Singapore is Asia's most expensive country for construction

Construction cost in Singapore is almost 7% higher than in the UK.

Singapore has been named Asia’s most expensive country to build and makes the top ten most expensive countries in the world, with Hong Kong being the second most expensive in Asia, according to the International Construction Cost Report released on Wednesday by leading international built asset management consultancy, EC Harris. Singapore is the 10th most expensive country in the world in a list topped by Switzerland.

According to the survey, which benchmarks the cost of building in each country against the UK, the price of construction in Singapore is nearly 7 per cent higher than in the UK, where costs fell almost 20 per cent from their peak in the previous year. Singapore’s closest Asian counterpart on the list was Hong Kong, which came in at number 21 and second in Asia, 7 per cent below the UK benchmark China came in fifth of the Asian countries, behind South Korea and Thailand. Sri Lanka was named the cheapest place to build in Asia and globally, at 27 per cent the cost of UK construction.

Richard Warburton, Regional Head of Cost and Commercial Management in Asia, said Singapore continues to be the most expensive Asian country to build in despite a drop in tender prices of between 5-8 per cent last year.  “The Singapore market appears to be recovering on the back of sustained demand and strong economic growth in that country. We are also seeing localised ‘hot’ markets, such as the substantial amount of new office building fit out activity that is underway. This may create supply chain pressures and push tender prices up again, although the market remains competitive particularly amongst the tier two suppliers. General tender price growth over the coming year could be between 3-5%, although one of the key factors impacting this will be by how much commodity prices continue to rise,” he said.

According to Mr Warburton the greatest uncertainty in tender price inflation amongst Asian countries exists in Hong Kong, where prices are already running at 93 per cent of those in the UK. “Construction workloads and tender prices rose steadily throughout 2009, driven largely by government spending on infrastructure, and were well ahead of the rest of China. There is a sense that a period of readjustment is on the way, but forecasting next year’s growth is very hard to predict with scenarios suggesting anything from 2 per to 20 per cent. My view is we are likely to see around 9-11% for general construction works.”

The Report found that China experienced significantly less cost growth than Singapore and Hong Kong, and South Korea and Thailand, despite the injection of over US$500 billion into the economy to counter the financial crisis and stimulate construction growth. Despite this, tender prices remained largely unchanged and future growth is expected to be minimal – 3 per cent this year and 5 per cent in 2011. Costs in China currently run at just under half (48 per cent) those of the UK.

The Asian region’s Pacific neighbours, Australia and New Zealand are both among the top ten most expensive countries for construction. Australia comes in at number four, with costs 20 per cent higher than the UK, while New Zealand is number nine, 11 per cent above the UK cost base.