2014-
signs of picking up in 2014 after six
Diamond Healthcare Group has plans 15. The industry is heavily reliant on
years of sluggish activity, particularly
to expand to a 2,000 bed facility over infrastructure developments within
for luxury homes, with the premium
the next decade at Health City. both the public and private sectors
west coast from Bridgetown to
and is a major employer. Projects
Speightstown being especially Developer Dart Realty is developing
include the reconstruction and
popular. This has not yet translated Camana Bay as a major hotel/
expansion of the Castries-Gros Islet
into rising prices. tourism destination. The plans are
highway and repairs to a number of
for a resort village connecting Seven
There are several planned areas which suffered infrastructural
Mile Beach to the current mixed-use
developments. These include the damage from the 2010 hurricane and
town centre. Additional office space
decision by international brand, floods. These include repairing the
is under construction. Another of
Sandals, to purchase and renovate island’s south-western roads, bridges,
their developments is the 263-room
the landmark tourism property, the Babonneau Fire Station and the
Kimpton-branded Seven Mile Beach
Almond Beach Resort, at a cost of Hewannora International Airport.
Hotel with 56 residences, a US$200
US$125 million. Sandals already has
million project in Grand Cayman. Following the completion of the
another property – the Casuarina-
infrastructure, the first 12 beachfront
under renovation, while a takeover
resort villas at Six Senses Freedom
of Amaryllis is set for the renovation
Bay are scheduled for completion
and the purchase of Four Seasons.
by the end of 2014. The 60-acre
Sandy Beach is being converted into
ecofriendly development will
a condo hotel and there is planned
include hotel villas, luxury homes
development for Settler’s Beach.
and apartments. The island will also
benefit from additional cruise ships.
After an eight-year hiatus, Port
Castries is back on the Disney Cruise
Lines itinerary with a total of five
calls to Saint Lucia for the 2014/2015
cruise season. As a result, Port
Castries is scheduled to welcome
over 685,000 cruise passengers
and over 375 cruise ships over the
2014/2015 cruise season.

Singapore Sports Hub, Singapore
Architect: DP Architects Pte Ltd

Market Intelligence
Asia
In China, GDP growth has been ASEAN 5 countries Indonesia, ASIA Construction Cost Relativities
revised down slightly to 7.38% from Malaysia, the Philippines, Singapore Q1, 2015
the initial estimate of 7.50% as has and Thailand have all seen a Hong Kong 157
Hong Kong down from 3.70% to marginal reduction in forecast Macau 133
3.00%. Construction growth within growth for 2014 with the exception Beijing 91
real estate remains strong and of Malaysia who have had an Shanghai 90
showed year on year an increase of increase from 5.20% to 5.90%. Guangzhou 85

Shenzhen 80
12.4%, with a similar year on year
growth of 12.3% for total floor area With the October 2014
under construction. There was a announcement that China and
drop of 5.5% year on year for total 20 other Asian countries have
floor area of new projects. China agreed to create an international 2015 Forecasted GDP Growth
are still implementing their carefully infrastructure bank, Beijing is hoping Country 2014% 2015% 2016%
managed slowdown and while the fund will rival American-led Bangladesh 6.21 6.40 6.76
they have slowed some sectors, agencies like the World Bank, giving Brunei Darussalam 5.30 2.99 3.38
there are stimulus measures to them regional autonomy in creating Cambodia 7.18 7.31 7.34
support housing projects, public funding for strategic regional China 7.38 7.09 6.84
infrastructure projects. Continuing Hong Kong SAR 3.00 3.25 3.50

infrastructure and tax relief to small
India 5.63 6.35 6.46
and medium enterprises in order for infrastructure investment across
Indonesia 5.16 5.49 5.80
China to reach its growth target. Asia is hoped to be fast tracked with
Japan 0.89 0.83 0.84
access to these funds which augers
Korea 3.73 3.97 3.99
Japan’s GDP growth is lower than well for the construction industry as
Lao P.D.R. 7.37 7.23 7.66
first expected dropping from 1.40% a whole.
Malaysia 5.90 5.20 5.00
to 0.89%. The drop is partly due
Myanmar 8.50 8.50 8.25
to increases in sales tax and the Philippines 6.24 6.27 5.98
rising costs of energy imports since Singapore 2.96 3.04 2.95
the shutdown of nuclear reactors. Sri Lanka 7.00 6.50 6.50
Wage growth remains subdued and Taiwan Province
3.49 3.84 4.18
unemployment remains high. The of China
Thailand 0.96 4.62 4.40
central bank has announced further
Vietnam 5.50 5.60 5.70
monetary stimulus aimed to bolster
growth and prevent inflation.

Asia - Growth Sectors vs Decline Sectors
NUMBER OF CITIES
10
0
GROWTH DECLINE

ASIA
Beijing Chengdu
Beijing’s economic growth has The new tallest building in Beijing Although China’s GDP growth
remained steady with GDP in the “Zhongguo Zun”, designed by TFP has slowed down, the economy
3Q 2014 growing by 7.3% year-on- Farrells, KPF and BIAD and located of Chengdu has remained stable.
year which was slightly higher by in eastern Beijing at the heart of the According to Chengdu Statistics
0.1% than in 2Q 2014. Fixed assets new CBD extension, will be over 120 Bureau, Chengdu’s GDP in the 3Q
investment grew 6.9% year-on-year storeys and more than 500 metres in of 2014 increased 9.03% when
while the Consumer Price Index in the height. Being part of the 30-hectare compared with last year, which was
3Q 2014 registered a slight increase master plan at the core of the 0.55% higher than the nationwide
of 1.9% year-on-year. Beijing’s district, the building accommodates GDP growth. Chengdu’s Consumer
economy is indeed cooling down 2 million m2 of office space, six-star Price Index (CPI) increased 1.30% in
which is in line with Chinese leaders' hotels, luxury service apartments and the 3Q of 2014 and the increment
plans for a controlled slowdown. high-end retail that connects to the was lower than the national CPI by
existing metro station and adjacent 0.67%.
The office market still has the lowest
shopping malls. The “Zhongguo Zun”
vacancy level across China due to In October 2014, the 15th Western
is expected to be complete in 2018.
under-supply. Rents appreciated for China International Fair (WCIF) was
the second consecutive quarter in Tender prices in Beijing have held in Chengdu. The WCIF serves as
3Q 2014. However, as supply is remained stable but with the an important platform for investment
expected to surge significantly next workload stalling, contractors are promotion, trade cooperation and
year, the rising trend will reverse in more willing to offer discounts under diplomatic service in western China.
1Q 2015. On the other hand, in the mounting competition. In addition to In 2014, a number of prominent
retail sector rental growth has slowed this, the costs of reinforcement bars international guests such as U. S.
down due to relatively weak demand are still at a low level, while prices of first lady Michelle Obama and the
for luxurious consumer goods. other building materials and labour Chancellor of Germany, Angela
costs have remained relative stable. Merkel visited Chengdu. These visits
The residential market remains weak
Tender prices are expected to face have enhanced the global image
in terms of transaction volumes and
downward pressure in the next few of Chengdu and strengthened its
prices, as many buyers take on a
months, before starting to pick up in position as an important city in
wait-and-see approach due to the
late 2015. Western China.
uncertainty over the future direction
of the market. Beijing’s government In 2014, the Chengdu government
will continue to control the capital’s supplied about 240.7 hectares of
residential market with taxation, land for residential development
credit tightening and purchase- and 216 hectares for commercial
restriction policies, hence property use, representing an annual increase
prices are expected to drop further. of 10% and 33% respectively. Land
In addition, leasing demand from prices and turnovers have declined
expatriates has weakened. Rents compared with the same period last
are set to decrease as a result of the year. According to the China Index
tightening leasing budget of foreign Academy, in the first three quarters
companies. of 2014, land transaction value has
declined approximately 20% on a
The Chinese government finally
year-on-year basis.
approved the US$3.25 billion
Universal Studios movie theme In October 2014, Tianfu Xinqu
park, Universal Beijing. To be built district, with an area of 1,578 km2,
in Tongzhou, an eastern suburb of was approved as a new national
Beijing, after 13 years of negotiation development district. The largest city
and planning it will be the biggest park in Chengdu will be constructed
park Universal has ever built. It is in the core of Tianfu Xinqu, which will
expected to open in 2019. The Initial be a new town with IT, commercial,
stage is planned to be built with an business, cultural and administration
area of 300 acres and it is expected centres. It will serve as the link
to expand to 1,000 acres when all between Western China and the
stages are complete. The park will be world.
jointly owned by a consortium of four
Chinese state-owned companies and
Universal Parks & Resorts.

ASIA
Guangzhou Hong Kong

Lotte Group is developing Guangzhou’s economy has grown Hong Kong’s economy grew
their first project in Chengdu, a steadily from the 1Q 2014. GDP for moderately by 2.7% year-on-year in
540,000 m2 complex comprising Q3 2014 was about RMB 1.2 trillion real terms in the 3Q 2014, compared
residential, office, hotel, cultural and and grew by 8.5% year-on-year. Fixed with the 1.8% increase in the 2Q 2014.
entertainment facilities. Chengdu asset investment, retail sales and On a seasonally adjusted quarter-to-
Joy City is being developed by exports posted annualised growth of quarter comparison basis, real GDP
COFCO Property (Group) with a total 14.2%, 12.5% and 19.5% respectively increased in the 3Q 2014 by 1.7%
construction floor area of 330,000 in 3Q 2014 – all higher than figures over the 2Q 2014. According to the
m2, comprising shopping, dining, recorded in the first half of the year. Composite Consumer Price Index,
entertainment and office facilities. CPI in the 3Q 2014 rose by 2.4%. The overall consumer prices rose by
economic outlook is still optimistic 5.2% in October 2014 over the same
According to Chengdu Urban and month a year earlier, higher than
though not as strong as previous
Rural Construction Commission the the corresponding increase of 6.6%
years.
total floor area of projects under in September 2014. The seasonally
construction in Chengdu from The municipal government has adjusted unemployment rate stood at
January to July 2014 was 42 million identified 136 projects currently 3.3% in September to November 2014,
m2, including 26.7 million m2 for undertaken in Guangzhou for close same as that in August to October
residential and 15.3 million m2 for monitoring. Significant projects 2014. The under employment rate
others. The total construction floor include eleven underground railway increased from 1.5% in August to
area has decreased 10.09% compared lines, four incinerators, Phase 2 of October 2014 to 1.6% in September to
to the same period last year. China Mobile’s southern operation November 2014.
base, Alibaba’s South China logistic Hong Kong’s economic activities
Chengdu’s labour cost increased by
centre, Tencent’s South China have been showing some signs of
6.8% on an annual basis in 2014. The
e-commerce operation headquarters, mild slowdown in recent months
market prices of ready mix concrete
three newly built or extensions to especially in the retail sector which
and steel in September 2014 declined
hospitals, the infrastructure and may have some dampening effect
by 1.42% and 25% respectively
advance works for the “Guangzhou on investment sentiment. With the
comparing with the prices in January
Financial Centre”, a new 7.5 km2 CBD. government’s determination in
2014.
maintaining a steady supply of land for
The government’s curb on home
Due to the slowdown in GDP growth, private developments, the impact of a
prices has been impacting upon the
development activities in Chengdu weaker economy on the construction
property market and it has taken its
are forecast to decline in 2015. industry will not be very significant.
toll. Real estate and land transactions
Although current tender prices On the other hand, the delay in
have dwindled significantly and
remains stable, it is expected that funding approval for a large number
the related tax income which used of public projects by the Legislative
prices will face downward pressure in
to be a major contribution to the Council since early this year will have
the coming few quarters.
government has tapered off. The a substantial impact on the workload
government has been stalling earlier of the construction industry in the
plans for fixed asset investment amid medium term if the situation does not
a shortage of capital. The contraction improve quickly. Nevertheless, the
in property and land sales, together construction industry is currently at
with downsized government the peak of output thanks to increased
investment, will drag down the level public expenditure in infrastructure
of construction activities in the near works as well as public buildings.
term. The government however has The shortage of skilled workers and
made announcements to launch professionals is still a major concern,
extensive land auctions by the end of but the pressure on tender prices has
2014 – an effort to boost its income been mitigated by stable material
- yielding better prospects from the prices to a certain extent.
construction sector around mid- RLB’s Tender Price Index, which
2015. Concrete and reinforcement measures tender price movements of
supply costs have fallen by 5% and builder’s works in the private sector in
10% respectively while labour costs Hong Kong, increased by 1.5% in tender
have remained stable since 1Q 2014. prices in the 3Q 2014. On a year-on-
Tender price movement is forecast to year basis, the increase was 8.7%.
dip to 2% by the first half of 2015. On the whole, it is forecast that the
increase in tender prices will gradually
become more moderate towards the
later part of 2015.

Jockey Club Innovation Tower, The Hong Kong Polytechnic University, Hong Kong
Architect: Zaha Hadid Architects

ASIA
Ho Chi Minh City

Vietnam’s economic growth in Q3 While South Korea is Vietnam’s
2014 expanded 6.2% compared with biggest foreign investor, Singapore
the same quarter of the previous and Japan are the top two
year. It is a gradual increase from investors into the real estate sector.
5.42% in 2Q 2014 and 5.09% in Singapore's Keppel Land Vietnam
1Q 2014. Support from a robust had increased its ownership to 98.0%
manufacturing sector and export in The Estella apartment project in
demand is assisting a slowly Ho Chi Minh City. Notable property
recovering economy as the domestic projects in 2014 include the US$300
economic markets deal with slowing million Alma Resort in Central Khanh
inflation and investment growth. Hoa Province by Israel’s Alma Group.
The anticipated US$4 billion South
For 2015, the government is targeting
Hoi An integrated casino resort
Vietnam's GDP to rise to 6.2%, up
in central Quang Nam province is
from a projected 5.8% for 2014.
slated to commence construction
In 2014, the annual inflation rate in mid-2015. The project is a joint
decreased from 3.6% in September to development between Vietnam's Vina
3.2% in October, which remains well Capital and another foreign project
below the government's initial target investor, and will comprise of a 500-
of 5.0%. In the January-September room five star hotel, villas and gaming
period, the Consumer Price Index facilities on a 1,000 hectare site.
(CPI) rate stood at 2.3%, the lowest
Notwithstanding geo-political
nine-month inflation rate in the past
tensions between Vietnam and China
decade. The government is expecting
over the parking of a Chinese oil rig
the inflation rate to end below 3.0%
in contested South China Sea waters
for 2014 while in 2015, the average
near Vietnam in May 2014, foreign
inflation rate is forecast to accelerate
investors continue to have an interest
to 6.8%.
in the Vietnam construction market.
While Vietnam's central bank had cut Foreign Direct Investment (FDI)
its policy interest rates twice in 2014 increased nearly 6.0% to US$10.2
to encourage lending, credit growth billion in the first three quarters of
was at 7.85% at the start of the 4Q 2014 with Ho Chi Minh City being
2014 from the end of 2013, compared the largest beneficiary. The building
with a goal of 12.0%-14.0% for 2014. and construction industry increased
6.4% with the real-estate business
The Official Development Assistance
and construction gaining over
(ODA) is the World Bank’s assistance
US$1.22 billion and US$1.03 billion
program of foreign aid to Vietnam
respectively. More Foreign Invested
since 1993. The construction market
Enterprises (FIEs) are encouraged
continues to see growth that is
with the support of Vietnam's new
driven by ODA in infrastructure.
Land Law and Construction Law
The majority of the funds to date
which take effect from 2014 and 2015
have come from loans from foreign
respectively.
governments or international
agencies such as the Japan Bank of Barring any unforeseen market
International Cooperation and the conditions, building tender prices in
Asian Development Bank. Vietnam Ho Chi Minh City are anticipated to
expects to disburse about $US 3 increase by 3.0% to 6.0% for 2015.
billion in untied ODA funding annually
from 2011 to 2015. Sectors prioritized
for ODA funding are primarily in
infrastructure construction. It is
expected that more Foreign Direct
Investment (FDI) will start driving
growth within the commercial
building markets at the end of 2015.
Domestic funded development is
predicted to remain flat until 2016.

ASIA
Jakarta
Indonesia’s GDP growth slowed include the IDR2 trillion (US$165
further to 5.01% year-on-year (y-o-y) million) airport railway project that
in 3Q 2014, the slowest rate since will connect Greater Jakarta to
2009. It is predicted to drop slightly Soekarno-Hatta airport. It is expected
below 5.0% in 4Q 2014. Growth has to be completed by the end of 2015.
been constrained in 2014 after the State-run construction firm Waskita
central bank raised interest rates in Karya allocated nearly IDR600 billion
2013 to restrain domestic demand, (US$49.27 million) in the form of
rein in both inflation and the current cash and assets including machinery
account deficit together with a ban and building for the Bekasi-Cawang-
on exporting unprocessed mineral Kampung Melayu toll road project.
ores. Inflation is expected to be The 100% precast concrete toll road,
between 3.5%-5.5% for full year 2014. which costs an estimated IDR5 trillion
(US$418 million) is scheduled to be
Accelerating building infrastructure completed in 2016.
development for electricity
Property prices in Indonesia are
generation and transmission, ports,
expected to rise in early 2015 as
airports and roads are the new
higher subsidized fuel prices and
government's priority to create
higher bank interest rates imply
more fiscal room for economic and
greater construction (local labour,
social development. Indonesia’s
local materials and transportation)
dependence on imported fuel must
costs and increased borrowing costs,
be addressed by building local oil
leading property developers to raise
refineries. President Widodo pledged
sales prices to offset losses. There
the construction and expansion of
is caution of a multiplier effect on
24 integrated seaports across the inflation that trickles down to the
archipelago, the development of toll lower income households who will
roads along the shore of Java and have declining purchasing power by
the construction of 35,000 megawatt up to 30.0%.
power plants during his 5-year
presidential term. Indonesia tightened up restrictions
on foreign investments in local
In 4Q 2014, Indonesia's new businesses. Foreign ownership is
government under President Widodo limited to 55.0% in sectors involving
raised fuel prices by nearly 31.0%. construction consulting, design and
This freed up state budget by more architectural services and engineering
than 100 trillion rupiah (US$ 8.2 services. While it is believed that
billion) and 16 trillion rupiah (US$1.3 Indonesian construction workers will
billion) to invest in the growth of now have a higher competitive value
infrastructure facilities and other in the ASEAN region, it also makes
productive sectors respectively. The it difficult for individual ASEAN job
nation is projected to have a faster seekers to find job opportunities
economic growth of 5.8% for 2015 in Indonesia. The country further
from an initial forecast of between announced it would terminate its
5.2-5.3%, as well as a full-year 2014 Bilateral Investment Treaty (BIT) with
inflation of 7.3% after taking into the Netherlands from 1 July 2015.
account the fuel price hike. The fuel Within Indonesia, Jakarta introduced
price hike is expected to further new procedures for securing a
boost confidence among foreign Construction Services License (Ijin
investors in the new government Usaha Jasa Konstruksi or IUJK) to
to pursue an over 7.0% economic provide construction services as
growth within 2 years. planners, contractors or supervisors.
The IUJK has a three year validity and
Indonesia's construction sector can be extended.
grew 6.28% y-o-y in 3Q 2014, down
slightly from 6.59% y-o-y in Q2 Barring any unforeseen market
2014. Several state-funded projects conditions, building costs are
anticipated to increase by 1.0%-3.0%
which commenced in 4Q 2014
in 2015.

ASIA
Kuala Lumpur
Malaysia's economy grew at its The Malaysian government is
slowest pace during the 3Q 2014, as planning to implement infrastructure
annual growth slipped to 5.6% from investment worth RM75 billion
a revised estimate of 6.5% growth (US$23 billion) in a bid to boost
in 2Q 2014, with exports struggling growth amid concerns of a curb
against a fragile global economy. in private spending arising from
Along with the ongoing 10th Malaysia subsidy cuts and impending Goods
Plan, Economic Transformation and Services Tax. Such infrastructure
Programme (ETP) and Government investments include highways and
Transformation Programme (GTP), a rail system. The most notable of
the Malaysian economy is expected this investment is the construction of
to sustain its growth momentum the Pan Borneo Highway spanning
in 2015. The Ministry of Finance the two East Malaysian states of
(MOF) kept its forecast for full year Sabah and Sarawak with a total
growth between 5.5-6.0% in 2014 and length of 1,663km. The other notable
between 5.0-6.0% in 2015. Inflation investments are seven new highways
is expected to remain within 3.0- worth RM21 billion (US$6.19 billion)
4.0% for 2014. It is projected to rise surrounding the capital Kuala
between 4.0-5.0% in 2015 before Lumpur.
stabilizing toward an average of 3.0%
The construction sector recorded
in 2016, due to subdued external
a strong growth of 9.6% in the 3Q
price pressures and moderate
2014. It is anticipated to expand
domestic demand.
with a growth rate of 10.7% in 2015.
In conjunction with the 2015 Budget, This is supported by oil and gas
Malaysia’s revised 6.0% goods and (O&G) related projects such as
services tax (GST) will take effect the Refinery and Petrochemical
in April 2015 which is expected to Integrated Development (RAPID)
raise RM21.7 billion in revenue. In 4Q and ongoing transportation-related
2014, the government abolished fuel infrastructure projects. Demand
subsidies where prices of petrol and for affordable housing will also
diesel will be fixed on a managed support the construction industry.
float mechanism that will move Construction costs are projected to
in tandem with global oil prices. continue trending upwards due to the
Malaysia is estimated to save RM20 increased volume of work, the rise of
billion annually from the fuel subsidy transportation costs from the removal
removal alone. The government of fuel subsidy, the implementation of
will continue to shrink its subsidy GST and the projected rise in inflation
program where total subsidies are due to domestic cost factors.
expected to be cut around 7.0%,
Barring any unforeseen market
from RM40.6 billion in 2014 to RM37.7
conditions, building tender prices
billion in 2015. The nation aims to
in Kuala Lumpur are anticipated to
reduce the fiscal deficit from an
increase by 3.5% - 4.0% in 2015.
expected 3.5% of GDP for 2014 to
3.0% of GDP in 2015, while ensuring
that its public debt does not surpass
a limit of 55.0% of GDP.

ASIA
Macau Shanghai
According to the Statistics and Since January 2014, Shanghai’s There were 85 major projects under
Census Service of the Macau economy has been in a stable construction in Shanghai in 2014,
government, GDP for the 3Q 2014 condition. Both the industry output including the development of an
decreased by 2.1% year-on-year in and consumer spending have shown engine factory for commercial
real terms. The unemployment rate signs of improvement at a slow but aircraft, a shipbuilding facility on
for August to October 2014 stood steady pace. Changxing Island, the Shanghai
at 1.7%, same as that in July to Disney Resort and the Shanghai
In the first three quarters of 2014,
September 2014. The average daily Tower skyscraper, the construction
the GDP for the Shanghai area
wage of construction workers was of the fourth runway at Pudong
was RMB 1,661 billion which was
MOP672 in the 3Q 2014, increased by International Airport, the expansion
7.0% greater than that in the same
2.3% on a quarter-to-quarter basis. of Shanghai No. 1 People's Hospital,
period last year. It is predicted that
The average daily wages of skilled the second phase of SAIC automobile
the overall increase of GDP in 2014
and semi-skilled workers increased by research and development centre,
will not exceed 7%. The increase
2.4% to MOP677 and that of unskilled the second phase of the Chinese
of CPI for the period of January to
workers rose by 0.8% to MOP390. Academy of Science Pudong Branch,
September 2014 was 2.7% comparing
and the construction of the National
Major projects under construction to the same period last year, and it
Convention and Exhibition Centre in
include the expansion of the six is estimated that the annual increase
Hongqiao Business District.
major gaming resorts and the Light will not be more than 3%.
Rapid Transit (LRT) System which Traffic projects include the
During the period of January to
commenced construction in 2012. On renovation of Terminal 1 building
September 2014, a total amount of
completion of Phase 1 in 2016, the of Pudong airport, the expansion
RMB 217.55 billion was invested in
LRT will connect the border entry- of China Eastern Airlines' base at
local property developments which
exit points at the Macau Peninsula Hongqiao airport, the extension of
was an 8.2% increase compared
and Taipa with major residential and Highway S6 and Jiading-Minhang
to the same period last year, and
tourist areas. Expressway, and the third phase of
represented about 55.6% of the
Metro lines 9, 13 and 17. The city is
In the past few months, there has overall investment to fixed assets.
also building Huangpu River tunnels
been a slump in gaming revenue, Based on the types of property,
for Zhoujiazui Road, Hongmei Road,
with the Gaming Inspection and a total of RMB122.691 billion was
Jinhai Road and Changjiang Road.
Coordination Bureau recording a fall invested in residential developments,
of 23.2% year-on-year in November which was an increase of 9.6% Tender prices have not changed
2014. Home prices have also started comparing to the same period significantly in 2014. It is expected
to decline, and the fall is expected last year. Total amounts of RMB that the tender prices will remain
to continue in the coming months. 33.07billion and RMB 30.823 billion relatively stable in the next 12 months
Whilst the construction industry is were invested in office buildings and with mild decreases in the range of
still heavily involved in the six major commercial buildings respectively, 2 - 3%.
gaming resorts which are on target to which represented increases of 14.8%
be completed in late 2015 and 2016, and 10.8% for the respective property
the weakening economy will result in type compared with the same period
a reduced workload after completion last year.
of these projects and a milder rise in
construction costs.

ASIA
Shenzhen Singapore
Shenzhen’s GDP growth in 1H 2014 Singapore’s economy grew by 2.8% Amidst the weak global market,
was 8% compared with the same y-o-y in 3Q 2014, the same pace of Singapore Tourism Board data
period last year. This percentage growth in the preceding quarter. The shows that the tourism industry
was slightly higher than that of the construction sector grew by 1.7% has witnessed a strong and rapid
1Q 2014, and was also slightly better on a y-o-y basis, a sharp slowdown annual growth rate of 10% in tourism
than the total GDP growth of 7.5% from the 3.7% growth in the previous receipts and 6.6% annual growth in
nationwide. The city remains as one quarter. This is due to a fall in private visitor arrivals in the past decade.
of the top ten fastest growing cities construction output, reflecting a Construction works for the notable
in China. weaker market across the residential, S$1.57 billion Changi Airport’s Project
commercial and industrial sectors. Jewel and expansion works for
The structure of the 600-metre Ping
The Ministry of Trade and Industry Terminal 1 are slated to start at the
An Finance Centre will be topped-
(MTI) expects the economy to grow end of 2014 and be completed by the
out in early 2015. The excavation of
by around 3.0% for the whole of 2014, end of 2018. With the continuity of a
the 300-metre adjoining hotel tower
and between 2-4% in 2015. resilient domestic demand and strong
has already commenced. The entire
growth in the number of international
development is scheduled to be The CPI-All Items inflation eased
tourists, additional infrastructure is
completed in 2017 which will certainly to 0.6% in September from 0.9%
being planned and built to support
add some synergy to the current well in August and 1.2% in July, mainly
the gross domestic product and job
planned CBD in Futian district. China reflecting a sharper decline in
market.
Resources Da Chong’s 3,000,000m2 private road transport costs along
redevelopment is ongoing in full with a more moderate increase Labour productivity for construction
steam. There are also several major in services fees and a further fell 1.3% in the first half of 2014,
developments in the new CBD in Qian decline in accommodation costs. despite efforts by the Ministry of
Hai area of Shenzhen. The number of The government's introduction of Manpower (MOM) to incentivise firms
land parcels available for auction is enhanced medical subsidies, including to invest in more skilled workers and
being controlled, enabling a steady the Pioneer Generation Package better equipment, through training
supply of office and commercial floor (PGP) also contributed to the programmes and grants. This is in
areas in a smooth manner. slowdown of inflation. line with overall efforts to achieve
quality growth driven by productivity
The construction market is stable The Monetary Authority of Singapore
improvements. The construction
at the moment. It is not overheated (MAS) Core Inflation measure, which
sector which has contracted for two
and contractors are eager to take on excludes the costs of accommodation
consecutive quarters, continues to
more projects as the Government's and private road transport, edged
struggle with higher foreign worker
controlling measures on cooling down to 1.9% in September from
levies, amidst a slowing property
down the property market persist. 2.1% in August. MAS Core Inflation is
market and delays in public projects.
Material prices have generally been projected to stay elevated at 2-2.5%
Tender prices remain competitive
declining, in particular the price in 2014, down from its earlier forecast
into 2015 despite construction costs
of steel bar reinforcement while of 2-3%. CPI-All Items inflation is
continuing to rise following the
labour costs have been rising mildly, projected to come in at 1-1.5% in 2014.
Government’s introduction of further
resulting in a rather flat tender price For 2015, it is projected at 0.5-1.5%,
regulations to improve construction
movement. reflecting also the impact of muted
productivity.
housing rentals.
Based on current trends and in
the absence of any extraneous
circumstances, RLB is presently
forecasting building costs to increase
by 1-3% on average for 2015.

Debenhams, United Kingdom
Architect: Ingenium Archial / Archial NORR

Market Intelligence
Europe
The UK is gaining momentum but while Poland at 3.25%, Turkey at Europe Construction Cost Relativities
parts of the Euro Area are lagging 3.03%, Lithuania at 2.98% and Q1, 2015
behind. The UK’s forecast GDP Iceland 2.91% are helping to bolster London 157
growth for 2014 being revised from the figures for the European Union. Bristol 132
2.90% to 3.21% while countries like Manchester 122
Cyprus at -3.22%, Italy at -0.17% and While most of European economies Birmingham 118
Finland at -0.19% have had negative look to changing fiscal policies to

growth. Low growth has been seen strengthen their economies, the 2015 Forecasted GDP Growth
in France at 0.37%, the Netherlands economic outlook is improving. Country 2014% 2015% 2016%
at 0.60%, Portugal at 0.99%, The bourgeoning anti austerity Austria 1.01 1.86 1.66
Belgium at 0.98 % and Austria at 1.01 movement is gaining momentum, Belgium 0.98 1.40 1.50
%. While others in the Euro Area are as recently witnessed in Greece, Bulgaria 1.40 2.00 2.50
showing more positive signs such and may force renegotiation of Croatia (0.82) 0.50 1.40
as Ireland at 3.62%, Luxemburg at debt repayment timings with the Cyprus (3.22) 0.43 1.56
European Central Bank, causing Czech Republic 2.49 2.53 2.44

2.69% and Latvia at 2.66%.
Denmark 1.54 1.80 1.86
implications for the troika of debtor
Estonia 1.23 2.48 3.45
The Commonwealth of Independent countries.
Finland (0.19) 0.92 1.59
States has seen a 0.75% decline in
The German construction sector is France 0.37 0.95 1.55
GDP for 2014 while the Euro Area
Germany 1.39 1.45 1.81
is forecasted to grow by 0.83%, still growing but at a slower pace
Greece 0.60 2.87 3.71
an increase on the previous two than in recent years. There are
Hungary 2.80 2.30 1.80
negative growth years. The Euro positive signs in the Netherlands
Iceland 2.91 3.03 2.70
Area remains in a slowly recovering and Spain where the hardest times
Ireland 3.62 3.05 2.54
state, forecasting GDP growth appear to be over, as these two Italy (0.17) 0.85 1.30
at 1.3 and 1.7% for 2015 and 2016 countries showed improvement Latvia 2.66 3.18 3.39
respectively. throughout the whole of 2014. Lithuania 2.98 3.35 3.66
France and Italy are not recovering Luxembourg 2.69 1.90 2.14
For countries in the European as fast as expected during 2014. The Malta 2.20 2.23 2.02
Union there are varying figures British market keeps on improving, Netherlands 0.60 1.43 1.56
across countries. Croatia and Serbia due in part to the growth in building Norway 1.80 1.86 1.99
have both had negative growth at permits for non-residential buildings, Poland 3.25 3.31 3.50
Portugal 0.99 1.55 1.74
(0.82%) and (0.54%) respectively indicating a potential strong pipeline
Romania 2.40 2.52 2.80
of future work.
San Marino (0.01) 2.18 2.41
Serbia (0.54) 1.04 1.50
Slovakia 2.35 2.65 2.90
Slovenia 1.44 1.39 1.53
Europe - Growth Sectors vs Decline Sectors Spain 1.31 1.69 1.79
Sweden 2.11 2.74 2.72
Switzerland 1.25 1.60 2.01
NUMBER OF CITIES
12 Turkey 3.03 3.01 3.74
United Kingdom 3.21 2.71 2.44
10 Commonwealth of
Independent States
8 Russia 0.24 0.51 1.50

Kazakhstan 4.61 4.71 4.84
6 Uzbekistan 7.00 6.50 6.00

Azerbaijan 4.47 4.32 3.47
4
Turkmenistan 10.12 11.46 9.89
Ukraine (6.50) 1.00 4.00
Belarus 0.94 1.48 2.05
2
Georgia 5.03 5.00 5.04
Armenia 3.18 3.50 3.70
0
GROWTH DECLINE Tajikistan 6.00 6.00 5.75
Kyrgyz Republic 4.10 4.93 5.02
Moldova 1.80 3.50 3.80

Europe
Amsterdam Birmingham
Due to new sustainability regulations, shows an increase of 2.5% for 2015 The midlands area continues to show
developers are requesting permits and 2.0% for 2016. There is still signs of recovery, albeit that many
before the end of 2014. For housing, significant vacant space in office and proposals need to be underpinned
the "energy norm" will be 33% education buildings around the city, with pre-lets. The retail market is
tougher than before. Sustainability but some of the growth will come also showing signs of a growing
regulations will change extensively in from new development in the health confidence with many schemes
2015 for many commercial building sector. being resurrected. However with
types. The next step will be the 2020 Infrastructure has had two years the pressure within the retail sector
"energy norm" that provides that new of decline with a total decrease of to maximise cashflows, greater
buildings cannot use more energy 10.0%. The Government is planning to emphasis is being placed on mixed
than they produce themselves. have more projects underway during use developments to spread retailing
the next two years which results in revenue exposure.
With more transformations of existing
buildings due to real estate market a forecast growth of 1.0% for 2015 Small churn and micro developments
having changing needs from 20 years and 2.0% for 2016. Most of the work are being created to maximise
ago, we are seeing office buildings will be concentrated around the and improve existing assets. The
being redeveloped into housing or Randstad region. university and education sectors
hotels. During the period 2009 to 2013, continue to develop student housing,
employment has decreased teaching and research facilities.
Schiphol airport is in the planning
extensively. The forecast growth in
phase for the redevelopment of Fee earning levels continue to be
the market will have a positive effect
the existing airport to position it competitive with the demands on
on the employment in the building
as a significant hub. After a large delivery more intense and the scope
industry for the coming years.
security renovation project that split detail being carefully challenged.
the ingoing and outgoing travellers,
Berlin The shortage of new Grade A office
Schiphol is now working on extending
Current global political and economic space is feeding the development
the airport to increase the capacity
with a complete new area (more than upheavals and associated risks and refurbishment pipeline such as
100,000 m2). This project is in its have also dampened the up to now the developments at Paradise Circus,
master plan phase and will be worked high levels of economic growth and Arena Central and 55 Colmore Row.
on for the next few years to come. exports within Germany. The Berlin
With the increase in tendering
Chamber of Commerce Economic
Amsterdam Metro is undertaking activities, contractors are carefully
Index has fallen to the level of last
significant projects. The new North reviewing the risk profile of each
autumn, but this is not seen as a
South line being constructed under project including contract conditions,
stagnation or recession.
the existing city is expected to be the tender process, construction risk
completed in 2017. Concurrently the Currently the area around Berlin main profile and programme, before they
city is working on the renovation of station (Hauptbahnhof) is surrounded commit to return a tender or enter
the existing East line. It requires an by construction work: several hotel the tender process.
upgrade after 40 years to meet the and office buildings are being
Feedback through the supply
new standard of the new North South constructed or planned, among which
chain continues to indicate that
line. This project is expected to be is John F Kennedy House, a ¤70m
the previously perceived skills
ready in 2016-2017. office block. The new ¤250m tower
shortage is developing, together
building "Upper West" near Zoo
After a few poor years in the Dutch with materials, plant and equipment
Station has commenced construction.
building industry the forecast is shortages which may drive up costs
looking brighter for 2015 and 2016. The overall rate of inflation in and hinder programme delivery. This
Most recent indications (October Germany is still very low, and is specifically evident with the early
2014) show a growth of 4.0% for stagnating at present at around 1%. trades of brick/concrete works and
2015 and 3.5% for 2016 for the whole Construction costs however have ground works.
sector. The residential sector is been rising more strongly at around
forecasted for the largest increase 1.7%, with fit out trades at around 2.4
of 7.0% for 2015 and 6.5% for – 2.7%, while shell and core trades at
2016 which will mostly come from much lower levels of around 0.8 %.
new built residential projects. The
commercial sector forecasts also

Europe
Bristol
The Universities in and around The South West market is showing The £24 billion Hinkley Point power
Birmingham have, or are in the signs of increasing activity although station is now moving forward
process of, delivering major projects. it appears to be lagging behind the causing resourcing issues around
Warwick University with JLR & rest of the country. There are several Somerset. Other significant projects
TMETC are developing a 33,000m2 developers moving into the Bristol coming to the market will be the
research facility, Aston University has market, citing the fact that London is £500 million redevelopment of both
recently resurrected a redevelopment becoming saturated, improving the the University of Bristol and the
and tower scheme as well as student economy locally. University of the West of England.
accommodation blocks are also under Network Rail is planning a major
Contractors are becoming
consideration. investment at Temple Meads where
increasingly selective over what
the surrounding areas are ear marked
The retail sector is showing continued they are prepared to price. With
for major redevelopments including
signs of investment as several retail negotiated tenders they are still
the Bristol Arena, new housing and
schemes are on the drawing board being very cautious and any hint
office / retail projects.
as either new ventures or previously of significant risk, they are walking
shelved schemes being resurrected. away. The market will continue to rise
Lichfield has various scheme options into 2015 but thereafter may well
There are several projects converting
being investigated. There are also level off. The political effect of
offices into residential apartments,
signs that residential schemes the 2015 election will potentially
the longer term effect resulting in an
are being dusted off and new affect construction activity. All
office space shortage.
opportunities developed, primarily in construction sectors are showing
the city centre apartment schemes. Shortages of bricks / blocks, in signs of shortages and due to the
particular, and other materials magnitude of Hinkley Point , clients
With the squeeze on skilled resources
are causing project lead in times are becoming concerned of the drain
following the skills loss fallout from
and programmes to be extended. on resources to Somerset.
the recession and the more selective
Construction resources are becoming
guard of the contractors, which
short with brickwork labour only
combined with a shortage of skilled
costs, exceeding budgets available
suitable sub-contractors there is a
for contractors, on a regular basis.
general expectation that tender price
Labour has been reported as moving
inflation will continue to climb into
from project to project to secure
2015 and 2016.
better rates and not even turning
The skills shortage in each faculty up on projects as more lucrative
of the construction process will also deals have been secured elsewhere.
affect the ability to deliver successful This creates tension on projects
schemes both professionally and both commercially and with overall
during construction and delivery. delivery programmes.
There is a likely increase in the
The consultants market is also
number of failures of principle supply
moving with salaries rising, and for
chain members and contractors as
some positions quite dramatically.
market conditions improve.
Constructions costs are rising and
skill shortages are occurring for
contractors. With professional fees,
however, the market is still fiercely
competitive and well below realistic
levels.

Europe
Budapest Dublin
Budapest and its surrounds, as The volume of output in building As tender prices have shown
the financial and administrational and construction increased by 7.7% evidence of rising there are
centre of Hungary, represents the in 1Q 2014. The volume of output in now significant shortages of
majority of real estate and property the residential sector y-o-y up to 2Q tradespersons. With enhanced
investment within the country. After 2014 has increased by approximately programme activities for
the long recession and stagnation, 30%. This increase was mainly seen multinationals such as Intel, resources
signs of growth are beginning to be in both the Dublin and the greater in the services industry are thin
seen, although they are weak and Dublin area followed by the areas on the ground. All trades are at
volatile. Annual growth is forecasted surrounding the other major cities full capacity having been severely
to be between 1-2 % for the next (Cork & Galway). August 2014 depleted in previous years. Currently,
couple of years. marked one year of continuous a small return of tradespersons to
growth across every sector of the Ireland, who were previously abroad,
The construction sector is dominated
construction industry. Sub-contractor is being observed. Whilst there is
by larger state run investments,
availability is declining to levels still caution in terms of the longevity
backed by European Union finance
similar to 2000. A significant rise in of the current rise in activities,
such as state or government
new orders has led to companies tradespersons are experiencing
buildings, football stadiums,
increasing their purchasing significant capacity shortfalls.
railway refurbishments and other
activities and actively seeking Professional consultancy firms are
infrastructure developments. The
professional positons. Consultants are experiencing difficulties in hiring
private sector is still relatively quiet
experiencing severe staff shortages staff with clear evidence of salary
although a few office buildings are
across all sectors. There has been increases across every professional
under construction again. Currently,
an increase in employment growth consultancy sector.
no major retail developments are
in the construction sector of over
under way however, two larger (a
30% compared to levels experienced
few hundred thousand m2) mixed
in early 2009. Ongoing forecasts
use developments are in the permit
lead to significant improvements
stage. The commencement of their
in the construction sector leading
construction depends on the stability
to increased activities. However,
of growth within the economy and
a significant volume of increased
the increase of the public buying-
activities are still centred on the
power which is currently lower than
Dublin Commercial and the Greater
in 2007/08.
Dublin areas. Activity in the other
TPI decreased from 2008 until 2011 major cities (Galway and Cork) are
and was stable in 2012 and 2013. A slower in comparison.
large number of medium and smaller
Significant developments underway
size companies ceased or terminated
include the re development of the
their operations together with a
¤60 million former Bank of Ireland
few larger companies. Due to the
premises in Dublin City, the new
commencement of state-financed
¤30 million Legal premises in Dublin’s
projects this trend has stopped. The
Commercial District, the new ¤25
forecasted growth in tender pricing is
million headquarters for Lidl in South
between 2–3% for the next two years.
Dublin and the ¤200 million joint
venture between NAMA and various
property developers which consists
of the development of 1,000 houses.

Europe
Istanbul London
The key economic data for Turkey in The construction market remains Construction costs have continued to rise
2014 is GDP is estimated at 3.0% and buoyant and certain sections are over this past quarter. This is largely as
inflation (CPI) at 8.9%. A combination faring better than others. The huge a result of the booming housing market,
of high inflation and a large current demand from investors to develop stronger commercial sector and limited
contractor capacity. The residential
account deficit has resulted in the residential and commercial schemes
market continues to experience growth
Turkish lira falling in value, and shows no signs of abating. The
with demand out-stripping supply and
with the continued rise of the US government is fuelling this growth house prices are continuing to rise in
dollar this has been problematic for with the provision of cheap land. This London, largely driven by overseas
businesses. strategy is driven by the needs of an investors.
ever expanding city population of 16
The inflation rate is of concern not Increased activity in the commercial
million people and their continuing sector has continued with an upsurge
only to businesses, but consumers
housing needs. The luxury hotel in the amount of pre-lets in speculative
and the government as well.
sector is experiencing significant developments. Two of the most recent
Emerging markets such as Turkey are
investment with three new five star additions to the London skyline, 122
highly dependent on foreign capital
hotels opening during 2014. Planned Leaden Hall Street (the cheese grater)
inflows and it remains to be seen
refurbishments of other five star and 20 Fenchurch Street (The Walkie
how the end of quantitative easing in
hotels means that this sector will Talkie) are 80% and 90% let respectively.
the US will impact emerging market The increase in construction costs is
continue to grow as Hotel owners
countries such as Turkey. While having an impact upon the viability of
have to refurbish their properties to
the Turkish economy has remained some commercial sector projects and
keep pace with the newer properties
resilient in the face of ongoing global could affect growth.
introduced into the market.
economic worries, there remains Contractors are continuing to be
significant difficulties for the Turkish The Turkish lira has depreciated selective about which projects they
economy to overcome. against the US dollar this year and tender for and we continue to see
this remains a challenge for the local a trend towards two-stage and
However, despite all this, the property
currency. The currency weakness negotiated tendering. Individual trades
and construction sector continues
coupled with high levels of inflation are experiencing higher than average
to boom in Istanbul with significant inflation. Material price increases for
add considerable risk to construction
investment in hotels, residential curtain walling and cladding have been
pricing. This risk can be offset by
and commercial developments and encountered. There are labour shortages
agreeing to use Euros or US Dollars
infrastructure projects under way and within the bricklaying trade and the rise
as the project currency, however
many more planned in the pipeline. in demolition and strip out works are all
only large international clients are
playing a part.
The construction of the third willing or able to accept this, and
international airport on the European opportunities are rare. The second phase of the Battersea
side of Istanbul and the third bridge Power Station redevelopment has
been awarded to Skanska. Kings Cross
crossing the Bosporus Sea are the
rents surge by 15% as technology
major projects under construction at
businesses are being attracted by the
the moment. Both projects are key imminent arrival of Google and their £1bn
factors in the country's continuing development in the area. Pharmaceutical
expansion of their transport network and science businesses are also fighting
capabilities. The third airport is for space due to the fast links to
also significant part of the tourism Cambridge, a key research hub and new
strategy to accommodate a greater medical research centre, the Francis
number of flights. The construction Crick Institute. The £1bn Northern line
of the third airport is a signal that extension has gained final approval and
the government is attempting to has been designed to pave the way for
regeneration of the Vauxhall, Nine elms
challenge the Gulf States monopoly
and Battersea area. This is to include two
of the Middle East passenger
new tube stations.
'connecting' flight traffic to the Indian
sub-continent and the Far East. The As construction activity continues to
rise in London, it is not a surprise that
continuing expansion of the Metro
construction costs are following suit.
system in Istanbul is another example
With the order books of the supply chain
of the government’s intention to following an upward trend, coupled
develop the creaking transport with a lack in increased labour force or
infrastructure of Istanbul. material production, some elements are
reaching premium levels. Tender prices
are forecast to increase by 5.5% in 2015,
4.75% in 2016, 4.5% in 2017 and 4.0% in
2018.
FC Barcelona, Spain
Architect: ICON Venue Group – Barcelona

Ingenium Archial / Archial NORR – Debenhams
Europe
Madrid Manchester
The construction sector has The North West continues to Retail development is coming back on
slowed down during 2014 and show sustained recovery with the stream with a number of significant
follows the trend of the previous residential sector the key growth schemes including the £50 million
years. Rehabilitation construction factor for the region. This has Barons Quay Development due to
work remains at 90-95% of the continued to perform strongly as commence on site before the end
levels achieved in 2009, pre GFC. private developers continue to bring of the year. The £100 million Bolton
Residential activity continues to be in schemes to the market. Commercial Wanderers backed Middlebrook
the region of 80-90% of 2009 levels sector growth continues to be London Master Plan has gained approval and
and infrastructure, industrial and centric however we are seeing a will see a new free sports academy
office sectors are only achieving 80% number of previously shelved retail for up to 500 pupils built next to the
of the pre GFC activity. The trend developments coming back on stadium, as well as 200 apartments, a
is positive for all sectors and are stream in the region along with large 60-bed hotel and a wealth of offices
anticipated to rise, but slowly. key developments still ongoing. The and restaurants.
North West continues to be the best
Except for both the rehabilitation Airport City Manchester remains a key
performing region for medical and
and residential sectors, in aggregate development for the region with an
health projects with strong growth
terms, construction activity is £800 million cost to create a globally
expected to continue with significant
anticipated to fall by 10 - 15% during connected business destination
public health sector spending in the
2014, but forecasted to grow 1-2% located at Manchester Airport
region and its established position as
in 2015. The growth in 2015 is with 5 million ft2. of offices, hotels,
a leading research and development
predicted to be seen in the residential advanced manufacturing, logistics and
hub.
& rehabilitation sectors with a warehousing.
stabilization in the contraction of The North West continues to show
Recovery has remained the
other sectors. tender return costs increasing
watchword in recent quarters whilst
with contractors and supply chain
Some of the current projects under there has been wider fears and
struggling to keep pace with
construction include: market blips on the back of poor
demand, there is an appreciable skills
Eurozone growth and slowing in
• BBVA Bank headquarters tower, shortage across the region and many
global emerging economies. There is
over 90 m high and area of companies are now actively recruiting
still an entrenched belief that whilst
114,000m2 . as they gear up to meet increased
there may be bumps to contend with,
demand. Fees remain tight and with
• Banco Popular Data Centre, over the construction industry is firmly
increasing costs, project delivery
50,000m2. engaged in a growth phase and will
across all sectors remains challenging.
continue its recovery at least in the
• Canalejas Centre Complex, Contractors are now being far
near term much in line with the wider
16,000m2 operated by Four more selective on both the types of
UK economy. The IMF predicts the
Seasons. projects and procurement routes they
UK looks set to replace France as the
• ¤660 million Wanda Edificio, are willing to bid against meaning
second largest Eurozone Economy
España, mixed use development that careful risk management and
and round out the year as the fastest
consisting of hotel, offices, procurement selection are ever more
growing G8 economy.
commercial and residential key in successful project outcomes.
Whilst the previous upward trend
Housing prices continue to fall due Research & Development remains
in construction output looks likely
to high levels of housing stock and a key for the region with significant
to settle to a more moderate level,
the difficulties in obtaining finance . projects such as the £65 million
optimism in the industry remains
Banks are currently selling their real University of Liverpool Material
strong and there is still an appreciable
estate portfolios, adding to the levels Innovation Factory project announced
skills shortage across the sectors.
of residential stock. and recent completion of the £25
Many companies are now aggressively
million City labs Development just two
The construction market remains in looking to recruit and there is still
of many noteworthy projects. Works
a similar condition as to our previous a need for the wider economy to
continue on the £800 million, 20 acre
report, with the potential of a slight address key areas such as wage
mixed-use NOMA redevelopment
recovery. Prices remain constant with growth however the UK as a whole
scheme in Manchester, this is a key
forecasted uplifts of 1.2% to 1.4% over appears strongly placed globally and
development for the city that involves
the next few years. the construction outlook remains
the creation of 4,000,000 ft2 of office,
buoyant.
residential, retail, leisure and hotel
space.

Europe
Milan Moscow
The property sector outlook in General observations are leading to The political situation within Russia
Milan is, at best, bleak. The country, the conclusion that prices are quite is having a significant impact on the
in general, has had a difficult time unstable at the moment. The overall construction industry. Projects are
restarting after the 2008 crisis. The conditions in the sector are leading being put on hold and there is no
construction industry has had the some to desperate measures, willing doubt that potential foreign investors
opportunity to follow through, but to undercut market prices in order to are now not considering Russia, at
2014 has proven to be strenuous for move forward until times are better, least in the short term, as a viable
all involved parties, with company hopefully sooner rather than later. location.
downsizing and bankruptcies This results in very unstable and
Currently, the only two market
becoming the norm for both erratic pricing, for which it is difficult
sectors that seem to be stable are
consultants and contractors. to predict a specific impact.
the infrastructure and apartment
There are, however, some In the past, sentiment was that times sectors. This is due to the
isolated discussions of interesting will soon improve, now it appears continuing population growth of
developments in the Milan area and, that people are resigning themselves Moscow requiring new residential
indeed, throughout the peninsula. to the fact that this downturn is more accommodation either inside the
Opportunities include mainly retail dramatic and longer-lasting than newly defined city boundaries (the
and hospitality projects funded by imagined. Western boundary of Moscow has
foreign investors, as well as office recently been extended), or in some
refurbishments for some international cases in areas outside the city.
corporations. It is doubtful, though,
The single biggest construction
that these developments will provide
project is the Skolkovo Innovation
enough stimulus to restart the local
Park (Russia's answer to Silicon
construction sector as well.
Valley). The development comprises
The 2015 Milan EXPO is providing a university, a technology innovation
some slight relief, but the bulk of the centre, a transportation hub, housing
work appears to be in the hands of on a grand scale and associated
specialised international corporations, infrastructure works.
with less trickle-down effect than
As the Ruble continues its downward
expected. Timing is tight, with initial
slide, the effect on Ruble funded
delays and poor initial organisation
projects is enormous. Most materials
taking its toll on the project. Pavilion
are increasing more or less at the
construction is being handled
same rate as the Ruble is devaluing.
mostly by international corporations
Whereas the projects funded in Euros
specialised in temporary facilities.
or US Dollars are largely unaffected
Westfield is planning a large by the situation. As far as the tender
development in Milan, in a joint prices are concerned it is anticipated
venture with an Italian retail that there will be a short term
developer. Westfield is vetting reduction (again in terms of Euros) as
various types of companies and the result of both, a reduction in the
has started tendering the design volume of work and the reduction in
phase with some local professional the contractor's local wages costs,
consultants. as wages have significantly reduced
when measured in Euros and of
course upward adjustments will take
much longer to filter through than
with materials. The current climate
remains highly unpredictable and
is dependent on both the political
situation and sanctions levied upon
Russia together with the terms of
trade within Russia which has been
significantly impacted by the fall in
the price of oil.

Europe
Sheffield Thames Valley

Activity and optimism is increasing The Thames Valley area is starting The increase in workload has lead
throughout Yorkshire however to show signs of recovery. There contractors to be far more selective
Sheffield is slightly behind other has been increased speculative about the work they tender for.
larger regional hubs. Construction commercial development over the Contractors are carefully reviewing
costs are rising, driven by an increase last 12 months and schemes that the risk profile of each project, the
in client activity as confidence is were shelved during the recession contract conditions, tender process
returning; this is in turn leading to are starting to move forward again. and programme, before they commit
greater contractor demand. This This is particularly the case with to participate in the tender process.
combined with a perceived skills residential schemes and premium It is becoming difficult to engage
and materials shortage means that town centre office developments. The contractors in a single stage tender
contractors are becoming selective development of two significant rail and they are favouring projects
with the tenders they are bidding, infrastructure projects in Reading and based on two stage or negotiated
with some only willing to negotiate or Maidenhead has driven the creation processes.
tender via a two stage approach. of regional ‘hot spots’ with much of
The £500 million Station Hill
An increase in client confidence the commercial development centred
development in Reading town centre
is leading to an increase in tender on these two towns.
is scheduled to commence in 2015
activity. Contractors are looking
The education sector has also but continues to be delayed and is
more stringently at the risk profile
started to generate increased now on its third planning application.
of schemes, becoming more
workload after a period of Plans for the redevelopment of
selective on the types of projects
stagnation with investment in Maidenhead town centre are also
and procurement routes they are
student accommodation, research under development but timescales
prepared to bid for works under.
and teaching facilities being moved remain undetermined. The University
Feedback through the supply
forward. The region still lags behind of Reading has kicked off the
chain indicates that there may be
London in terms of its economic development of its Thames Valley
a materials, plant and equipment
shortage which could drive costs up recovery and there is still significant Science Park with the new road
and lengthen programme delivery. caution in the market. Decisions infrastructure and bridge over the M4
to proceed are being made over starting on site in January 2015 and
Sheffield Hallam University and the extended timescales, with as much the first phase of the 800,000 ft2.
University of Sheffield remain key risk removed or passed on as science park scheduled to be on site
players in the Sheffield market. The possible. in summer 2015.
University of Sheffield is in the midst
of an ongoing capital development In terms of tender price levels, the Work on residential housing
programme that has seen significant region is feeling the full effects of the developments in the South of M4
investment within the city. Current increased construction workload in Strategic Development zone are
key projects include Sheffield Hallam London. The London workload, more set to commence in early 2015 with
University’s £30 million “Charles than work in the region, is driving Bellway Homes, David Wilson Homes
Street building” and University of price levels. In some cases, tender and Taylor Wimpey planning to build
Sheffield’s “The Diamond” project. price inflation is starting to affect in excess of 2,500 homes together
The Diamond, for the faculty of the viability of some schemes with with associated infrastructure and
Engineering, will provide in excess of the increase in construction costs community facilities.
10,000m2 of teaching space with a outstripping the increase in asset
Asset prices in the Thames Valley
project value in excess of £80 million. values in the Thames Valley region.
may not be able to sustain the
Fee levels continue to be overly
The retail sector within Sheffield is increase in construction costs as they
competitive with all-encompassing
showing signs of activity. The Seven do in London and this may threaten
Stones city centre development scopes of service and intensive
the viability of schemes outside of
lead by Sheffield City Council is demands on delivery.
the capital and see a reduction in
beginning to gain momentum with workload. We are already seeing
the announcement of the councils signs of this in the region. Some
preferred delivery partner. domestic investors are withdrawing
As construction activity continues to from the London market in favour of
rise in the region construction costs ‘better value’ assets in the regions
will follow suit. The current pressure and this may see some equilibrium
is anticipated to ease in the medium returning and a ripple of activity
to long term as skilled labour re- outwards from London that will
enters the industry after a prolonged support a more even distribution in
period of decline. growth.

Europe
Vienna Welwyn Garden City

Due to the opening of the Eurasian The region is now feeling the full There appears to be an increasing
Economic Commission (EEC), Vienna effects of the increased construction pipeline of key projects in the local
is one of the fastest growing capitals market activity from London and is education sectors, with a local
in Europe. The economic situation starting to see increased construction education college indicating that a
is better in Vienna than in the rest activity in a wide range of sectors. significant amount of land will be
of Austria and this also applies to In particular, housing projects have sold for housing. The proceeds of the
the construction market. The overall seen significant growth, particularly sale going towards significant master
mood in the economy is positive in areas of the popular London planning of the existing campus. In
even though unemployment ratio commuter belt as local councils are addition to this, local universities
is around 5%. This is an "all-time- opening up land for development to Essex and Hertfordshire continue to
high" for Austria, though statistical meet their new housing obligations. expand and refurbish their existing
measurement rules have been facilities.
Economic hubs, such as Cambridge,
changed within the last years.
have seen a significant increase in Significant interest has been sparked
"Seestadt Aspern" is the most the amount of speculative buildings with the proposals for the Welwyn
significant project currently in being constructed, in particular office Garden City Master plan which will
Vienna; the old airport of Aspern in accommodation as the green light to see 750 new homes created over a
the northeast of Vienna is becoming begin speculative investment again. 20 acre town centre site, alongside
a new residential district and will retail and community assets.
Generally, it has been witnessed that
contain about 10.500 apartments Whilst still going through public
growth in the food retail sector is
when the development is finished. consultation, should the project be
showing signs of slowing down from
The new Central Station has opened approved, it will represent a large
previous periods of growth, but non-
and a new hospital "Krankenhaus boost to the local economy generally,
food retail continues to grow with
Nord" is under construction. as well as stimulate further growth in
evidence of major developers and
the construction market.
The general recession still effects retailers in the retail sector looking to
Austria except for the Viennese spend significantly over the next few Given the general increase in
construction market. Some regions years. construction activity in the region,
in Austria are still providing loan coupled with the shortages in
The heightened market activity,
programs for the refurbishment of materials and labour, the local market
primarily spilling outwards from
residential buildings. This economic has seen significant price increases in
the London growth, has seen
stimulus package for residential the period. It is expected to continue
procurement options available being
buildings, as well as the thermal to do so in line with the continued
reduced to clients, with a significant
retrofit of dwelling units are very growth in the London market, albeit
number of contractors unwilling to
important for Austrian general with a slight lag effect.
competitively tender under single
contracting KMU´s (small and middle
stage procurement routes. The
sized construction companies).
primary reason for this is estimating
The growth of superstructure
resources and increased general
industries is about 3.3%, however
workload of contractors. Works on
the infrastructure sector suffers
site have been impacted by increased
from a decreasing number of big
lead in periods on key materials, in
infrastructure projects. Brenner
particular bricks and façade materials
Basis Tunnel is under construction
generally and shortages of skilled and
and full project speed will probably
unskilled labour.
be reached in two or three years
however it is currently “on track”.

Institute of Diplomatic Studies and Consular Affairs, KSA
Architect: Henning Larsen

Market Intelligence
Middle East
& North Africa
Oil prices have fallen by more than Growth of 0.3% during 2014 was infrastructure projects across the
50% since June 2014. In November seen for the developing oil exporting region. In Algeria, Egypt, Jordan,
2014, the Organization of the countries including Algeria, Iran, Kuwait further investment in power
Petroleum Exporting Countries Iraq, Libya, Syria and Yemen, with and water assets are being seen,
(OPEC) declared that member GDP rising to 2.4% in 2016. while others in the region are in
countries would not cut production the midst of seeking to upgrade
Oil production and continuing
in the short term. Markets have outdated infrastructure in the
conflicts in the area will determine
forecasted oil prices to be around developing economies.
the stability of the forecasts in
US$60 -70 per barrel on average in
the short term. Regional OPEC Approximately US$180 billion of
2015 (a decline of about 40 percent
oil producers are not expected to contracts for new construction
from June 2014 levels) before rising
cut oil production under baseline projects are forecast to be awarded
gradually to US$72 per barrel by
projections, but as production levels in the Gulf States during 2014,
2019. Oil prices are expected to
are maintained it may suggest the highest amount for six years,
partially recover over the medium
that any sizeable lift in oil pricing despite falling oil prices, according
term because of the likely decline
may not be seen in the short term. to MEED Projects. The concern for
in investment and future capacity
Countries that are presently in the construction industry is that oil
growth in the oil sector in response
conflict (Iraq, Libya and Yemen) prices could drop for an extended
to lower oil prices.
or facing difficult external trading period below the "break-even" levels
Forecasted GDP within the region environments (Iran) could also suffer which may cause governments to
remained strong during 2014 at from declining oil production and/ balance their budgets and reduce
3.0% up from 2.3% in 2013. GDP or face downside risks from conflict- infrastructure and new development
growth for 2015 & 2016 is predicted induced disruptions in non-oil spending.
to fall slightly due to the fall in oil economic activity impacting on the
export prices. The Gulf States GDP Region’s GDP forecasts. Middle East Construction
Cost Relativities
is forecasted to be 3.4% in 2015, a
Across both the developed Q1, 2015
reduction of 100 basis points (bps)
and developing parts of the Doha 111
from that forecasted by the IMF in
region increased spending on Abu Dhabi 106
September. For other oil exporters
infrastructure is helping to offset Dubai 105
in the region, a fall of 70 bps is
the recent volatility of oil prices. Riyadh 104
predicted.
Construction either underway or
planned is inclusive of some large 2015 Forecasted GDP Growth
Country 2014% 2015% 2016%
Afghanistan, Rep. of 3.24 4.49 5.03
Algeria 3.84 3.99 3.83
RLB Construction Market Activity Model Bahrain 3.88 2.95 3.11
Middle East - Growth Sectors vs Decline Sectors Djibouti 5.50 5.55 6.00
Egypt 2.20 3.50 3.85
NUMBER OF CITIES Iran, I.R. of 1.46 2.20 2.23
4 Iraq (2.66) 1.46 7.62
Jordan 3.50 4.00 4.50
Kuwait 1.39 1.79 1.83
3 Lebanon 1.75 2.50 4.00

Libya (19.78) 15.00 18.28
Mauritania 6.80 6.75 6.69
Morocco 3.51 4.72 5.05
2
Oman 3.40 3.41 3.60
Pakistan 4.14 4.30 4.40
Qatar 6.53 7.70 7.82
1 Saudi Arabia 4.60 4.46 4.39
Sudan 3.03 3.71 4.57
Syrian Arab Republic n/a n/a n/a
Tunisia 2.80 3.70 4.50
0
United Arab Emirates 4.28 4.50 4.44
GROWTH DECLINE
NOT NOT NOT
West Bank and Gaza LINKED LINKED LINKED
Yemen 1.91 4.58 4.68

The Address Residence Fountain Views, Dubai, UAE
Architect: Dewan for FV1 and FV2

(Left and Right Residential Towers)
and Atkins are for FV3 (Middle Tower – Hotel)
Middle East & North Africa
Abu Dhabi The second half of 2014 is seeing Dubai

Abu Dhabi has recorded overall steady economic growth driven A positive increase in sentiment with
steady growth in the second half by the continued expansion of the the award of the 2020 Expo to Dubai
of 2014 as all market sectors are non-hydrocarbon economy and as well as the perception of Dubai
going through a recovery phase infrastructure investment. Economic as an investor friendly safe haven
and showing positive signs since diversification is growing and, along has seen property prices and rentals
the economic crisis. The Abu Dhabi with the continued plans associated increase markedly. This has also seen
Airport recorded an increase of 15% with the National Vision of 2030. an increase in the cost of living. The
in visitors compared to 2013 which is Government investment is beginning resultant development boom has
encouraging. to materialize and set off new seen a swath of new projects and
projects on the infrastructure level mega projects being announced with
A number of significant projects are as well as education and healthcare. all major developers trying to get to
keeping the construction market With the new Hamad International market as soon as possible in order to
buoyant such as the Abu Dhabi Airport opening, the increased secure competitive tenders and lock
International Airport a part of the number of visitors to Qatar, along in contractors.
governments “Plan Abu Dhabi 2030”. with the continued rising population
The building will be constructed using growth, has resulted in noticeable Significant projects include
approximately 69,000 tons of steel, economic growth in the second half Bluewater’s Island, centred on the
more than 680,000m3 of concrete, of this year. This however has also Dubai Island, the development
and nearly 500,000m2 of steel and seen an increase in the cost of living. includes retail, residential, hospitality
glass cladding, 135,000 tons of rebar, and infrastructure together with
360,000m2 of suspended ceilings and Projects for Doha can be seen at a 260m high ferris wheel. Dubai
325,000m2 of natural stone flooring. Doha Metro, Doha Education City Airport’s Maktoum International
and Doha Festival City. In preparation project is said to become the largest
Also adjacent to Abu Dhabi city is for the 2022 World Cup stadium airport in the world and capable of
the Yas Island Development. Already construction is moving ahead at Fifa accommodating up to 200 million
home to significant development it 2022 World Cup Stadium, Lusail passengers a year.
continues to provide construction Iconic Solar Stadium, Al Wakrah
activity to complete or add to some Stadium and Al Gharafa Stadium. Other significant projects include:
world-class leisure an entertainment The Qatar National Museum in also • City Walk, a large mixed use and
attractions including a world-class underway. retail development,
motor sports racetrack, the Ferrari
World Abu Dhabi theme park, and With the 2022 World Cup and the • La Mer, a leisure, housing and
a water park. In addition to these National 2030 Vision, the Qatari hospitality development,
attractions, the island is home to Government is investing heavily in
infrastructure such as roads, Doha • Downtown, centred on the Burj
300,000 square meters of retail
Metro, rail, drainage and sanitation Khalifa, a number of mega projects
space, parkland golf courses, lagoon
projects. Other sectors currently are ongoing including Fountain
hotels, marinas, apartments and villas.
seeing significant activity include Views
Many more projects in Abu Dhabi health, education, hospitality and • Dubai Opera House, and
support the current and forecast retail sectors. Although there remains
growth figures for Abu Dhabi such • AKOYA Oxygen, housing project
steady activity across all sectors, the
as Capital District City, Khalifa Port & and golf courses, including
rate of growth in new opportunities
Industrial Zone, Al Falah Community approximately 13,000 units.
outside of infrastructure appears to
Development, Le Louvre Museum, have stabilised. This is potentially With the increased sentiment and
Masdar City, Saadiyat Island Museums due to the ongoing rationalisation the number of projects and mega
and other infrastructure projects. of policy driven projects as the projects noted above, prices are
The second half of 2014 has shown local authorities begin to undertake expected to continue to ramp
strong market confidence which the necessary prioritisation of key up as the competition for staff,
will instigate a sustained period of investments prior to 2022. Prices management personnel and materials
developments with multiple new currently remain reasonably stable increases. Current market forecasts
projects to be awarded. The TPI’s due to ongoing high competition but as reflect an annual increase of 4.7%
are forecast to increase in 2015 and an increase is forecasted for the year in 2015, 5.7% in 2016 and up to 6.1%
2016 in line with current and planned to come as pressure on resources by 2017.
construction activity for Abu Dhabi. begins to make a more noticeable
impact.
Doha

ASB North Wharf, Auckland, New Zealand
Architect: Bligh Voller Nield and Jasmax

Market Intelligence
Oceania
In 2014, the Australian economy continuing low inflation as falling Oceania Construction Cost Relativities
grew at 2.9%, a small amount dairy incomes and potential El Nino Q1, 2015
below trend and the New Zealand affect are being offset by strong Darwin 127
economy grew at 3.6%. Despite construction growth, rising housing Sydney 120
large falls in Australian mining prices and strong net immigration. Perth 119
investment in the year, rising GDP forecasts are predicting Canberra 116
resource exports meant that growth domestic economic growth will ease Melbourne 113
Christchurch 111
of mining activity overall, remained during 2015 but still remain robust
Adelaide 110
high. Growth of non-mining culminating in a forecasted GDP of
Wellington 107
activity remained below its long- just under 3%.
Townsville 106
run average, but picked up owing
In Australia, construction work yet Auckland 99
to stronger growth in dwelling
Brisbane 96
investment and public demand and to be done in the non-residential
a small rise in consumption growth. building sector remains elevated
Non-mining business investment and should support investment in
remained subdued. Falling export the near term. Forward-looking
commodity prices in Australia indicators, such as non-residential 2015 Forecasted GDP Growth
are having a detrimental effect building approvals, have weakened Country 2014% 2015% 2016%
on revenues but the fall in the over the course of this year, Australia 2.82 2.90 3.01
implying that there is less growth New Zealand 3.60 2.84 2.45
Australian Dollar and oil pricing is
Pacific Island
assisting this shortfall. in prospect in this sector than countries and NOT NOT NOT
LINKED LINKED LINKED
previously expected. Residential other small states
Within New Zealand, the economy construction is still very strong all Pacific Island countries and other small states include
Bhutan, Fiji, Kiribati, Maldives, Marshall Islands,
is still strong. Investment is likely around the country Micronesia, Palau, Papua New Guinea, Samoa,
Solomon Islands, Timor-Leste, Tonga, Tuvalu, and
to remain a strong driver of growth Vanuatu.
during 2015, with consumption solid Forecasts for Australian GDP growth
in support. The pace of growth in are expected to be below trend over
New Zealand’s economy will remain 2015 and 2016, remaining at the 3%
firm through 2015. The ecomomy mark.
is seeing falling unemployment,
a slight lift in wages growth, but

Oceania - Growth Sectors vs Decline Sectors
NUMBER OF CITIES
12
10
0
GROWTH DECLINE

Oceania
Adelaide Auckland
The tender market still continues to The New Zealand economic recovery Non-residential construction activity
be very flat. There is a limited number continues to strengthen and has increased over the year and has
of new projects being generated from broaden across the regions after highlighted capacity issues within
both the private and public sectors to being concentrated in Canterbury the industry with long lead times for
feed the trade and head contractor and Auckland in the last couple of off-site prefabricated products and
market within Adelaide. We have years. The Reserve Bank of New labour shortages on structural trades.
seen some signs of larger contractors Zealand raised interest rates earlier This is of concern given that whilst
pricing smaller projects to ensure that in the year in an attempt to cool construction activity has increased,
they maintain some work into the the Auckland housing market whilst the current volume of work is not
new year – with some limited success. the New Zealand dollar appears to yet significant. There is promise of a
Tertiary Institutions remain active have peaked from historical highs. number of large scale construction
with large projects being tendered Generally business confidence is high projects in Auckland and the amount
to Tier 1 Contractors. There are signs with optimism in hiring, investment of projects in for building consents
of the retail sector improving which and increasing margins and profits. has grown strongly. With this
will provide new projects during 2015 Despite interest rate rises the potential volume of work along with
including the ALDI Stores roll out. Auckland housing market remains other significant construction projects
strong. The central government has in Christchurch, then there will likely
Major projects that are expected to
set a target of 39,000 new homes in be industry capacity issues requiring
help lift the market include:
Auckland over the next three years significant industry investment. Key
• Adelaide University Clinical School and residential building activity is projects in the planning for Auckland
($230 million) increasing including apartments and in the short to medium term include
retirement homes. This increased the proposed new International
• University SA Health Innovation
level of activity is affecting resource Convention Centre, the Precinct
Building ($200 million)
and supply chain capacity and is Downtown redevelopment and the
• Sky City Casino ($300 million) ultimately increasing labour and City Rail Loop.
• University SA Great Hall material costs.
The increased construction
($50 million) The strong residential market activity has seen an increase in
• Courts Precinct ($550 million) and demand has provided strong main contractor margins and
work flows through the civil and subcontractor pricing including
All trade contractors continue to infrastructure sectors with new land increased labour costs. Particularly
remain very competitive and activity zoning opening up areas of new in the structural trades which are
seeking work. residential development. Particularly experiencing high demand. Should
Many trade contractors continue in the North West and South of construction activity continue to
to fall into administration - recent Auckland where new Town Centres grow as expected then we will see
casualties include a mid-sized such as Westgate and Ormiston are a volatile market and tender prices.
electrical contractor and a medium to being developed. Going forward construction cost
large sized concreter during Q4 2014. escalation will need to be considered
For the short and medium term, the as a key risk element of project
market continues to be difficult for feasibility models.
trade contractors.

Oceania
Brisbane Canberra
The sharp decline in commodity The retail sector continues to A recent OECD report has ranked
prices is likely to have a significant perform strongly with four major Canberra as the world's most liveable
effect on the State budget for projects in South-East Queensland city. The continued development
2014/15 and future budgets. In under construction and further of award winning projects like New
2013/14 Gross State Product was 2.3% projects planned for commencement Acton, visionary infrastructure
compared to the budget forecast of in 2015. The commercial market such as the Capital Metro and
3%. In addition the upcoming State remains subdued but the longer significant investments in federal
budget is likely to result in a reduced term prospects remain strong. The office accommodation, health and
level of Government activity during residential market continues to grow education over the years have laid the
the caretaker period and during the with a number of major projects foundations for a vibrant city ready for
post-election period. The major issue underway or about to commence new opportunities and growth as the
for the election is the Governments including the Flat Iron project in region approaches its coming of age
Strong Choices proposal to lease Fortitude Valley, 300 George Street, with the ACT celebrating 21 years of
State assets to the private sector. the Commonwealth Games Village self-government in 2015.
and Jewel on the Gold Coast. The long term outlook for Canberra
Positive indicators are an increase
in the ANZ Job Ads survey that The Government has released is promising, however, in the short
has risen for 6 consecutive months details for the two bids for the to medium term, market sentiment
indicting sustained strength in the redevelopment of the Queens Wharf is still subdued with the impact of
jobs market. The international trade precinct which will re-vitalise this area consecutive federal budgets cuts
balance has also increased by 5% of the CBD with both bids offering continuing to affect confidence.
in October 2014 but is still negative an integrated resort incorporating Projections for employment growth
$1.55 billion. This can be expected hotels, casino, apartments and a and final demand remains below long
term trends.
to improve dramatically as the LNG retail precinct. A final decision on the
exports increase in 2015. preferred bidder is likely in early 2015. The ACT Government has announced
a mass buy back scheme for homes
Housing finance continued to The market remains competitive
affected by loose asbestos insulation
increase in 3Q 2013 however however increased costs have been
fill. A previous clean up in the 1980s
construction work on buildings fell by experienced in particular trades
failed to remove all traces of asbestos
7.4% in the same period. Retail trade in particular, mechanical Services,
leaving no other option than full
increased 1.4% in the period ending formwork and tiling. This is the result
demolition of the 1,021 affected
October 2014. of limited resources and limited sub-
properties. The buyback scheme,
contractors in these trades to meet
Market sentiment remains positive underpinned by a $1 billion federal
the increasing workload.
particularly in the residential, retail government loan, is expected to leave
and industrial sectors. The key Construction costs in 2015 will a shortfall of $300 million in the ACT
indicator is population growth be dependent on the timing of Government accounts. One major
that continues increase with 1.5% the commencement of major effect of this is that many ambitious
(70,500) growth in the year ending projects currently being planned capital works programs such as the
June 2014. Significant house price and marketed however we expect City to Lake are unlikely to be realised
differential between Brisbane, Sydney construction volumes to increase within previously reported time
and Melbourne and an increase in through 2015 putting upward frames.
overseas migrants are major factors pressure on construction costs. Major projects recently announced
in this trend. There remains strong are the Department of Social Services
interest from overseas developers new offices in Tuggeranong providing
and investors in the South-East a net lettable area of 38,000m2 and
Queensland market. the recent tender for leased office
accommodation for the Department
of Immigration and Border Protection
to provide 80,000m2 NLA of office
accommodation. There has also been
a strong response to the new ACT
Government Offices project with 11
developers registering their interest to
develop 42,000m2 of office space
As the construction industry welcomes
a New Year we expect confidence
to slowly recover and forecast a rise
in the tender price index line with
inflation for 2015 of 2.5%.

Oceania
Christchurch Darwin
The post-earthquake Canterbury Developing the North is the key
rebuild has continued to gain theme of the NT Government
momentum with the CBD skyline in conjunction with the Federal
noticeably busier over the last period Government with a number of
with the number of cranes engaged initiatives through all sectors of
in new commercial construction. the NT economy being explored.
July 2014 non-residential consents The infrastructure sector including
were $154 million, once again the oil, gas, mining, roads and services
highest in New Zealand. Residential infrastructure including ports, is being
construction, while moving slower examined with a view to ensuring
than expected is continuing strongly these are adequate or require major
(July residential consents were 20% investment to enable the theme to be
ahead of the same period in 2013). implemented.
There is some month on month Land is being released for housing
volatility but the overall trend is still in a bid to lower the cost of housing
one of strong growth across both in Darwin and surrounding areas, a
sectors. key driver in getting the cost of living
down and improving NT business
Unemployment in Canterbury remains
competitiveness in the face of
the lowest in New Zealand at 3.8%.
growing interstate and international
The total number of people employed
competition.
in Christchurch has grown by nearly
6% since 2013. Most of the current The current positive economic
cost increases in Canterbury are from environment is still heavily influenced
labour cost inflation although some by the INPEX gas project which is
subcontract and supplier margins under full construction and providing
are also increasing and affecting a number of positive outcomes and
tender prices on major and complex spin-offs for those local businesses
projects. that can benefit from such a project.
The Burwood Hospital redevelopment The INPEX gas project was the
is around 30% through construction primary focus of construction and
while the Christchurch Hospital engineering activity in the Top End in
redevelopment is beginning early 2014 and likely to remain so in 2015. A
earthworks and enabling works ahead number of construction projects were
of main contract commencement in the feasibility phase in 2014 after
by the middle of 2015. The Justice the increased onsite construction
Precinct project is now rising in the activity experienced in 2013. A
CBD and a number of commercial number of projects are earmarked for
office and retail projects are also start in 2015 mainly in the apartments
underway in the city centre. The Bus and hospitality sectors. Industrial
Interchange project has commenced activity will continue in earnest as
and both Canterbury and Lincoln will other sectors such as health and
Universities have extensive building education with slower activity in retail
programmes planned. and commercial office markets.
Escalation forecasts are complex The construction market is still very
and uncertain at present and have competitive with a number of bidders
a number of variables depending vying for the few projects on offer. A
on project size and type and number of owner developer builders
as such should be taken as an are seeking to lock in prices for
average. Overseas contractors and projects due to start in 2015 given
subcontractors have begun to see the current competitive nature of
some success in securing contracts in the market. As more projects come
recent months. on line we predict a rise in the order
of 4% for the calendar year in 2015,
potentially easing thereafter once
work on the INPEX project tapers off.

Oceania
Melbourne Perth
Victoria’s economic growth has Although the Western Australian
performed strongly over the past economy, with the engineering
twelve months, despite not being sector in particular, is experiencing
heavily reliant on the resources some "post resources boom blues",
sector. Since 2009, Victoria’s Gross it is nevertheless showing resilience
State Product (GSP) has grown at an across many other sectors of the
average of 3%. Driven by growth in construction market. The leadership
the services, warehousing and freight shown by the State Government in
sectors, Victoria have repositioned initiating a number of projects to
its employment base away from release and 'create' land immediately
manufacturing towards health, adjacent to the CBD has provided
education, finance and business development opportunities and
consulting services. enticed major players to invest in
Perth.
Increased investment in infrastructure
has been a significant driver of Reclaiming the area over the railway
industrial capacity growth for approaches to the main Perth rail
the Victorian economy. Victoria’s station has resulted in Perth City Link
transport infrastructure program development zone.
of up to $24 billion of new projects
The Elizabeth Quays development
has generated jobs, from office-
has unlocked a number of major sites
based engineering and design roles
and will in future become home to
to onsite road works and building
the new Chevron office tower and
and construction jobs, plus the small
Ritz Carlton hotel.
businesses that support them.
The reclamation of land alongside
Victoria’s population is growing at
the causeway at East Perth has
near record rates, driving higher
created further opportunities at
levels of economic growth. This will
'Water bank' and will provide Lend
help to support demand for housing.
Lease, the incumbent developer, with
A high level of new dwelling supply
extensive opportunities for mixed
in the pipeline (mainly in the form of
used development over the next 5 to
apartment completions) is likely to
10 years.
tip the market into oversupply from
2015/16, causing vacancy rates to rise. From a counter perspective, the
office vacancy rate has continued
Commercial real estate ownership
to climb and is now at levels not
is changing within Melbourne. The
seen for at least a decade and
displacement is occurring as private
will effectively dampen interest in
investors, typically one of the
speculative office development
largest group of investors in prime
although a number of pre-committed
grade assets in Melbourne, were
office projects will proceed.
net sellers of assets, during 2014,
which were taken up by institutions. The Perth construction market
Since 2004, Melbourne has added continues to be demand driven with
more than 900,000m2 of new office keen pricing at virtually every level
supply. Despite the strong pipeline and particularly fierce competition
of development during this period, in the low to mid-range commercial
vacancies averaged only 6.9%. projects. However, increased activity
in the housing sector has led to some
The Melbourne construction
shortage of supply, particularly in
market is still in positive territory.
the brickwork trade and it is possible
Pricing is starting to increase in
there may be some emerging price
the structure, finishes and façade
pressures in this and other selected
trades. Competition is holding prices
trades.
relatively steady but escalation of
2.5% is forecasted for 2015.

Liberty Place, Sydney, Australia
Architect: Francis-Jones Morehen Thorp

Oceania
Sydney Wellington
Recent National Accounts statistics Whilst approvals and activity in the Local construction trends
reported New South Wales had the non-residential sector is increasing, remain weak in terms of new
second highest growth in GDP for the the rate of increase is much lower developments, in both the
Q3 2014 recording a 3% increase from than the residential sector at about commercial and residential markets.
the Q3 2013 statistics. A factor in the a 1% increase over a twelve month Civil infrastructure projects
improvement of GDP has been the period. Current forecasts predict this are progressing well north of
strong performance of the building trend to continue. Wellington and will continue to
sector. provide employment for some time.
Despite increased activity materials
Strengthening of existing buildings
An analysis of Australia Bureau of price rises have been very stable
still remains high on the priority list
Statistics construction work done over the last half of the year. The
locally but is not adding value to
reports an 18% increase in building most significant price increase in this
the cityscape or local economy. This
works for Q3 2014 compared to Q3 period has been plasterboard supply
needs to change if we are to move
2013. Overall construction activity has recording a 6% price increase.
forward like other centres within New
increased 6% for the similar period.
Contractors are reporting that sub- Zealand, but there are no real signs of
Whilst activity over twelve months
contract pricing continues to record this on the horizon.
has recorded increases, activity on
large spreads between highest and
a quarter by quarter basis reported There are a few larger projects due to
lowest prices. It is believed that such
a fall of 1% from Q2 2014 to Q3 start in the New Year. These include
differences are attributed to sub-
2014. This fall is attributed to a 13% the Gateway project and Rutherford
contractor workload. Contractors,
reduction of engineering activity. House extensions for Victoria
operating on major residential multi-
University, Transmission Gully and the
The strength of building activity in unit projects, have reported price
major civil road works on the Kapiti
New South Wales follows from the rises for selected structural and
Coast as well as the potential Hilton
higher levels of building approvals services trades that are well above
Hotel and Convention Centre. These
that had been recorded in the past expectations. Subcontractors and
projects will soak up a large portion
two years. Residential building contractors continue to be risk averse
of the contracting resources and
approvals continue to be the sector on projects where perceived risk
provide much needed impetus to the
that indicates continuing activity and will impact upon possible margins.
local industry, and hopefully kick-start
increased opportunities. However Such projects are attracting a price
a number of other developments in
it is difficult to confirm anticipated premium and a reduced number of
our region.
trends as values and the number of interested contractors.
approvals for the residential sector We are beginning to see some cost
During 2014 the Sydney building
varies on a month to month basis. escalation come through from the
industry has experienced levels of
market, being led by material supply
Developers report demand for multi- confidence resulting in an increased
price increases on the back of the
unit development continues to be investment in staffing levels, plant
burgeoning markets in Auckland and
strong for pre sales. In particular, and equipment and in some cases
Christchurch. Whilst this escalation is
areas of high demand are sold out selective tendering in order to
having an impact on certain trades,
within hours of entering the market. achieve an increased return on
it is not reflecting in large increases
investment. However, whilst there
A recent analysis of the RLB Crane on a project level as not all material
is increased confidence and greater
Index confirms the strength of groups are affected. Labour costs
opportunities for continued workload,
residential activity by the majority of remain in a holding pattern and we
competition to secure projects has
tower cranes erected in Sydney are are still seeing resources moving to
not diminished. Contractors report
operating on residential sites. The use pick up work in other centres. It is
that to secure work significant
of tower cranes across the Sydney likely that we will see further upward
discounting of prices is required.
metropolitan area confirms the pressure on prices in 2015/16 on the
Such competition is likely to see price
changes in methods of construction back of new projects due to start,
rises limited to 3% for 2014. However,
requiring the use of tower cranes but the market here remains well
the outlook for 2015 remains positive
to take advantage of pre-fabricated behind the other major centres in the
as the continued strength in the
components and maximise materials country.
residential sector could see prices
handling methods in order to achieve
increase up to 4.5% for 2015 which is
reduced construction durations.
the highest level for price rises since
2008.

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INTERNATIONAL CONSTRUCTION

FIRST Quarter 2015

Regional RELEASE Sector Specific RELEASE

Sources of Information – International Report

International Monetary Fund – Regional Economic Outlooks imf.org

Cover: Nedbank MenlynMaine, Pretoria, Africa

RLB promotes a sustainable environment.

The Rider Levett Bucknall International Report provides a half-yearly

Building Cost Ranges and International Construction Cost Relativities

To download our free App visit

Rider Levett Bucknall | International Report – First Quarter 2015 3

Rider Levett Bucknall offers independent cost management, project

RLB prides itself on exceptional RLB remains committed to its 2014

4 Rider Levett Bucknall | International Report – First Quarter 2015

City Q1, 2015

Rider Levett Bucknall | International Report – First Quarter 2015 5

The majority of large, developed economies are growing more slowly

6 Rider Levett Bucknall | International Report – First Quarter 2015

Rider Levett Bucknall | International Report – First Quarter 2015 7

8 Rider Levett Bucknall | International Report – First Quarter 2015

Rider Levett Bucknall | International Report – First Quarter 2015 9

PEAK GROWTH PEAK DECLINE

TROUGH TROUGH DECLINE

Houses Apartments Offices Industrial Retail Hotel Civil

10 Rider Levett Bucknall | International Report – First Quarter 2015

HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

RLB Construction Market Activity Model

HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

HOUSES 12% HOUSES 10%

Rider Levett Bucknall | International Report – First Quarter 2015 11

12 Rider Levett Bucknall | International Report – First Quarter 2015

Rider Levett Bucknall | International Report – First Quarter 2015 13

Range of cost per m2 of gross floor area

14 Rider Levett Bucknall | International Report – First Quarter 2015

Range of cost per m2 of gross floor area

Rider Levett Bucknall | International Report – First Quarter 2015 15

Architect: Boogertman + Partners

increasing due to increased public Comoros 3.92 3.93 3.94

remains one of the fastest growing Mali 5.92 4.79 5.09

globally. Mauritius 3.32 3.95 4.14

HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

Rider Levett Bucknall | International Report – First Quarter 2015 17

Cape Town Johannesburg

18 Rider Levett Bucknall | International Report – First Quarter 2015

Maputo (Mozambique) Port Louis (Mauritius) Pretoria

Rider Levett Bucknall | International Report – First Quarter 2015 19

Architect: Architekton and 360 Architecture

20 Barbados (0.55) 0.55 1.51

Rider Levett Bucknall | International Report – First Quarter 2015 21

22 Rider Levett Bucknall | International Report – First Quarter 2015

Barbados Cayman Islands St Lucia

Rider Levett Bucknall | International Report – First Quarter 2015 23

Architect: DP Architects Pte Ltd

showed year on year an increase of increase from 5.20% to 5.90%. Guangzhou 85

infrastructure projects. Continuing Hong Kong SAR 3.00 3.25 3.50

RLB Construction Market Activity Model

HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

Rider Levett Bucknall | International Report – First Quarter 2015 25

26 Rider Levett Bucknall | International Report – First Quarter 2015

Guangzhou Hong Kong

Rider Levett Bucknall | International Report – First Quarter 2015 27

Architect: Zaha Hadid Architects

Ho Chi Minh City